‘Next generation bar code’ revolutionizing supply chains

Radio frequency identification, or RFID, is a technology often described as the next generation of bar coding, one that proponents say will revolutionize supply chain management.

Placed on pallets, boxes or individual items, RFID tags can track and identify goods through warehouses, assembly lines, and even retail stores, much more quickly and accurately than bar codes ever could.

But others are far more concerned about the technology as it moves out of the warehouse and onto store shelves, claiming consumer privacy is being compromised.

Lauded or lamented, RFID is a technology whose time has apparently come and will likely have far-reaching implications for companies – large and small – and those that do business with them.

RFID technology was developed during World War II, but its use has exploded into some 400 million transponders worldwide, used on everything from livestock to car anti-theft systems to grocery store items, according to Bill Allen, marketing communications manager for TI-RFID, a division of RFID technology pioneer Texas Instruments.

“This is not truly an emerging technology,” said Allen, “but it is emerging in supply chain management.”

According to Dr. J. Stephanie Collins, associate professor of information technology at Southern New Hampshire University, RFID systems involve three pieces of hardware — an antenna or coil, a transceiver device and the RFID transponder tag itself. The transceiver sends and receives signals to and from the coil on the RFID tag. Tags hold digital information on a small microchip. They can either be passive (meaning that where information is available only when scanned by the transceiver) or active (the tag has a small battery that sends out the information continuously).

Transceivers can process signals from a few inches to as many as 100 feet away, even more. The simplest tags, such as those used in pet identification, are about the size of a grain of rice. Larger, more sophisticated tags are the size of bricks.

RFID’s advantages

RFID tags have several advantages over their closest cousins, bar code labels and smart cards, said Peter Riendeau, general manager of the Concord office Melexis, a worldwide manufacturer of integrated circuits and RFID components for the auto industry.

“RFID tags are not susceptible to abrasion or wetness like ink-printed bar code labels. Their big advantage, however, is not having to have line of sight to be read,” said Riendeau.

For instance, with bar codes, a scanner must be held against the label, but an RFID tag can be read from several feet or even a few hundred meters away, depending on the kind of tag or unit. The reading process also is much quicker and more accurate than bar codes, he said.

Another advantage is the amount and type of information RFID tags can hold. Passive tags typically hold expiration dates, temperature and other data about a product’s condition, but, said Collins, “active RFID tags can hold up to 1 megabyte of data.”

Because of that greater storage capacity, inventory control can be much tighter, possibly eliminating out-of-stock occurrences and speeding up manufacturing on an assembly line with encoded instructions.

Consumer concerns

The price of RFID tags has been one of the technology’s limiting factors, with a cost from 20 cents to a dollar or more per tag – sometimes much more – depending on the sophistication.

Bar codes cost less than a penny per label. “It will be pretty easy to get to the 8- to 10-cent range,” said Riendeau, “but to be at the item level, you need to be able to make tags around a penny a piece or less. And many people are trying to figure out just how to do that.”

The cost of the tag is not the only expense involved. Readers and software to interpret the RFID signals, hefty databases to manage the information and enormous storage systems with multi-terabyte capacities are also required.

As the use of RFID tags increases, however, costs will eventually drop further. Collins sees advantages in marketing in the not-too-distant future.

With an RFID tag placed on the label of a specific store’s brand of clothing, the items could be scanned as a customer enters the store and other items that might be in the customer’s interest would be presented in some fashion.

Some civil liberties groups are deeply concerned about such marketing techniques, warning of Orwellian scenarios. Collins herself postulated a chilling one: “What if I had a heart attack? My insurance company could pull up my grocery store records and look at all the ice cream, steak and bacon I’ve bought over the years and decide not to pay my hospital bills.”

She admits this situation is far-flung, but it might one day be technically possible.

This is exactly what worries Katherine Albrecht. The Nashua resident was so concerned about the unauthorized use of consumer data, she created “Consumers Against Supermarket Privacy Invasion And Numbering,” or CASPIAN, an organization that has thousands of members in all 50 states and in 20 countries around the world.

CASPIAN has moved to the forefront in the battle against customer loyalty cards and RFID technology in the marketplace. The organization alleges that item-level RFID tagging erodes personal privacy rights.

“We are not against business. I don’t think anyone is against using this technology at the supply chain level. We are against items with unique identification numbers being linked to individuals, and having that data captured remotely without the consumer knowing about it,” said Albrecht, who is completing a Harvard doctorate on marketing and consumerism.

Apparently companies are starting to listen to those concerns. CASPIAN has successfully stopped RFID shelf trials around the world, including clothing tests by Italian fashion house Benetton, and Gillette’s Mach3 razor tests in Brockton, Mass., Wal-Mart stores.

She said she was not aware of any item-level RFID testing in New Hampshire.

Gus Whitcomb, spokesperson for Wal-Mart said in an email that the retailer is focusing on case and pallet tagging. “That said, there may be a few items tagged that are both case and customer selling units. An example of this would be electronic items like television sets. In such instances, the tag will be marked with the official EPCglobal symbol so that the customer is aware and can remove the tag post-purchase if they choose to.”

EPCglobal is a non-profit organization leading the development of industry-driven standards for electronic product codes to support the use of radio frequency identification.

Allen said that consumer choice is the most important factor driving the technology beyond the warehouse. “Consumers vote. So we in the industry must continue to educate what is possible and what is highly impractical.”