RFID (Radio Frequency Identification Devices)-

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  1. RFID (Radio Frequency Identification Devices)- An Introduction:

RFID is an automated data-capture technology that can be used to electronically identify, track, and store information about groups of products, individual items, or product components. The technology consists of three key pieces: RFID tags; RFID readers; and a data collection, distribution, and management system. RFID tags are small or miniaturized computer chips programmed with information about a product or with a number that corresponds to information that is stored in a database. The tags can be located inside or on the surface of the product, item, or packing material. RFID readers are querying systems that interrogate or send signals to the tags and receive the responses. These responses can be stored within the reader for later transfer to a data collection system or instantaneously transferred to the data collection system. Lastly, data collection systems consist of computers running data processing software, which typically are networked with a larger information management system. [IDC, 2004. Online]

RFID technology is not new; it has been around since World War II (in aircraft Identification Friend or Foe systems) and in limited use in inventory management since the 1970’s. The technology relies on the transfer of packets of information through radio waves or electromagnetic waves. However, it has been the exponential growth in information and communications technologies coupled with the expansion of global production and trade that has resulted in RFID technology becoming useful for managing and tracking large shipments and product sales, and as a means of identification for security purposes and supply chain management. Market Estimates: RFID is viewed as an emerging technology with the potential to disrupt and transform currently used systems for cataloguing operations in the manufacturing, retail, and service sectors of the economy. Estimates of market size for RFID over the next 2-3 years vary significantly. [WDRG, 2003. Online]

− The International Data Corporation (IDC) estimated that the RFID market for related consulting, implementation, and managed services was expected to grow 47% in 2004 and reach $2 billion worldwide by 2008. IDC also reports that almost two-thirds of enterprise organizations considering RFID applications in 2004 indicated that they would rely on external resources in implementing RFID. IDC also points to future growth in the IT services and data management sectors from RFID-related implementations.

Although supply chain applications (inventory management and tracking) probably account for the largest dollar value driver of the technology for RFID, a survey of 450 developers around the world, conducted by Evans Data Group, suggests that RFID is currently being used more for security applications. However, as the costs of RFID tags continue to fall, use of the technology for inventory control will likely increase. Mandates by Wal-Mart, other large retailers, and the U.S. Department of Defence (DOD) requiring their top suppliers to use RFID tags on pallets and containers to track shipments have spurred the recent uptake of this technology. Both have issued RFID compliance deadlines for their suppliers. Wal-Mart expected its top 100 supplier to tag all shipments to Wal-Mart distribution centres after January 1, 2005. DOD, which has set similar implementation deadlines, also required suppliers to tag shipments to DOD warehouses. Both mandates have phase-in timelines of two to three years from a limited number of shippers and distribution centres to all shippers, materials, and distribution centres or warehouses. [Migration Management, 2004. Online]

Benefits of RFID technology: The RFID system allows manufacturers, retailers, and suppliers to efficiently collect, manage, distribute, and store information on inventory, business processes, and security controls. RFID will allow: retailers to identify potential delays and shortages; grocery stores to eliminate or reduce item spoilage; toll systems to identify and collect auto tolls on roadways; suppliers to track shipments; and in the case of critical materials, RFID will allow receiving authorities to verify the security and authentication of shipped items. These uses are seen as only the beginning, and as RFID is deployed across different sectors and services, increasing efficiency and visibility, several other applications and benefits may arise. [In-Stat, 2005. Online]

The technology itself offers several improvements over its predecessor technologies – the barcode and magnetic stripe cards. The central data feature of RFID technology is the Electronic Product Code (EPC), which is viewed by many in the industry as the next generation barcode or Universal Product Code (UPC). This EPC code can carry more data, than the UPC code and can be reprogrammed with new information if necessary. Like the UPC, the EPC code consists of a series of numbers that identify the manufacturer and product type. The EPC code also includes an extra set of digits to identify unique items. RFID also allows easy and as needed uninterrupted access to data on the tag. Unlike the barcode where identification is limited by line-of-sight, RFID technology and its reliance on radio waves does not require a line-of-sight for identification nor a straight-line alignment between the tags and readers. RFID tags are also sturdier than barcodes, allowing for use in adverse conditions, and tags can be affixed or embedded on the product packaging or inside the item. [EPC, 2004. Online]

RFID System Costs: The cost of acquiring, installing, and maintaining an RFID system will be a major and determining factor in the deployment of RFID in the commercial sector. There appears to be great diversity and little quantitative information in the overall costs of acquiring, installing, supporting and maintaining an RFID system. RFID system cost is composed of tags, readers, and processing and supporting information technology hardware and software. Higher adoption rates will cause system costs to drop and encourage more RFID users. At present, larger retailers such as Wal-Mart, Target, Albertsons, and manufacturers like Hewlett Packard, Gillette, and Proctor and Gamble, are leading the industrial deployment of RFID. According to several analysts, uptake for smaller suppliers and retailers is expected to take longer. Current tag costs range from 25 to 40 cents per tag (higher in some cases, depending upon the type of tag), making it relatively expensive for low-end consumer items. [SRI Consulting, 2004]

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The Auto-ID Labs (former Auto-ID Centre) expects tag prices to drop to 10 cents in 2005 and 5 cents in 2006 for orders of 1 million units.7 In 2004, Gillette placed an order for 500 million tags and was able to obtain a bulk rate of 10 cents per tag. RFID reader costs are also relatively high due to limited uptake of RFID systems. The Auto-ID Labs also expects reader costs to come down from about $250 in 2003 to about $100 in 2005 and to $70 in 2006. Finally, middleware costs include computer hardware, software, data processing, data ...

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