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We keep on hearing about Radio Frequency Identification (RFID) tags, but where do they fit in supply chain operations. For decades, supply chain professionals have used bar codes to tag everything from a retail-level item to a shipping box to a pallet, and even trailers and railroad cars. Now with the advent of active and passive RFID tags, will bar codes be replaced? Will RFID tags work in conjunction with bar codes and other ID technologies such as GPS and biometrics? Or is RFID a fad that will soon fade away with all the hype.

The Promise of RFID Technology. With the advent of active and passive RFID tags, bar codes have the potential to be phased out for tracking and tagging everything from boxes of items to ocean containers. Even if RFID tags live up to their potential, bar codes will continue for at least for now. The return on investment (ROI) in most cases is still not there for RFID to completely replace bar codes at the retail item level. RFID is now getting past the hype and starting to be a good ROI for supply operations. See posting, RFID Logistics – the Tempest is Moving Out of the Teapot, for more information on RFID emerging role within Automatic Identification Technology.

The Key Criteria For Using RFID Technology in Supply Chain Operations. The key criteria for using a bar code versus passive RFID versus active RFID tag is cost and functionality required for a given supply chain situation. Generally, bar codes cost less and have less functionality than RFID tags. Passive RFID tags cost less and have less functionality than active RFID tags.

Where Does RFID Fit Within Supply Chain Operations?

Below is how to best leverage bar codes, RFID, and GPS for logistics and supply chains:

• Vehicle Movement – GPS. Track vehicles that move assets using Global Position System (GPS) satellite systems. Most expensive, but provides best communications in terms of interactive communications and continuous communications. Also, requires less terrestrial communications infrastructure than active RFID tags.
• Containers – Active RFID Tags. Track containers real-time in yards and docks using active RFID tags with RF ranges of 300 feet. Active RFID tags provide more functionality than passive RFID in terms of communicating with RFID readers from hundreds of feet away versus a few feet with passive RFID tags. Active tags are smart and can do such functions as store a lot of data, read-write capability, make audible sounds, connect to sensor instruments, and so on. Active RFID does need a terrestrial communications infrastructure of RFID readers located at “chokepoints” such as ports, terminals, and docks to track containers with RFID tags.
• Asset Management – Active and Passive RFID Tags. Manage tool rooms, security items with active or passive RFID tags based on RF range required and affordability. If you just need to check-in and check-out assets such as with tools in a tool room, passive RFID tags should work. If you have expensive or need immediate visibility over items such as medical equipment on rollers or material-handling equipment, then active RFID tags would be a better choice.
• Pallets – Passive RFID Tags. Track pallets using affordable passive RFID tags with 3-15 foot RF range. By setting up a series of “chokepoints” at dock doors as well as forklifts equipped with RFID readers, passive RFID tags can save a lot on labor and optimize inventory management. Bar codes and active RFID tags may be viable for some, specific applications for tracking pallets.
• Boxes – Passive RFID Tags or Bar Codes. Track boxes with passive RFID tags or bar codes. Passive RFID tags are now affordable to track boxes with costs of under ten cents a RFID tag. Passive RFID tags provide the ability to automatically track boxes all along the supply chain from the supplier, to the distribution center, to the retailer, and inside the retail store. Active RFID tags can also be an option for niche solutions such as environmental monitoring of boxes containing perishables or medical-related items.
• Items – Bar Codes. Bar codes are still the best option for tagging individual retail items. At some point, passive RFID tags may replace bar codes. Passive RFID tags hold the promise of automating in-store inventories, automating Point-Of-Sale (i.e. no more hand-scanning items at checkout), and duel use of RFID tags for supply chain tracking as well as a retail theft-prevention devices. Active RFID tags can also be an option for niche solutions such as tires where a lot of data needs to be stored with the item as well as the value-add of monitoring temperature and tire pressure during use.

Back to Radio Frequency Identification (RFID) Technology.