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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.

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This is an exciting time for anyone that follows information technology trends. There is not so much as a bunch of new technologies emerging, but there is a convergence of web-based technologies and real-world sensor technologies. Web converges with the real-world:

• Web is Becoming Real-Time. The web is turning into a real-time, information-rich, interactive conversation between applications and people. This is because of technology phenomenons such as social media, search engines, cloud computing, and broadband.

• Omnipresent Sensors in Real-World. The real-world is getting embedded with cheap, omnipresent sensor technology such as RFID, GPS, biometrics, cameras, and instrumental sensors.

Now people and software applications are interacting with web and sensor technologies in real-time. Tim O’Reilly calls this phenomenon “Web Squared”.

B2B Web-Squared Trends. Many large businesses and Government agencies already have “Web-Squared” initiatives in place. The most notable examples are in the areas of supply chain and Business-to-Business (B2B) eCommerce. B2B Web-Squared Examples:

• Wal-Mart. Wal-Mart is a pioneer in using bar codes and RFID technologies to keep near and real-time visibility of products and shipments. Many large businesses also use the web to exchange electronic documents with their suppliers.

• U.S. Department of Defense (DoD). The U.S. DoD has used active RFID tags as well as web technologies to track and trace shipping containers globally for years.

Both Government and large businesses are continuing to leverage both web technologies and sensor technologies to start to tag and track items down to the package and product level.

Opportunity to Expand B2B Web-Squared Technology to Small Businesses. With the costs of “Web-Squared” technologies going down and everyone becoming familiar with the technologies, there is a real opportunity for medium and small businesses to start using Web-Squared technologies. Passive RFID tags are now under ten cents, and cell phone GPS chips are getting down to five dollars a piece. We should start seeing a lot more initiatives and business services opening up for small businesses to exchange electronic business documents and information in real-time.

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I have always thought Radio Frequency Identification (RFID) technology would revolutionize logistics. Well after almost two decades, the RFID revolution may be starting. For many years the question for RFID was it a Catalyst to Boil an Ocean or Make a Cup of Tea? Behind the hype and the promise, the ROI for many RFID projects were at best questionable. It appears now that RFID is turning the corner.

DoD Leadership in RFID Logistics. The US Government has done a good job over the years in helping to enable and commercialize emerging technologies and standards. This has included the internet, software development standards, scanners, wireless, and now RFID. I was involved in a lot of Department of Defense (DoD) RFID logistics projects in the ’90s. Most of these projects had to do with active RFID and web servers to track ocean containers. Over ten years later it looks like the investment that DoD has made in RFID logistics will pay off. A recent set of articles in the Defense Transportation Journal on DoD RFID Logistics provide a great overview of how DoD is enabling maneuver logistics for the warfighters. DoD is definitely leading RFID logistics in the areas of standards, software, RFID infrastructure, and enterprise integration.

Where RFID Fits in With Auto ID Technology. Bar codes and scanners are key Automated Identification Technology (AIT) enablers for managing logistics and supply chains. 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. With the advent of active and passive RFID tags, I expect bar codes will slowly be phased out for tracking and tagging everything from boxes of items to ocean containers. Bar codes will continue, at least for now, to be used at the retail item level. The key criteria for using a bar code versus passive RFID versus active RFID tag is cost and functionality required of AIT. 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 GPS.
• Containers - Active RFID Tags. Track containers real-time in yards and docks using active RFID tags with RF ranges of 300 feet.
• Asset Management - Active and Passive RFID Tags. Manage tool rooms, security items with active or passive RFID based on RF range required and affordability.
• Pallets - Passive RFID Tags. Track pallets using affordable passive RFID tag with 3-15 foot RF range.
• Boxes - Passive RFID Tags or Bar Codes. Track boxes with passive RFID tags or bar codes. Passive RFID tags now are affordable to track boxes with costs of under ten cents a RFID tag.
• Items - Bar Codes. Bar codes are still the best option for tagging individual retail items.

RFID Logistics - Benefits. Below are the reasons why RFID offers so much promise for logistics and supply chains:

• Reduces Clerical Errors. RFID gets the human out of the loop where clerical errors are about eliminated in terms of inventory levels and asset visibility.
• Improves Asset Visibility and Utilization. RFID can give you complete situational awareness. If you know where an asset is, you can use it.
• Increase Efficiency. People no longer need to be always looking for stuff, nor do they have to do inventories by hand. This frees them up to do their real job.
• Improves Decision-Making. RFID give real-time information that enable better decision-making as well as reduces the decision-making cycle.

For more on RFID being a change agent within logistics and supply chains, see posting RFID DASH7 - the Catalyst to Move The Tempest Out of the Teapot.

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