Radio Frequency Identification in supply chain Technology Essay


The intent of this research undertaking is to research a subject of personal involvement in the field of information systems.

The subject selected is Radio Frequency Identification ( RFID ) engineering and its applications in supply concatenation direction. RFID has been a subject of involvement across many industries for rather some clip. It had besides triggered many controversial issues sing information security every bit good as privateness issues.

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The focal point of the study will be to supply a background apprehension of the engineering and how it works, the benefits that it offers, and the current issues and debates over this engineering. This study will include a specific expression at RFID’s application in the field of supply concatenation direction with an illustration in the pharmaceutical industry. This study will reason with a brief treatment on the possible hereafter applications of RFID.

What is RFID?

Radio Frequency Identification is a term used to depict a system that uses wireless moving ridges to convey information wirelessly. There are two chief constituents to a basic RFID system ; an inquisitor ( reader ) and a transponder ( ticket ) . The simplest signifier of a transponder contains a micro chip and an aerial, the inquisitor uses wireless moving ridges to recover the information from the transponder’s micro chip. There are typically two types of transponders ; active and inactive.

Depending on the type of transponder, the interaction between the inquisitor and transponder will differ.Active transponders are equipped with a beginning of power, such as a battery, to provide to the circuitry and aerial. Active transponders can actively convey its informations, greatly increase its scope every bit good execute other more complicated maps. Extra detectors can be included in the circuitry to supervise and log parametric quantities such as temperature. Disadvantages of active transponders include increased costs, larger size, and the demand to keep a power beginning ( battery ) .

Due to these restrictions, active transponders are typically fitted to big transit containers or other lading.Alternatively, inactive transponders are the simplest signifier of RFID tickets, comprised merely of a bit and aerial. They contain no power beginning and have no active transmittal device. The ticket uses the wireless moving ridges transmitted from the planimeter to stimulate the circuitry to read and convey the information. Due to its simplistic design, the size of a RFID ticket has gone down well due to improved fabrication techniques. The cost has besides decreased to every bit low as 20 cents due to the big production graduated table.

As a consequence, transponders can be embedded into little mundane points such as cardinal watch pockets, recognition cards, and even boxing stuff. The chief disadvantage to passive tickets is that they can merely be read from a short distance ( less than 10 metres ) . Another disadvantage is that the information is available until the ticket is physically disposed of, a possible security hazard.Because of these differences, both Active and Passive RFID transponders have its utilizations in supply concatenation direction. Passive tickets are used most frequently with palettes and repositing, whereas active tickets are used for more advanced trailing such as in supervising lading during theodolite. In the undermentioned subdivisions, the application of RFID in the supply concatenation will be discussed every bit good as a few industry specific illustrations.

IS Implications of RFID

After more than 40 old ages of research and development, RFID engineering started to commercialize in the late 80s and early 90s. The first commercialised utilizations of RFID engineering was the widespread acceptance of electronic toll aggregations across the United States.

The engineering continually improved and its applications spread across all industries including ; farm animal designation, entree control, athleticss timing, and automotive immobilisation.RFID engineering itself is simply a manner of hive awaying informations and recovering it. The power of the RFID resides in the information system ( s ) that encompasses it. As mentioned above, RFID engineering itself has been around for rather some clip, but its applications were limited due to the deficiency of IS advanced plenty to back up it.

The impact of RFID systems as a whole can be analyzed utilizing the four constituents of the IS System ( refer to Exhibit 1 ) . RFID belongs in the engineering constituent of the IS system but it besides relies on other engineering constituents to be effectual, such as centralized information storage and computer science. Promotions in informations storage and computing machine systems allowed for broader and more powerful applications of RFID, such as in supply concatenation direction.Early systems of RFID were, non surprisingly, first-order alterations in the IS.

Using the illustration of farm animal designation, the RFID engineering was implemented to simply alter the tagging of farm animal and the storage of its information from a centralised system to single RFID ticket. Livestock were traditionally tagged utilizing designation Numberss, and information was stored centrally either on paper or on a computing machine system. RFID allows information to be stored on the animate being straight, leting for quicker designation and lower opportunities of confusion. This application of engineering changed the manner the procedure of information was handled, but non the overall construction of the IS system.

An illustration of a RFID 2nd order alteration is the PayPass™ system. The system allows users to pay for their purchases utilizing a RFID base on balls linked to a pre-authorized history. This application non merely changed the manner the procedure of managing purchase minutess, but besides how the people make purchases. The demand of a teller can possibility be eliminated, hence altering the people constituent of the IS system.With the development of sophisticated computing machine systems and informations use techniques, RFID applications became more advanced and tightly integrated into the design of IS. The field of supply concatenation direction is a perfect illustration of a third-order alteration. The usage of RFID in the supply concatenation allows for a alteration in the construction, people, and procedure of the IS.

Sellers, providers, and clients can derive entree to information that they might hold non been able to prior to RFID execution. The relationship between these participants in the concatenation alterations because of the increased flow of information.

Application of RFID in the Supply Chain

One of the biggest impacts that RFID has made for concerns is the manner it has changed supply concatenation direction. The betterments that RFID offers to provide ironss can be considered as extremist invention, because it basically changes the manner that a supply concatenation operates as noted in the subdivision above.

In a wide sense, RFID engineering allows for greater visibleness at all phases of the supply concatenation. The full concatenation, from natural stuffs, fabrication, repositing, logistics, gross revenues, to disposal can all be expeditiously traced and monitored. Increased visibleness can take to a faster and more efficient logistics every bit good as cut downing loss that add to unneeded costs.

By accurately tracking merchandises throughout their life rhythm, the full supply concatenation can profit from improved velocity and truth of telling, automated invoicing and payment, fewer supply deficits with lower stock list degrees, and decreased merchandise loss. More specifically, RFID engineering can be implemented to better concern maps at each measure of the supply concatenation listed below.

Asset Management

By put ining RFID tickets onto equipment such as forklifts, palettes, tools, and vehicles, the installation can supervise the motion of such equipment with fixed place readers. Tracking tools and machinery allows the installation to maintain path of equipment around the installation. Tracking equipment such as palettes, carryalls, and other containers allows the installation to track the entrance and surpassing cargos accurately. With palette tagging, stock list locations can be identified accurately, minimising hunts of misplaced palettes.

Production Tracking

The usage of RFID can help the trailing of production batches. RFID ticket incorporated into sub assemblies can let Work-In-Process ( WIP ) to be tracked. Materials and merchandise traveling through the production procedure can be proctors and automatically directed to the following stage via RFID designation. This is particularly utile for extremely customized merchandises where the sorting of stock list and WIP is important.

Inventory Control

The usage of RFID in stock list control provides the biggest advantage to provide concatenation direction. The accurate monitoring of stock list degrees at all phases of the supply concatenation allows for better visibleness and flexibleness. RFID tickets can be used to curtail motions of stock list around the module without mandate. The added security control over the stock list reduces possible losingss and increases the truth of stock list direction.

Transporting & A ; Receiving

As mentioned antecedently, the trailing of merchandise cargos can be simplified utilizing RFID tickets. All shipment information can be included on the palettes or containers. RFID tickets can be standardized so that the same RFID ticket can be used so all logistics installations can do usage of the same cargo information to cut down mistakes.

Automated transporting installations can besides do usage of RFID tickets handle cargos automatically.

Traceability and Regulations

The handling of risky stuffs, pharmaceuticals, and other sensitive stuffs can be improved by utilizing RFID ticket. At each measure of the procedure, the tickets can be updated in real-time during managing.

Information such as clip entered installation and clip exited installation can be recorded in order to better traceability and comply with industry ordinances.There are legion other illustrations where RFID engineering are used to better supply concatenation direction, but the implicit in advantage that RFID outputs over traditional supply concatenation direction is the increased flow of information. Information flow is a important facet of supply concatenation direction.

The key to pull offing an efficient supply concatenation is communicating between providers, sellers and clients. With the add-on of RFID engineering, supply ironss have another channel in which information can be passed and traced.

Concerns with RFID in Supply Chain Management


As with all emergent engineerings, the challenge of acceptance ever includes the costs of execution. In 2004, Wal-Mart announced that it would necessitate all its top 100 providers to be to the full RFID ready within a few old ages. The estimated cost for larger providers was estimated to be at $ 9 million for the first twelvemonth for this authorization. This cost includes hardware, such as readers and tickets, every bit good as package and IT execution costs. Further research suggests that cost of RFID execution in a consumer goods maker would be around $ 13 million to $ 23 million.

Refer Exhibit 2 for an estimated cost dislocation. The big upfront capital costs associated with RFID acceptance is a major barrier for many smaller-sized houses.


For point trailing intents, high frequence or ultra-high frequence tickets can be used. High and ultra-high frequence ( UHF ) systems typically run at 13.56 MHz, and 300+ MHz severally. With the addition of frequence, scope is increased every bit good as faster read times.

UHF offers the best scope and read velocities. UHF RFID is extensively used in supply concatenation and logistics applications due to its acceptance by cardinal industries as the criterion. But there are jobs with operating in the UHF set. As you increase the frequence of wireless moving ridges they start to act more like visible radiation. They have trouble perforating stuffs every bit good and be given to reflect off metallic objects.

Waves in the UHF set are besides absorbed by H2O. Exhibit 3 summarized the features of each type of frequence band through different stuffs. The challenge confronting companies utilizing UHF systems is being able to read RFID tickets on instances in the centre of a palette, or on stuffs made of metal or H2O.


An initial challenge that hindered mass RFID acceptance, particularly for supply concatenation direction, is the issue of standardisation.

In the early phases of RFID engineering, there were no regulating organic structure to put the criterions of RFID tickets and information. This evidently posed immense challenges for houses covering with multiple sellers and providers holding to maintain path of different criterions. Since so, there have been two primary groups puting criterions in supply concatenation RFID. The first is EPCglobal, the other is the International Standards Organization ( ISO ) . EPCglobal created the Electronic Product Code ( EPC ) . The EPC is designed to be a replacement to the Uniform Product Code ( UPC ) .

The ISO 18000 criterion is coaction between RFID makers, and is chiefly concerned with the communicating protocol between readers and label more so than the information content. There is still presently a split between the users of ISO 18000and EPC criterion on RFID engineering and informations, although the two criterions have started to meet.

Privacy and Business Risk

Privacy issues are amongst one of the top concerns for consumers that carry RFID enabled recognition cards, entree cards, passport etc.

But even in the supply concatenation, privateness is a legitimate concern. Two chief types of privateness concerns exist for houses ; tracking and take stocking. Despite encoding methods to protect the information from being read, tags broadcast a alone identifier for readers to pick up. Even when the reader does non hold the valid hallmark to read the informations, it can utilize this alone identifier to physically track the ticket within scanning scope. In a retail scene, RFID tags on merchandises are used to supervise stock-levels, but a rival can besides utilize this engineering to larn about the product’s stock list turnover rates.

RFID – solution to drug counterfeiting

A alone illustration of RFID in the supply concatenation is in the Pharmaceutical Industry. Pharmaceutical companies are implementing RFID solutions to battle the serious issue of drug counterfeiting. Harmonizing estimations from the World Trade Organization, 10 per centum of the trade in pharmaceuticals worldwide is imitative. With entire world-wide gross revenues of $ 750 billion, the planetary drug forging market is expected to turn to $ 75 billion. This is on top of the serious safety and health-risks that 1000000s of people could potentially fall victim to.The Food and Drug Administration ( FDA ) is encouraging industry leaders to take enterprise in RFID surveies and pilot plans in order to increase the safety and security of the drug supply. RFID engineering can replace and heighten presently required drug lineages, paperwork that shows the trail of ownership from the maker all the manner to the retail merchant.

“The FDA considers electronic lineages to be a type of electronic safety net” , leting distributers and retail merchants to quickly place and describe forgery drugs to the FDA.The complexness of a pharmaceutical supply concatenation poses a greater challenge in implementing RFID systems over merchandises. But it is the complexness of the supply concatenation that allows for higher hazards of drug counterfeiting. Drugs frequently travel in a complicated way from the maker to the terminal user. Distributors carry up to 40,000 carrying units at a clip, and stock list is frequently sold amongst distributers to keep stock degrees.

Besides, drugs are frequently repackaged within the supply concatenation, hence keeping records ( lineage ) on these drugs can go a hard undertaking with current methods.The usage of RFID system in a pharmaceutical supply concatenation can assist better the “Track and Trace” controls presently used by the maker to guarantee safety and security of the drugs. RFID can let pro-active hallmark and monitoring of drugs throughout the supply concatenation web.

Due to the low cost of the RFID tickets, they can be included in palettes, boxes, even single phials to guarantee that the merchandise can be identified and traced. At each measure along the supply concatenation, drugs can be scanned and verified for unity and termination. Information can be recorded to the RFID tickets at each measure so that the retail merchant will cognize precisely the shipment’s history along the supply concatenation.As discussed before, RFID engineering is non a security device. It does non forestall forgery drugs from come ining or go forthing the supply concatenation. RFID engineering allows for more efficient security steps to be in topographic point at the IS degree. RFID is a tool that allows the information system to efficaciously track, hint, and verify merchandises along the supply concatenation.


Current Leaderships in RFID

Despite the good understood advantages of implementing RFID in the supply concatenation, the acceptance of RFID engineering has been slightly scattered in industry. Not all companies use it, and even within the companies that do, non all operations of the supply concatenation are connected. The slow growing of the RFID engineering meant that limited research and resources were given to better and standardise the engineering. Like many advanced engineerings, RFID had troubles “crossing the chasm” from the early adoptive parents to the pragmatist, refer to Exhibit 4 for the Technology Adoption Lifecycle.RFID got a encouragement in November 2003 when the largest retail merchant in the universe, Wal-Mart, announced that it would necessitate its top 100 providers to be to the full RFID equipped utilizing EPC to track instances and palettes by January 2005. With Wal-Mart taking the manner, the RFID industry would turn.

The economic systems of graduated table for tickets would farther drive down costs and extra research allows more advanced applications.Unfortunately, programs did non travel swimmingly for the retail giant. Wal-Mart had programs to to the full fit every bit many as 12 of its 130 distribution centres by 2007, but advancement has haltered at 5. Merely big providers such as P & A ; G, Unilever, and Kimberly-Clark have been supportive of the engineering.

Smaller providers merely do non hold plenty graduated table to warrant the ROI. Wal-Mart has alternatively, shifted its focal point to fiting the engineering in its shops alternatively of distribution centres. Despite the alterations in RFID scheme, Wal-Mart is still at the head of RFID acceptance.Similarly, the U.S. Department of Defense ( DOD ) issued a authorization for all its providers to utilize RFID tickets by 2005.

The DOD has been more successful than Wal-Mart in its phased attack. Different merchandise types and categories have being phased in at both provider and DOD sites. Since its start in 2004, RFID execution in the DOD supply concatenation has been rather successful.

More late in 2008, the DOD issued out a contract named “RFID III” worth up to $ 429.4 million. This 10-year contract would include the sum of the RFID hardware, package and services for active 433.92 MHz RFID tags compliant with the ISO 18000-7 criterion.Despite many reverses, the RFID industry is still demoing important growing with organisations like Wal-Mart and the U.

S. Department of Defense taking the charge. It is a affair of clip before all RFID engineering becomes the industry criterion in the supply concatenation industry.

Future of RFID

As RFID engineering progresss, the applications available are limited merely to the imaginativeness. RFID implants in worlds for tracking have been the long debated subject.

But more interesting utilizations of RFID have surfaced in the recent old ages. For illustration, Kodak invented an comestible RFID bit that is designed to supervise a patient’s stomachic piece of land. Visions of smart places contraptions may go closer to world with RFID engineering. Appliances such as iceboxs could advise so food markets are low, or if nutrient has expired. Children’s toys can besides do usage of RFID to track place and clip for a assortment of activities and games.Of class, the issues of privateness and security are ever of topmost importance when implementing traceable engineering such as RFID.

With potentially all commercial and household merchandises incorporating RFID tickets, stealers could potentially aim places with expensive points by scanning and placing them.As with all new engineerings, RFID opens up new chances every bit good as menaces. The usage of RFID engineering in our mundane lives is inevitable ; it is up to industry and corporations to present the benefits of RFID engineering while minimising the hazards.


Exhibit 1: Information System ComponentsExhibit 2: Estimate Cost Breakdown for Manufacturer of 50 million instances of Merchandises AnnuallyExhibit 3: Impact of Selected Materials on Radio Frequency TransmissionExhibit 4: Technology Adoption Lifecycle


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