Radio frequency identification (RFID) is a generic term that is used to describe a system that transmits the identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves. It's grouped under the broad category of automatic identification technologies.
Auto-ID technologies include bar codes, optical character readers and some biometric technologies, such as retinal scans. The auto-ID technologies have been used to reduce the amount of time and labor needed to input data manually and to improve data accuracy.
Some auto-ID technologies, such as bar code systems, often require a person to manually scan a label or tag to capture the data. RFID is designed to enable readers to capture data on tags and transmit it to a computer system—without needing a person to be involved.
A typical RFID tag consists of a microchip attached to a radio antenna mounted on a substrate. (For more detail and for information about tags that don’t use silicon chips, read “The Basics of RFID Technology.”) The chip can store as much as 2 kilobytes of data. For example, information about a product or shipment—date of manufacture, destination and sell-by date—can be written to a tag.
To retrieve the data stored on an RFID tag, you need a reader. A typical reader is a device that has one or more antennas that emit radio waves and receive signals back from the tag. The reader then passes the information in digital form to a computer system.
RFID technology has been used by thousands of companies for a decade or more. (RFID Business Applications spells out some of the ways the technology has been and will be used.) The technology is not new (see The History of RFID), so why is it taking off now?
Until recently, the cost of RFID has limited its use. For many applications, such as tracking parts for just-in-time manufacturing, companies could justify the cost of tags—a dollar or more per tag—by the savings an RFID system could generate. And when RFID was used to track assets or reusable containers within a company’s own four walls, the tags could be reused.
But for tracking goods in open supply chains, where RFID tags are put on cases and pallets of products by one company and read by another, cost has been a major obstacle to adoption. Tags must, in effect, be disposable because the company putting them on cannot recycle them. They get thrown out with the box. (Tags built into pallets could be reused, and some companies are looking to develop ways to recycle tags on corrugated cases.)