RFID in logistics: game changer or bust?

RFID, or Radio Frequency Identification, goes all the way back to the 1970s. That is when the first patents for active RFID tags were issued by the US Patent Office. Yet serious efforts to utilize RFID in logistics did not take place right away. Only several decades later, in 2004, RFID Gen 2 specification was finalized. At the time, RFID in logistics was seen as the next frontier. Something that would revolutionize the industry and remove costly human interaction. Also, it was expected to increase traceability and provide proper real-time inventory management. With Intermec and Symbol leading the way, first in-the-field implementations were developed and tested in real work environments. But then…

The bump happened

…and there was no more progress for quite some time. RFID projects were popping up here and there. Some of them would even get a good amount of publicity. Several offshoots of RFID would get real traction as RFID toll passes on US interstates and RFID security badges. Some harsh environment projects or those instances where “line of site” barcode scanning was not feasible also happened. But those were exceptions, not the rule. The main promise of an RFID tag placed on every box of cereal has never materialized. Even the “every pallet shipped to Walmart must have an RFID tag” idea has not come to fruition.

There are multiple reasons why this technology did not catch on as was originally expected. One of them was RFID`s dependency on radio waves. And they tend to behave differently when placed on varying materials. Tags have a different optimal “read/write” distance when placed on metal versus glass versus plastic. Another issue was that the cost of the RFID equipment was quite high back then. Adding s custom software solution to bring RFID integration into ERP would raise that bar even higher. And, of course, probably the number one reason for not going the RFID route was the high price of consumables. I.e. those pesky RFID tags that were supposed to be placed on every piece of inventory. Especially it was obvious when comparing an RFID label to a regular non-radio label. No matter how you look at it, ROI in many instances was simply not there yet.

Now vs then

However, fifteen years later, it looks like things are finally picking up. RFID hardware is much cheaper now, and RFID tags are slowly becoming more affordable. This is probably due to the fact that RFID is becoming more and more visible in consumer space. Apple Pay, anyone? Yes, this is not RFID in logistics application we have been waiting for, but the direction is right.

On a side note, the RFID industry has seen a few consolidations. For example, Symbol became Motorola and then was acquired by Zebra. Meanwhile, Intermec became Honeywell. So, with the exception of Zebra which used to only do RFID printers, there are no original big players left. Nevertheless, there are plenty of RFID players, including RFID in logistics, around. And now, that this mostly dormant area of technology is becoming active again, those players are ready to make another attempt.

Today many businesses look at this trend and they come back to automation plans they had had before. Total automation of the warehouses and proper real-time inventory seem doable now. After all, it takes ten times longer to do physical inventory with Barcode handhelds versus handheld RFID scanners on average. And results can be even more impressive when RFID scanners are placed on ceilings. Then they can be programmed to run every hour if needed.

To understand RFID even better, let`s have a look at the pros and cons of RFID.

RFID pros:

  • RFID does not require line of site;
  • reading distance is quite long and is even longer on an active RFID tag;
  • RFID does not generally require human interaction;
  • the speed of reading is significantly higher than with a barcode reader.

RFID cons:

  • the cost of an individual label is higher;
  • the cost of equipment is higher;
  • tags have different effects based on the material they are placed on;
  • on average, tags store less data compared to 2D barcodes.

More about RFID in logistics

Privacy, reliability over time, and incompatible standards in different countries. These aspects often come up in conversations next to RFID in logistics. However, we think that none of them are strictly advantages or disadvantages.

Usually, privacy is not a concern when it comes to inventory management and logistics. There probably are cases where RFID may not be the right solution because of privacy. We do not rule this option out. However, we do not see a scenario like that when it comes to inventory control. If it is acceptable to put a label on the piece of inventory being transported with a lot of information on it, then placing an RFID tag holding 96 bits of data in it should be too.

Reliability over time is something that needs to be looked at in a specific situation. For example, when choosing the kind of a tag or a label. In some environments, like in high humidity or high temperature, the RFID tag may become unreadable. However, it is important to keep in mind that the same happens to a basic barcode label. All in all, the reliability issue can be easily solved by selecting the correct tag.

What else?

Finally, the question of incompatible RFID standards across different countries should be addressed in two parts. Firstly, the data tag format. Different countries have different standards. However, they are almost always convertible or can be cross-referenced. For example, UPC->EAN. Secondly, the RFID spectrum limitations. Yes, there are differences in frequencies between North/South Americas and EU. RFID readers are supposed to operate in 868 Mhz for EU and the Middle East versus 902-928 Mhz for Americas. There are tags, though, that have dual-antenna configuration. So, they can operate properly in both frequencies. Honeywell, formerly known as Intermec, has pioneered this technology. Nowadays, it is widely used by many RFID tag producers. Therefore, it is necessary to keep RFID cross-country compatibility in mind, while also remembering that it is no more a problem than regular barcode labels are.

Upward trend

To sum up, there is a huge potential in RFID. We have seen a substantial increase in requests for RFID solutions in recent years. Efficiency and potential savings on labor costs are major benefits. No wonder why numerous businesses begin to give this technology a second chance. It happens even before they discover how much more accurate the data collection process becomes. If the trend continues, RFID will become widespread in many businesses of today and tomorrow.