Benefits And Drawbacks Of RFID Technology

I. RFID Benefits

Radio Frequency Identification provides a worthwhile service that is definitely capable of revolutionizing the way firms track items. There are several benefactors of this technology: the military, retailers, suppliers, consulting firms, producers in the technology, and shoppers. RFID provides providers having a much better alternative to bar-coding simply because no line-of-sight is needed to study a pallet, a carton, or even a solution with a RFID tag. RFID tags also include data on the product that may be effortlessly readable and accessible for the reader. RFID will also begin to automate company's provide chain, reducing labor charges, human error and time spent checking in solutions.

In 2005, companies and suppliers requesting new bids in the military should be RFID compliant on 4 various levels: packaged operational rations, clothing, tools, and weapon method repair parts and elements. The military requires that all cartons and pallets are shipped with a Military Shipping Label which displays shipping data. The Division of Defense has developed the RFID Military Compliance Solution as a method to help suppliers and makers meet the military's new requirements for RFID. The plan is run by Avery Dennison Retail Data Services, and they had been commissioned by the RFID Military Compliance Option. Avery Dennison Retail Facts Services sells the RFID tags to firms which should be affixed close towards the Military Shipping Labels to comply with Department of Defense regulations.

The U.S. military is saving an huge quantity of cash by using active and passive RFID systems. By using RFID for communication and transportation systems in Iraq and Afghanistan, the military is able to diagnose and fix troubles a great deal quicker than before. The implementation of RFID in just this region will save the military close to half a million dollars this year. The U.S. government has contracted IBM to accomplish analysis on the current RFID becoming employed presently inside the military and the prospective future applications for RFID in the military. The military has been productive in making improved visibility all through their supply chain rising their productivity and stability.

Retailers and also other firms which have a demanding supply chain can obtain an benefit on the field by utilizing RFID inside the supply chain. By demanding that all levels of their provide chain be RFID capable is a sizable investment. The productivity boost that follows the initial investment and implementation for corporations will pay for their investment. Wal-Mart was the first retailer to use RFID in their distribution centers and warehouses, prompting lots of corporations to stick to in their footsteps when Wal-Mart's results was realized.

RFID is very successful with retail organizations because it improves productivity, saves on human labor charges, and provides corporations real-time visibility with all their solutions. RFID tags use an Electronic Product Code (EPC) which can be an upgrade in addition to a replacement for the Universal Solution Code (UPC) system. "EPC includes a 96-bit code that has digits to determine the manufacturer, product category and the individual item. Producers get registration numbers & assign them to products. Each number is unique to a given item."

The cost of a tag is anywhere between twenty-five to fifty cents. Within the next five to ten years it could be reduced to five cents per tag. At some point inside the near future tags could fall to one cent tempting firms to use RFID tags on every solution in a store. Wal-Mart says that since their stores now have RFID, it makes it easier to keep store shelves stocked allowing employees to interact with customers.

Target was able to save on their investment for implementing RFID, following in Wal-Mart's footsteps as Wal-Mart had already paved the way and suffered the pitfalls of implementing a new technology. In addition to the lower implementation charges, quite a few of Target's suppliers had already begun preparing for the switch over to RFID assuming Target would adhere to Wal-Mart. Target as a large retailer knows how important it is to be capable to provide real-time data on pallets, cartons and shipments up and down-stream through their provide chain.

A break-through in RFID technologies was made by Intermec, Inc. in May of 2006, with new rugged and reusable RFID tags. These tags can be written thousands of times; it can handle hazardous chemical exposure, and withstands temperatures from -50 degrees Fahrenheit to 250 degrees Fahrenheit. In October of 2006, Intermec released a new version in the rugged, reusable RFID tag, including wide-band antenna that can be applied on any surface in any part of your world.

RFID makes the business world seem like a smaller place, even companies like Wal-Mart who are pretty big and have a large integrated provide chain. RFID enables businesses to be more efficient with their time and space. Corporations that combine some newer provide chain technologies with RFID could see great results. Combining auto-picking with RFID would reduce man-power required, time needed to move pallets and cartons around a warehouse, and time necessary to send pallets to their proper destination. The goal of a company's provide chain should be to reduce time required to be productive, by automating as significantly in the supply chain as possible. It reduces human error, and machines are capable of running twenty-four hours a day and cost less than human labor. The
application of RFID for a large company like Wal-Mart or Target, as well as smaller retail stores can ensure a better shopping experience with more in-stock items plus a more knowledgeable store.

The RFID market is booming and a lot of technological organizations have gotten inside the game producing RFID components and systems. In quite a few cases getting a producer of RFID components and systems also allows you to become a consulting firm for the technologies. Hewlett Packard (HP) is one of the largest firms developing RFID systems. HP's goal is to make it as easy and affordable as possible for a company adopting RFID technology. HP has experience within the RFID field, as they had been one with the early adopters with the technology and have been very effective integrating it into their business. HP began with two larger clients, Hasbro (produces children's toys) and Conros (a large Wal-Mart supplier). Hewlett Packard has designed two RFID Centers for Excellence, one in California and one in Taiwan, to demonstrate new prospective uses for the technologies, as well as how it can be implemented into a business. More centers are slated to be opened all through the world, including Great Britain, Singapore, and Tokyo RFID Centers for Excellence.

The RFID market sits at roughly one billion dollars in 2006 and has varying estimates as for the growth potential in the market. Estimates of RFID market size in 2008 vary anywhere from $1.3 billion by IDC, to $4.2 Billion by the Yankee Group. As shown in Figure 1 inside the appendix, most from the industry is made up of sales of hardware, tags, readers as well as other physical goods of RFID. Roughly 20-25% in the market is made up of consulting work for the technologies as well as the last 5% is made up of software for RFID. The two biggest areas firms are concentrating on are the production and consulting sides of RFID.

The biggest challenges for producers and consultants alike are the reliability and durability of RFID systems and goods. It is hard to simulate the wear and tear a product will experience over time. HP has made testing RFID products one of their benchmarks, providing intense field-testing of RFID to ensure its durability and quality. A competitor of HP is IBM, who according to AMR Investigation is the market leader in RFID. IBM has over eleven years experience working with RFID, and like HP, they were an early adopter of RFID technology. The advantage that IBM has over HP is there world-renowned consulting services, coupled with their immense networking capabilities. IBM's services promise more results than HP's RFID systems mainly because of IBM's consulting expertise. IBM works with companies to locate the best avenues to implement RFID, attempting to maximize Return on Investment (ROI) by reducing one person per shift from manually tracking merchandise allowing them to focus on value-added manufacturing activities. IBM also focuses on other ways to improve ROI including, offering a one-time savings of $230,000 in operating charges, continuous fabrication line operations, greater customer service providing real-time information on products, and less errors and delays cause by human error.

RFID began to take off as soon as businesses like Wal-Mart and Target, and the U.S. military demanded that their top 100 suppliers have to adopt RFID technology. Many suppliers have been not ready for a move like this, a move that would completely retrofit their present operations at a high cost towards the supplier. There were some suppliers that welcomed the change in technologies and already began implementing RFID in anticipation of Wal-Mart as well as the U.S. military's demand that their suppliers adopt the new technologies. Wal-Mart demanded that their top one hundred suppliers would need to be RFID ready by January 2005, and to Wal-Mart's surprise, twenty three extra suppliers have volunteered to make the change to RFID. There can be a new generation of tags that hit the market in 2005, called the Gen 2 Standard, which make RFID more appealing to suppliers who have no RFID systems in place. The Gen 2 RFID improves around the 1st generation of RFID by escalating read times, growing study ranges, and study tags more accurately.

Suppliers and producers will notice the benefits of implementing RFID into their organizations streamlining components of their operations. Return on Investment is the most important factor for a business implementing RFID. Suppliers will see their ROI raise as human labor hours are decreased, human errors are decreased and interoperability is increased. RFID increases the visibility with the suppliers so they can do their job in actual time, assuring that the correct package is sent towards the correct location. It also saves income inside the long-term for companies and suppliers since RFID will save time spent inventorying and tracking goods. An advantage for suppliers and producers applying RFID is customization of products in a shorter period of time. Smaller suppliers and makers will possess a harder time implementing RFID, as charges range from $100,000 to $5 million to implement the technology, but as costs go down more organizations will adopt RFID.

RFID does have another possible benefit for suppliers that could give them invaluable info. For Wal-Mart suppliers, readers are set up at the back door so suppliers know when their shipments have arrived escalating visibility for both entities. A second reader is placed at the entrance towards the sales floor so the supplier can see what is on-hand on the sales floor and within the stock room. This will allow the supplier to see which items sell greater than others so that they can be replaced, and it also allows the supplier to develop more accurate sales forecasts. A secondary benefit of RFID is that the promotions that merchandisers spend a lot of money to set up are often left within the stock room for too long or are improperly placed. Now merchandisers and vendors can make sure their promotions are being handled correctly. Suppliers and producers have the possible to save money on production fees, while making funds on customized solutions.

Shoppers should be the ultimate winner with RFID becoming implemented throughout a company's provide chain. Inside the long-run, stores will save dollars throughout their supply chain, thus bringing down expenses to shoppers. Shoppers should also expect to find more helpful and more informative customers service with providers which have RFID. These organizations now have real-time data to share with the customer. A consumer complaint about retail stores has always been that you can find too numerous out-of-stock items; however, with RFID in place quite a few of these stores should see a significant decrease in out-of-stock items. Having RFID tags on certain items can also make people's lives a lot easier, such as a microwave that's a reader and recognizes the tag in the food you put in and will automatically cook it according for the directions on the tag. It also helps environmentally simply because organizations will use resources more efficiently, benefiting everyone. After RFID tags are able to be used on food solutions it will make a recall on a certain item a great deal easier and it could potentially save lives.

Customers use RFID everyday and several do not realize the benefits they are receiving from the technology. Contactless payment can be a developing technologies, the card getting utilised contains a tag as well as the payment area contains a reader. Mobil and Exxon use a "Speedpass" as their contactless form of payment allowing customers to wave the card in front of a reader to pay for gas or anything inside the convenient store. Visa and Mastercard are the two biggest developers of this technologies, claiming that it will benefit everyone from buyers to businesses. It allows people to have preset income on a card (either debit or credit) which decreases waiting time at check-out stands and increases loyalty to firms that offer this feature. Another use of smart cards is keyless entries, which is becoming a popular trend in America, using just a card and swipe it over the sensor to allow entry. RFID can be a beneficial technology for consumers saving time and offering conveniences traditional bar codes, credit cards and keys cannot offer.

RFID contains lots of advantages over traditional ways of coding pallets, boxes and merchandise. It allows for non-line of sight reading from the tag which stores all the item info. RFID reduces human labor expenses and human errors through the provide chain saving providers cash, as well as decreasing theft within the store and warehouses. RFID can save lives as well if there is often a recall and the recalled food item or item is tagged, then it would be easier to collect all the units.

II. Disadvantages

Radio Frequency Identification has been around for over fifty years, but it has been the rapid development and deployment on the technologies over the last five years which has raised people's awareness and understanding with the technology. While there are lots of potential benefits for RFID, there are plenty of pitfalls as well. Every level that could benefit from RFID can also reap negative rewards from the technology.

The U.S. military was one of the early adopters from the technologies working with it for over ten years in a limited region of their operations. In 2003 they upgraded their usage of the technology by demanding that all suppliers ought to affix a RFID tag to every pallet, carton and big-ticket item getting shipped towards the military. The biggest problem the military faces is an issue of security. With complete product info on a tag it is easy for an enemy of your United States to pull data off a tag. This could result in loss of life of U.S. soldiers or even U.S. civilians if the wrong product ended up inside the wrong hands. The tags could inform enemies of possible weaknesses and strengths of our military and give them a view on how to attack us at our weakest points.

Large providers like Wal-Mart and Target who use RFID face lots of possible issues with the technologies. RFID has no proven infrastructure making it difficult for suppliers to keep up with these company's demands to become RFID-ready. If the suppliers cannot effectively implement RFID into their business, then retailers cannot fully view their supply chain. If retailers cannot get all their information in genuine time across their entire supply chain, then the issues they are trying to solve will remain complications. Out-of-stock items, first-in-first-out merchandise and last-in-last out solutions will still cause challenges for these large retailers.

EPCGlobal is really a start to an international requirements body for RFID. It has yet to be approved by the International Organization for Standardization (ISO) and there is still not a global frequency standard. While 900 MHz appears to be the best frequency due to its long read-range capability, 13.56 MHz is still applied delaying the standardization of global frequency for RFID. High fees of RFID implementation is the reason lots of mid-size and smaller retailers have not adopted the technologies. The short-term outlook for corporations who use RFID isn't impressive, although long-term benefits will be realized.

Privacy issues are the number one pitfall for RFID and retailers. As long as the tags are only affixed to pallets and cartons then the retailers would not have any specific details on the consumer. However, when RFID tag prices fall, providers like Wal-Mart and Target plan on employing RFID tags on individual merchandise which they can trace consumer's buying habits as well as other info consumer's wish to keep private. It was privacy issues that force Benetton to cease their pilot RFID program. They wanted to embed a tag in articles of clothes to stop theft, determine consumer buying habits and keep their inventory at an acceptable level. Privacy advocate groups such as the Consumers Against Supermarket Privacy Invasion (CASPIAN) fight companies utilizing RFID to track consumer behavior. A study showed that up to 78% of America was against RFID based solely on privacy issues. It will be difficult for corporations inside the future to tag individual items without a public outcry without some form of protection for the public's privacy rights.

Buyers have the largest disadvantage of any other entities involved with RFID technologies. You can find five privacy issues that shoppers ought to try to protect themselves from: Hidden placement of tags, unique identifiers for objects worldwide, massive data aggregation, hidden readers, and person tracking and profiling. Hidden placement of tags by firms is an easy technique to get data from buyers. The consumer will feel safe buying a item with no knowledge of an RFID tag embedded in their clothing. These tags theoretically could track a person around the world if there were readers in specific locations all through the world. Personal data may also be embedded in these tags giving information as detailed as your medical history. Prada and Swatch use embedded tags in their clothing, and Benetton did as well, but a boycott of Benetton was prosperous and they removed their tags. There is no law against companies embedding tags, and only California and Utah have made official requests to change the situation.

Providers who use RFID can compile massive amounts of data on buyers, including item likes or dislikes, buying power or even prescription history. RFID makes it easy to amass this information and to designate correlations. If a corporation owns quite a few stores they can combine information between corporations and create new information on buying habits.

Hidden readers violate people's privacy considerably the same way hidden tags do. Gillette and Accenture are introducing "silent commerce" which embeds tags on people's products and readers in strategic locations without the consumer's knowledge. These organizations have experimented with diverse reader locations ranging from secret carpet locations to shelve locations and even hidden in floor tiles. Readers could even be installed in doorways on street lights, anywhere that people have to pass through, and instantly all information and facts embedded inside the tag is broadcast towards the reader. If this were to happen privacy would be impossible because you would never know if the goods you have include tags, and you never know when you are within proximity to a reader.

The disadvantages of RFID hinge mainly on privacy concerns, technological imperfections, cost in the technologies and no proven method to set up an RFID system for a company. The government and corporations are the two groups that offer the most concern for privacy issues. Hidden tags and readers threaten to take away human mystery, offering a world where people see, feel and hear only what the government and large corporation want people to.

III. Future of RFID

The future of RFID is uncertain, however, the technology is here to stay. Providers have numerous obstacles to overcome to make the technology a feasible option to be implemented. Privacy issues and will persist, although cost for RFID systems will decrease. In order for RFID to be productive, firms must work with privacy advocate groups to develop a fair technique to implement RFID without alienating their customers.

Technology will continue to develop for RFID and many new applications will be realized. Automation will be a side-effect of RFID development, inside the provide chain and in everyday activities. Contactless payment methods are already available, as well as automatic keycards to open doors. RFID tags installed in cars with readers around the roads and freeways will alert the authority if you are breaking the law. Supermarkets will eventually be able to realize their shopping cart checkout technique as soon as prices fall to a more affordable price. Fresh foods, metals and liquids will all be RFID compatible inside the near future. If privacy issues are not watched closely, people will become tagged and there will always be someone watching and analyzing every person's decisions.




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