Magazine Article | October 27, 2008

What Is The Future Of RFID?

Source: Field Technologies Magazine

With the advancement of RFID (radio frequency identification) technology, it is important to consider the different applications and choose a solution that best fist your company’s needs. 

Integrated Solutions, November 2008

For more than 30 years, RFID has been an effective method of tracking assets, products, and components through the course of any given process. RFID tags work by emitting a low-powered radio frequency transmission when passed within range of a scanner. The electronic chips inside RFID tags are being produced in increasingly smaller dimensions — and for rapidly falling costs. Although the traditional bar code will be present and valuable for many years ahead, the benefits offered by RFID means it is fast becoming a real alternative for companies that need to know where their assets are within a production or distribution system. automatically tracking individual items without requiring a line of sight and from a relatively long range are the clear and measurable benefits of RFID that can be implemented across a multitude of industries and processes. RFID technology has been successfully implemented in industries such as retail, manufacturing, public transport, and even personal banking.

The Return Of The Closed Loop
In recent years, open-loop RFID systems have received a great deal of press attention and financial investment. But, as the dust has settled, closed-loop applications are garnering more interest and widespread deployment. An early catalyst for passive UHF (ultra high frequency) RFID was the open-loop RFID system. In an open-loop system, an RFID-tagged item passes from manufacturer to distributor to retailer in an integrated network with a by-product of information sharing between cooperating companies. Some early mandates were generated by big names such as the U.S. Department of Defense and retailer Wal-Mart to use open-loop systems throughout their supply chains. While these open-loop networks will eventually come to pass, the attitudes of the RFID industry and its potential customers are currently undergoing a paradigm shift in the direction of closed-loop systems.

Of the large number of RFID deployments of leading AIDC (automatic identification and data capture) companies today, most are closed-loop. The closed-loop method allows the client to gain the benefit through streamlining its own supply chain, asset management, and manufacturing processes. Closed-loop RFID directly and exclusively serves the interests of the individual corporation and leaves the deployment and MIS (management information systems) integration issues within the corporation's control. While any RFID deployment takes time and money, a case can be made for the 'simplicity' of closed-loop deployments due to their reduced scale and increased control. The administrative and logistical difficulties of information sharing (incompatibility of data, processing power, and man hours) are minimized in closed-loop systems.

The primary areas of growth for closed-loop applications, and RFID in general, will be in transport and logistics, retail, and industrial manufacturing. As previously mentioned, the steadily decreasing deployment costs are allowing more organizations to approach RFID as a viable and cost effective tracking method.

The Early Bird Catches the Worm
RFID does have its critics. Some commentators maintain that RFID fails to provide a clear cost-benefit margin, especially as many see existing non-RFID methods as being 'sufficient'. This 'if it ain't broke, don't fix it' attitude is short sighted, and is often based on experiences of out-dated RFID technologies, in particular the less successful short ranged devices of the early 1990s.  However, the new impetus for closed-loop could provide a sea-change in opinions, especially since most close to the RFID industry realize that there are few companies that would not significantly benefit from an RFID implementation, both financially and operationally.

In general terms, the full potential for closed-loop is still to be realized. We have yet to see the true impact of closed-loop RFID defining market segments successfully, but clear signs are being shown in automotive manufacturing, mobile maintenance, repair and overhaul, speciality hauling, logistics and postal distribution segments, and warehouse operations. It is surely fair to say that closed-loop RFID remains a relatively untapped resource. Only those that act fast and stay informed will be striking 'RFID oil'!