Radio frequency identification (RFID) is a technology that uses radio waves to identify products or objects automatically. An RFID tag or transponder is a label that contains a microchip and an antenna. Unique electronic product information is stored in the microchip, which helps in identifying a product. The electronic information can be stored in the form of a unique serial number that is called an Electronic Product Code (EPC).
RFID tags can be classified into active tags and passive tags. Active tags are attached with a battery that provides power to the electronic circuit. These tags can be used within a range of 25 feet or more. Passive tags do not contain any battery and extract electricity only from the signals transmitted by an RFID reader. They work within a range of a meter or so. RFID tags can be embedded in various types of materials, since radio waves can travel through most non-metallic materials. These embedded tags can then be fixed to packages.
Applications
The Association of Independent Corrugated Converters (AICC) has recently produced a white paper to understand the functioning and implications of RFID and EPC for the corrugated industry. According to the white paper, RFID tags can be put on a product itself or can be placed on its packaging.
These RFID tagged products can then be put into corrugated containers that have their own RFID tags. The corrugated containers in turn can further be put onto pallets having their own tags. When these pallets leave the consumer product company or the corrugated box manufacturer's facility, an RFID reader that is positioned at the loading dock door can detect the RFID tags. Once the RFID tags are detected, the reader can transmit and provide power to the RFID tags.
Through these RFID tags, the location of the products can be monitored throughout the supply chain. Once the product reaches a distribution centre or a retail store, it goes through RFID readers in the unloading area. In case the distributors/retailers have their own readers at their docks, the shipment or the content of the boxes can be checked at the docks without opening the boxes. The RFID readers can also be placed at the shelves of the retail stores, allowing the retailers to monitor product inventory levels continuously. If the RFID readers are kept at the exit points in a retail store, they can easily recognise the goods purchased by the consumers. The consumers can then make the payment easily by simply swiping their credit/debit cards at the exit point. It also means that consumers would not have to visit the cashier, which would allow them to save time.
It is evident that RFID-compliant supply chain solutions can have multiple advantages for the manufacturers, distributors, retailers, and the consumers.
RFID is a superior technology, compared with other available technologies such as bar codes. RFID tags are often compared with bar codes which also serve as labels and carry information. Bar codes store information that acts as a unique identifier and helps in identifying an object. However, unlike RFID tags, bar codes generally do not store the price and description of the product. Moreover, their operation is quite different from that of RFID tags. Bar codes use line-of-sight technology, which implies that they need to be seen by the bar code reader. This can only be possible if somebody manually brings the bar code near the reader.
RFID readers, on the contrary, have a specific range within which the RFID tags can be read automatically. Being an automated system, RFID works fast. An RFID reader can read the entire content of a corrugated box or a pallet within a few seconds. It eliminates human error completely and thus helps in saving time and money. RFID also enables the users to collect vital information about products continuously.
Since information about the products can be collected at all points in the supply chain, from factories, the distribution centres, to the retail stores, RFID provides an insight into the areas of problems that are prone to theft or damage. In case of pharmaceutical products, for instance, the product information obtained through RFID tags can make it easier to remove expired products from the shelf immediately. Thus, RFID helps manufacturers, distributors, and retailers to take critical logistics decisions like recalling a product or increasing the supply of a product.
Moreover, RFID facilitates in constantly monitoring the movement of the products throughout the supply chain. This helps companies in reducing stock-outs significantly and also getting rid of excess inventory. Companies, especially in the FMCG industry, can save on cost and become more competitive in the process. The RFID technology thus enables companies to serve their customers more efficiently.
RFID gaining ground
RFID tags are increasingly getting popular among big players having wide distribution networks. In 2003, Wal-Mart, the world's largest retailer, announced on RFID mandate, as per which, in the first phase, its top 1 00 suppliers were asked to have their pallets of goods equipped with RFID technology by January 2005. The RFID tags were to be attached to the outermost packaging of the cases or pallets and not to individual products. Subsequently, in 2004, Wal-Mart announced other phases of its plan as well.
(Extracted from Onboard -A publication from ITC I.imited)