The technology known as Radio Frequency Identification (RFID) has been maturing for several decades. I recently had the opportunity to work with a few UHF-type devices in the context of data integration. I’ve gained an overview of this technology – overall: set for continued growth and adoption, if at a slow pace.
Imagine you are at the grocery store. As you put items in your cart, pictures of them pop up on a screen. When it’s time to checkout, you tap your wallet on the screen to pay. Then you walk out of the store with your groceries. No bar code scanning required, no standing in line, and no shoplifting.
The basic technologies required exist today to turn this vision of RFID utopia into reality. So why haven’t stores adopted it? Mostly costs.
First there are the costs of UHF RFID tags themselves – anywhere from $0.10 to $0.50 depending on who you ask. The RFID industry feels those costs must get down to $0.05 or under to support ubiquitous bar code replacement. Then there’s the cost of the RFID reading devices – in the $2-3K range. And then you still need software to turn all of those numbers from the tags into a meaningful picture of inventory and ERP integration. A plug and play solution may or may not exist for some basic scenarios, but at the enterprise level, you will need to work with software developers to get something meaningful done. And you will want to retain an RFID integration consultant who has real world experience in setting up solutions.
On the other hand, several factors continue to push costs of UHF RFID down. The tags, which are computer chips with antennas, are becoming cheaper due to Moore’s Law and the continued increase in demand. The same market forces will impact the RFID reading devices. We’ve seen brand consolidation with companies like Motorola rebranding smaller companies’ devices. And some software companies have comprehensive offerings to manage RFID data in off-the-shelf solutions.
I can say that as a software developer, it would be helpful if some industry standards could be applied to RFID reader APIs. As it stands, even two readers of the same brand name will have completely different APIs. This means that the integration software needs to be rewritten every time you want to use a different set of readers. The industry could eliminate that hurdle by agreeing on some standard APIs. This would lower the cost of RFID integration, making adoption faster.
In the meantime, industry will continue to rely on robust RFID integration consultants to roll out solutions.
Here’s another compelling vision of RFID. Imagine you have a warehouse full of expensive equipment to manage. You used to employ many people to take a full inventory once a month. Now you take inventory once a minute using the RFID system installed in your shelving. The computer screen in your office shows you where each stock item is and flags any discrepancies. As stock comes in, it is tagged and registered. On the outbound door, RFID readers note the inventory being shipped and compare it to pick lists. The system knows what is approved to leave the warehouse, and updates your ERP system.
As larger quantities of valuable items need to be managed, the costs of labor to control inventory go up, and the more likely it is that RFID can bring those costs down today. The savings in bean counter wages and product attrition can more than offset the costs of an RFID system on large enough scales. This is why Wal-Mart has adopted RFID, and it’s why smaller distribution companies are too.
RFID has come a long way from its beginnings, but it doesn’t yet have a lot of public visibility, and industry adoption has been slow. Market forces will continue to bring costs down, and as that happens more companies will adopt RFID to compete. Therefore, like most technologies, RFID is an area that will continue to grow. The industry could quicken that growth by self-adopting more standards.