The promise of passive RFID

This radio frequency identification technology could improve product monitoring while substantially reducing costs across the supply chain.

-- Modern Materials Handling, 1/1/2001

To kick off my columns in 2001, I've chosen to cover a fundamental element of the supply chain infrastructure: automatic data capture. Today, we rely upon bar code technology linked to information systems. In a sense, bar codes are the touchstone that permits electronic interfaces to occur all along the supply chain.

But for all that bar codes do, many are asking if radio frequency identification (RFID) technology is a viable alternative in the supply chain. Desirable attributes of RFID include the ability to read individual license plates of all items remotely without regard to orientation. RFID can read through cartons, identifying individual articles, and can read through clothing, which would go a long way toward eliminating theft in retail channels and improving efficiency in logistics processes. Keep in mind that upwards of $20 billion is lost in the retail channel annually due to theft at some point in the supply chain.

Active RF technology consists of chips, antenna, and a power source configured to allow communication between individual items and information systems. A number of firms have developed active RF technology. Unfortunately, this approach costs $0.50 to $1.00 or more per RF tag.

Passive RF, however, may be a more viable option for the supply chain. It consists of an antenna only (no chip or power source), which acts as a license plate much as bar codes do. The cost of passive RF is less than 5 cents per item. (The total cost of scanning a bar code at a point of sale is 5 cents, some studies have shown.) In this context in particular, the RF approach has real promise.

Just imagine how RF technology would work, and ultimately complement bar codes, in the supply chain.

Each item could be monitored during transit and while in inventory at distribution centers or on the retail shelf. That starts with identifying every item as it enters a distribution center from distances of several feet without concern about product orientation. In fact, this technology allows the reading of RF tags through boxes or cartons, and without cumbersome guns and targets. Detectors that read all items picked to specific customers' orders could verify piece picking. Imagine 100% accuracy! Stretch your imagination a bit further and you can visualize achieving real-time inventory as strategically located RF detectors in distribution centers monitor all products.

At the retail store, a similar scene comes into view. The store's inventory system knows all items on the shelves. Customers place items into their carts equipped with RF detectors, which would allow them to check out without passing the traditional check out counter.

Items not deleted from the store database by the RF sensors, in the check out process, would signal store personnel if a customer or employee attempted to exit the building without paying for an item. Passive RF technology, at least in one current version, can easily be undetectable to the human eye, making it extremely difficult to sabotage the system.

Supply chains need technology to take the next step of enabling information systems to monitor product movement more efficiently. Passive RF technology could be the answer to gaining improved performance while substantially reducing costs across the supply chain. Conceivably, RF could even monitor consumption in consumers' homes.