RFID - The Future

Published: 07th August 2007
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Radio Frequency Identification (RFID), technology of the future, has long established itself in our everyday lives. It is already deployed in various areas ranging from efficient inventory management and road-toll collection through to timing the performance of individual participants, in mass sporting events. With its enormous potential it is only right that RFID is now on everyone's lips.It builds a bridge between the physical world of a product and the virtual world of digital data. The technology thus meets the demands of companies cooperating with each other in a closely knit value chain and is also being deployed promisingly in all sectors of the economy. This way RFID will soon be considered an indispensable part of the value chain.

RFID - An Overview

RFID or Radio Frequency Identification is a system that uses radio waves to transmit an object's identity. There are several methods of identifying objects using RFID, but the most common is to store an ID or serial number that identifies a specific product along with other information, on a tag, which is a small microchip attached to an antenna. The antenna enables the chip to transmit whatever identification information it contains to a reader. The reader converts the radio waves from the RFID tag into digital information that software systems can use for processing.

Typically, when a reader reads a tag, it passes three things to a host computer system: the tag ID, the reader's own ID, and the time the tag was read. By knowing which readers are in which locations, companies can know where a product is, as well as what it is, and by tracking the tag data by time, they can know everywhere it's been.

Most industry analysts argue that RFID tagging is a transformational software development activity that will ultimately change the way businesses plan, price, distribute, and advertise products. But for the present, enterprise application vendors are extending their products to handle an expected boom in RFID data.

Until recently, a bar coded item used to sit on a retail shelf and did not generate any data until it was scanned by a bar code reader. And then the data was read only once. RFID, on the other hand, is a passive technology that does not require human interaction to scan. A reader can extract location and product description data from a tagged item every 250 milliseconds. Some readers are capable of reading data from 200 tags per second. The result is a data increase of more than one thousand times above traditional scanning methods.

With the rate at which the market competition is rising, inefficiencies in a company's value/supply chain and their continuous efforts to shore up internal security are driving the rising demand for RFID. The retail trade is playing a decisive part in the broad-based roll-out of RFID projects. RFID represents an all-encompassing structural business concept that far transcends simply superseding the bar code. Considering the current scenario, RFID systems are rapidly gaining significance. This holds especially in areas where they can be used to manage processes within the value chain. With this favorable situation, the market for RFID systems are likely to grow globally from EUR 1.5 bn to EUR 22 bn between 2004 and 2010 (average growth rate: +57% p.a.). During the same period, the RFID market in the EU-15 is expected to expand from EUR 0.4 bn to EUR 4 bn (+47% p.a.).

RFID is such an intriguing business concept, as it cuts inventory and supply chain costs through its implementation. The ultimate goal is for RFID to replace barcodes. RFID allows for individual product identification, not for product line identification like barcodes. If this takes place, individual products can be read letting stores locate those items if needed. Stores can also track when items leave the store allowing them to easily replace items when one is purchased.Furthermore, shipments can be easily and quickly sorted and accepted by the receivables department. With the reader, products can be received without even opening the pallet cutting logistical needs. Obviously RFID is a great tool for the supply chain and companies wishing to better track their products and inventory.

RFID will also serve as a supply chain management tool. It will replace manual processes for tracking supplies in warehouses and at loading docks, e.g. as a crate passes by, a networked RFID portal on a loading dock can transmit information about it to a backend system. This facilitates automated creation of shipping manifests and other data, whose generation currently involves some degree of manual labor. In principle, speedy data generation by RFID means that information about, say, a crate of oranges, can reach a destination even before the oranges are loaded onto the truck. In other words, RFID is a form of automation support for the supply chain management systems of today.

Metro and Wal-Mart were the pioneers when it comes to deploying RFID tags in the supply chain. Their suppliers are increasingly attaching RFID tags to cartons and pallets, mostly with conventional bar code labels on the front so that both procedures can be used complementarily. This level is expected to become ever more widespread in logistics in the coming years.

RFID current and future trends

RFID - smart radio tags - is the keystone of the emerging 'Internet of Things' that will connect objects and places. They will create many new opportunities for software software development and other businesses alike and also benefiting society at large.

Current trends indicate that the RFID market will grow fast in the coming years. With 1.02 billion tags sold in 2006, the value of the market, including hardware, systems and services, is expected to increase by a factor of six between 2007 and 2017.

Business applications using RFID such as transport and logistics, access control, real time location, supply chain management, manufacturing and processing, agriculture, medicine and pharmaceuticals, are expected to grow strongly. FID devices will also influence Government (e.g. eGovernment, national defense and security), and consumer sectors (e.g. personal safety, sports and leisure, smart homes and smart cities). RFID and bar codes will coexist for many years, although the former technology is likely to gradually replace the latter in some sectors.

Asset tracking applications will also see the most rapid growth in the next few years and will grow disproportionately as compared to the RFID market as a whole. Interoperability across various RFID systems, companies, and countries is critical for achieving wide-scale deployment of the technology.


RFID, in its broadest sense, does not only refer to next-generation barcodes, but to a compact class of wireless computing devices. There is a broad spectrum of radio-frequency technologies, including more highly functional (and expensive) technologies such as Bluetooth, mobile phones, and WiFi. The future holds for applications of RFID that go far beyond mere bar-coding. A ubiquitously RFID-tagged and networked world offers a transformational extension of the World Wide Web. It will become not just a World Wide Web of data, but also a World Wide Web of things.

The world will be very different once readers and RFID tags are everywhere. In an RFID-enhanced future, the benefits would accrue not just to businesses, but also to consumers.

Author is a Marketing Executive with an Offshore Software Development Service provider located in India. The company deals in offshore software development and offshore outsourcing. For more detailed information about the company and its services visit: http://www.otssolutions.com

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