01/10/2020
What is RFID and the benefits of implementing RFID?

The earliest forms of RFID date back to 1846, where Michael Faraday completed experiments with electromagnetic energy using lights and radio waves. It is reported that the first application of RFID technology was used in 1935 during World War II. This basic form of RFID technology was introduced by Sir Robert Alexander Watson Watt to identify British RAF planes approaching British air space distinguishing them from hostile foreign fighter planes.

So what RFID? In its simplest terms RFID consists of three main parts, a server, reader and tag.
The tag itself is a small microchip component part that can be attached to an item, making it easily and readily identified. The microchip component parts store unique identification information to identify the particular product it is attached to. The reader is a handheld device, its role is to scan and read tagged items. By scanning and then reading the tag, the device is able to obtain the unique information that has been encoded to the tag. Once an item that has been RFID enabled has been scanned and information read it is communicated to the server, the information can then be analysed, for example using the RFKeeper platform. The wider use of RFID outside of the retail environment has been associated with numerous applications; some examples including animal tracking, SCM, medical records, electronic passports and identity cards.

Governments around the world regulate the use of RFID to ensure the technology does not interfere with other devices. The frequency of an RFID system is a key factor as to how well the solution operates as it is responsible for determining the reading range of the system, which has a direct impact on operational performance. The frequencies that are used in RFID systems are low (LF: 125-134 KHz), high (HF: 13.56 MHz), ultra- high (UHF: 868-956 MHz), and microwave (MF: above 1 GHz).

RFID and barcodes are two examples of automatic identification technologies and are often compared due to the similar roles they can be used for to complete functions within the supply chain. As a solution, bar codes have consistently shown to be a reliable, fast and effective way for information to be uploaded to a retailer’s Electronic Point of Sale (EPOS) system containing a product’s price point.

Although the technology remains comparatively cheap, the barcodes can only hold limited data, fail to work when dirty and have to be scanned individually in line of sight and short distance away from the reader, needing human intervention. In recent years, barcode technology has evolved with the development of the two dimensional (2D) barcode. Although this does provide the capability to hold more information and can include holding a complete Electronic Product Code (EPC), the use of barcodes still has many limitations, for example, the reliability becomes questionable when the barcode is dirty, creased or damaged in comparison to RFID.

Compared to the barcode technology that is traditionally used within the retail sector, RFID provides many more advantages due to the data the tags can hold. Unlike a barcode that has to be scanned individually and directly in front of the reader so it is not obscured to ensure it has correctly been read, RFID technology enables the operative to scan multiple items at a time due to it not needing line of sight. The process of scanning can be fully automated, removing the need for any human interaction and removing the potential for mistakes to happen which can lead to labour savings. The benefits for using RFID tags include being able to search for individual items once they have been RFID enabled. By having this functionality, sales can be increased, even if by one item, and more importantly stock is not written off that is actually in a store that may have simply been misplaced. Further examples of the benefits of RFID as proposed include retail inventory information linked to readers at the doors of shops that identify stock leaving or entering the building such as items leaving the store without being paid for, and more importantly, identifying inaccuracies immediately within a delivery.

Whilst there are many advantages to RFID, there also limitations that need to be considered to provide a balanced discussion. RF waves bounce off metal, so tags inside a metal box or surrounded by metal fixtures may not be read as reliably as those tags situated away from metal objects. In years gone by cost has also been a barrier to many organisations as the implementation of RFID needed considerable investment. In more recent times the associated costs to implement RFID have been driven down and by using the RFKeeper platform IT integration is seamless and scalable.

RFID provides businesses with the ability to track shipments throughout the supply chain, from the product’s inception to its final destination. Therefore, products can be tracked from the first delivery of raw material to the manufacturer and from manufacturer to the DC before the retailer distributes it across their infrastructure, providing a finished product for consumers to purchase. RFID captures and provides real time information, which leads to improved performance with in organisations by helping to protect their bottom line, by increasing stock accuracy and addressing shrink.

During a stock take process, where tasks are completed by humans who might not follow the procedures correctly or make honest mistakes, process errors can occur. For example, an employee could incorrectly scan a number of items resulting in an inaccurate stock file and causing a potential inventory shrink. RFID technology provides a solution that limits the need for human intervention and limits the decision making process, thus removing the possibility for the wrong decisions to be made that are critical to ensuring the business’s stock integrity is maintained. The RFKeeper software is the perfect way for retailers to interpret their data enabling them to make informed decisions. The implementation of RFID can provide significant benefits to retailers including better controls around inventory management and improved security.

Summary

In today’s socio economic climate, the management of the supply chain is a critical factor for any business to achieve a financial advantage over competitors. By controlling the supply chain correctly businesses will reduce shrink, increase availability and in turn maximize sales opportunities, whilst providing a positive customer experience. RFID is key for those retailers who want to move from being multi-channel retailers to become Omni-Channel retailers enabling the increased customer experience and how it can lead to increased customer satisfaction by having the right product in the right place at the right time. Get those steps wrong and the impact to an organisation can be significant, resulting in financial loss and possibly more importantly, damaging a business’s reputational brand.

References

Landt, J (2005) ‘The History of RFID’, Ollivier, M. (1995) ‘RFID enhances materials handling’, Finkenzeller, K., Finkenzeller, K., Waddington, R. and Waddinton, R. (2003) RFID handbook: Fundamentals and applications in Contactless smart cards and identification, Want, R. (2006) ‘An introduction to RFID technology’, Schuster, E. W. and Koh R. (2004). ‘To Track and Trace.’, Karmakar, N.C. (ed.) (2010) Handbook of smart antennas for RFID systems., Kaur, M. et al (2011) ‘RFID technology principles, advantages, limitations & its applications’, Mooney, J.G., Gurbaxani, V. and Kraemer, K.L. (1996) ‘A process oriented framework for assessing the business value of information technology’, Bhattacharya, M., Chu, C. and Mullen, T. (2008) A comparative analysis of RFID adoption in retail manufacturing sectors., Smith, A.D. (2005) ‘Exploring radio frequency identification technology and its impact on business systems’