Pros and Cons of RFID Technology

I. RFID Benefits

Radio Frequency Identification gives a worthwhile service that’s able to revolutionizing the best way firms observe merchandise. There are lots of benefactors of this expertise: the army, retailers, suppliers, consulting companies, producers of the expertise, and shoppers. RFID gives firms with a greater various to bar-coding as a result of no line-of-sight is required to learn a pallet, a carton, or a product with a RFID tag. RFID tags additionally include info on the product that’s simply readable and accessible for the reader. RFID can even start to automate firm’s provide chain, decreasing labor prices, human error and time spent checking in merchandise.

In 2005, producers and suppliers requesting new bids from the army should be RFID compliant on 4 totally different ranges: packaged operational rations, clothes, instruments, and weapon system restore elements and parts. The army requires that each one cartons and pallets are shipped with a Navy Transport Label which shows delivery knowledge. The Division of Protection has created the RFID Navy Compliance Resolution as a manner to assist suppliers and producers meet the army’s new requirements for RFID. This system is run by Avery Dennison Retail Data Companies, and so they have been commissioned by the RFID Navy Compliance Resolution. Avery Dennison Retail Data Companies sells the RFID tags to firms which should be affixed near the Navy Transport Labels to adjust to Division of Protection rules.

The U.S. army is saving an unlimited amount of cash by utilizing energetic and passive RFID methods. By utilizing RFID for communication and transportation methods in Iraq and Afghanistan, the army is ready to diagnose and repair issues a lot quicker than earlier than. The implementation of RFID in simply this space will save the army near half one million {dollars} this yr. The U.S. authorities has contracted IBM to do analysis on the present RFID getting used at present within the army and the potential future functions for RFID within the army. The army has been profitable in creating higher visibility all through their provide chain growing their productiveness and stability.

Retailers and different firms which have a demanding provide chain can acquire a bonus on the sphere by utilizing RFID within the provide chain. By demanding that each one ranges of their provide chain be RFID succesful is a large funding. The productiveness improve that follows the preliminary funding and implementation for firms pays for his or her funding. Wal-Mart was the primary retailer to make use of RFID of their distribution facilities and warehouses, prompting many firms to comply with of their footsteps as soon as Wal-Mart’s success was realized.

RFID may be very profitable with retail firms as a result of it improves productiveness, saves on human labor prices, and offers firms real-time visibility with all their merchandise. RFID tags use an Digital Product Code (EPC) which is an improve and a substitute for the Common Product Code (UPC) system. “EPC has a 96-bit code that has digits to establish the producer, product class and the person merchandise. Producers receive registration numbers & assign them to merchandise. Every quantity is exclusive to a given merchandise.”

The price of a tag is wherever between twenty-five to fifty cents. Within the subsequent 5 to 10 years it could possibly be lowered to 5 cents per tag. Sooner or later within the close to future tags may fall to 1 cent tempting firms to make use of RFID tags on each product in a retailer. Wal-Mart says that since their shops now have RFID, it makes it simpler to maintain retailer cabinets stocked permitting staff to work together with prospects.

Goal was in a position to save on their funding for implementing RFID, following in Wal-Mart’s footsteps as Wal-Mart had already paved the best way and suffered the pitfalls of implementing a brand new expertise. Along with the decrease implementation prices, lots of Goal’s suppliers had already begun making ready for the change over to RFID assuming Goal would comply with Wal-Mart. Goal as a big retailer is aware of how essential it’s to have the ability to present real-time knowledge on pallets, cartons and shipments up and down-stream via their provide chain.

A break-through in RFID expertise was made by Intermec, Inc. in Might of 2006, with new rugged and reusable RFID tags. These tags may be written hundreds of occasions; it might probably deal with hazardous chemical publicity, and withstands temperatures from -50 levels Fahrenheit to 250 levels Fahrenheit. In October of 2006, Intermec launched a brand new model of the rugged, reusable RFID tag, together with wide-band antenna that can be utilized on any floor in any a part of the world.

RFID makes the enterprise world appear to be a smaller place, even firms like Wal-Mart who’re very large and have a big built-in provide chain. RFID allows firms to be extra environment friendly with their time and house. Corporations that mix some newer provide chain applied sciences with RFID may see nice outcomes. Combining auto-picking with RFID would scale back man-power wanted, time wanted to maneuver pallets and cartons round a warehouse, and time wanted to ship pallets to their correct vacation spot. The objective of an organization’s provide chain ought to be to scale back time wanted to be productive, by automating as a lot of the provision chain as doable. It reduces human error, and machines are able to operating twenty-four hours a day and price lower than human labor. The
software of RFID for a big firm like Wal-Mart or Goal, in addition to smaller retail shops can guarantee a greater buying expertise with extra in-stock gadgets and a extra educated retailer.

The RFID market is booming and lots of technological firms have gotten within the sport producing RFID elements and methods. In lots of circumstances being a producer of RFID parts and methods additionally lets you grow to be a consulting agency for the expertise. Hewlett Packard (HP) is among the largest firms creating RFID methods. HP’s objective is to make it as straightforward and inexpensive as doable for a corporation adopting RFID expertise. HP has expertise within the RFID discipline, as they have been one of many early adopters of the expertise and have been very profitable integrating it into their enterprise. HP started with two bigger shoppers, Hasbro (produces youngsters’s toys) and Conros (a big Wal-Mart provider). Hewlett Packard has created two RFID Facilities for Excellence, one in California and one in Taiwan, to exhibit new potential makes use of for the expertise, in addition to how it may be applied right into a enterprise. Extra facilities are slated to be opened all through the world, together with Nice Britain, Singapore digital marketing services, and Tokyo RFID Facilities for Excellence.

The RFID market sits at roughly one billion {dollars} in 2006 and has various estimates as to the expansion potential of the market. Estimates of RFID market dimension in 2008 differ wherever from $1.3 billion by IDC, to $4.2 Billion by the Yankee Group. As proven in Determine 1 within the appendix, a lot of the business is made up of gross sales of {hardware}, tags, readers and different bodily merchandise of RFID. Roughly 20-25% of the market is made up of consulting work for the expertise and the final 5% is made up of software program for RFID. The 2 largest areas companies are concentrating on are the manufacturing and consulting sides of RFID.

The most important challenges for producers and consultants alike are the reliability and sturdiness of RFID methods and merchandise. It’s exhausting to simulate the damage and tear a product will expertise over time. HP has made testing RFID merchandise one in all their benchmarks, offering intense field-testing of RFID to make sure its sturdiness and high quality. A competitor of HP is IBM, who in response to AMR Analysis is the market chief in RFID. IBM has over eleven years expertise working with RFID, and like HP, they have been an early adopter of RFID expertise. The benefit that IBM has over HP is there world-renowned consulting providers, coupled with their immense networking capabilities. IBM’s providers promise extra outcomes than HP’s RFID methods primarily due to IBM’s consulting experience. IBM works with firms to find one of the best avenues to implement RFID, trying to maximise Return on Funding (ROI) by decreasing one individual per shift from manually monitoring merchandise permitting them to deal with value-added manufacturing actions. IBM additionally focuses on different methods to enhance ROI together with, providing a one-time financial savings of $230,000 in working prices, steady fabrication line operations, higher customer support offering real-time info on merchandise, and fewer errors and delays trigger by human error.

RFID started to take off as soon as firms like Wal-Mart and Goal, and the U.S. army demanded that their prime 100 suppliers should undertake RFID expertise. Many suppliers weren’t prepared for a transfer like this, a transfer that may utterly retrofit their present operations at a excessive value to the provider. There have been some suppliers that welcomed the change in expertise and already started implementing RFID in anticipation of Wal-Mart and the U.S. army’s demand that their suppliers undertake the brand new expertise. Wal-Mart demanded that their prime 100 suppliers would should be RFID prepared by January 2005, and to Wal-Mart’s shock, twenty three additional suppliers have volunteered to make the change to RFID. There’s a new era of tags that hit the market in 2005, known as the Gen 2 Customary, which make RFID extra interesting to suppliers who haven’t any RFID methods in place. The Gen 2 RFID improves on the primary era of RFID by growing learn occasions, growing learn ranges, and browse tags extra precisely.

Suppliers and producers will discover the advantages of implementing RFID into their organizations streamlining elements of their operations. Return on Funding is a very powerful issue for a enterprise implementing RFID. Suppliers will see their ROI improve as human labor hours are decreased, human errors are decreased and interoperability is elevated. RFID will increase the visibility of the suppliers to allow them to do their job in actual time, assuring that the proper bundle is shipped to the proper location. It additionally saves cash within the long-term for producers and suppliers as a result of RFID will save time spent inventorying and monitoring merchandise. A bonus for suppliers and producers utilizing RFID is customization of merchandise in a shorter time period. Smaller suppliers and producers may have a tougher time implementing RFID, as prices vary from $100,000 to $5 million to implement the expertise, however as prices go down extra firms will undertake RFID.

RFID does have one other potential profit for suppliers that might give them invaluable info. For Wal-Mart suppliers, readers are arrange on the again door so suppliers know when their shipments have arrived growing visibility for each entities. A second reader is positioned on the entrance to the gross sales ground so the provider can see what’s on-hand on the gross sales ground and within the inventory room. It will enable the provider to see which merchandise promote higher than others in order that they are often changed, and it additionally permits the provider to develop extra correct gross sales forecasts. A secondary advantage of RFID is that the promotions that merchandisers spend some huge cash to arrange are sometimes left within the inventory room for too lengthy or are improperly positioned. Now merchandisers and distributors can be sure their promotions are being dealt with appropriately. Suppliers and producers have the potential to save cash on manufacturing prices, whereas creating wealth on custom-made merchandise.

Shoppers ought to be the last word winner with RFID being applied all through an organization’s provide chain. Within the long-run, shops will get monetary savings all through their provide chain, thus bringing down prices to shoppers. Shoppers must also anticipate finding extra useful and extra informative prospects service with firms which have RFID. These firms now have real-time knowledge to share with the shopper. A client grievance about retail shops has all the time been that there are too many out-of-stock gadgets; nevertheless, with RFID in place many of those shops ought to see a major lower in out-of-stock gadgets. Having RFID tags on sure merchandise may also make folks’s lives a lot simpler, corresponding to a microwave that could be a reader and acknowledges the tag of the meals you place in and can mechanically cook dinner it in response to the instructions on the tag. It additionally helps environmentally as a result of firms will use sources extra effectively, benefiting everybody. As soon as RFID tags are ready for use on meals merchandise it’ll make a recall on a sure merchandise a lot simpler and it may probably save lives.

Shoppers use RFID on a regular basis and many don’t understand the advantages they’re receiving from the expertise. Contactless cost is a creating expertise, the cardboard getting used incorporates a tag and the cost space incorporates a reader. Mobil and Exxon use a “Speedpass” as their contactless type of cost permitting prospects to wave the cardboard in entrance of a reader to pay for fuel or something within the handy retailer. Visa and Mastercard are the 2 largest builders of this expertise, claiming that it’s going to profit everybody from shoppers to companies. It permits folks to have preset cash on a card (both debit or credit score) which decreases ready time at check-out stands and will increase loyalty to firms that provide this function. One other use of sensible playing cards is keyless entries, which is changing into a well-liked pattern in America, utilizing only a card and swipe it over the sensor to permit entry. RFID is a helpful expertise for shoppers saving time and providing conveniences conventional bar codes, bank cards and keys can not provide.

RFID incorporates many benefits over conventional methods of coding pallets, packing containers and merchandise. It permits for non-line of sight studying of the tag which shops all of the product info. RFID reduces human labor prices and human errors via the provision chain saving firms cash, in addition to decreasing theft within the retailer and warehouses. RFID can save lives as nicely if there’s a recall and the recalled meals merchandise or product is tagged, then it will be simpler to gather all of the models.

II. Disadvantages

Radio Frequency Identification has been round for over fifty years, nevertheless it has been the fast growth and deployment of the expertise over the past 5 years that has raised folks’s consciousness and understanding of the expertise. Whereas there are lots of potential advantages for RFID, there are lots of pitfalls as nicely. Each degree that might profit from RFID may also reap damaging rewards from the expertise.

The U.S. army was one of many early adopters of the expertise utilizing it for over ten years in a restricted space of their operations. In 2003 they upgraded their utilization of the expertise by demanding that each one suppliers should affix a RFID tag to each pallet, carton and big-ticket merchandise being shipped to the army. The most important drawback the army faces is a matter of safety. With full product info on a tag it’s straightforward for an enemy of the US to tug info off a tag. This might end in lack of lifetime of U.S. troopers and even U.S. civilians if the flawed product ended up within the flawed arms. The tags may inform enemies of potential weaknesses and strengths of our army and provides them a view on easy methods to assault us at our weakest factors.

Giant firms like Wal-Mart and Goal who use RFID face many potential issues with the expertise. RFID has no confirmed infrastructure making it troublesome for suppliers to maintain up with these firm’s calls for to grow to be RFID-ready. If the suppliers can not successfully implement RFID into their enterprise, then retailers can not absolutely view their provide chain. If retailers can not get all their info in actual time throughout their complete provide chain, then the problems they’re making an attempt to unravel will stay issues. Out-of-stock gadgets, first-in-first-out merchandise and last-in-last out merchandise will nonetheless trigger issues for these massive retailers.

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