Radio frequency identification, or RFID, has been hailed as a magic bullet inventory solution — a bar code on steroids. But steep implementation costs are a barrier to entry for many small businesses. Is RFID right for your company? How much will it cost to move to an RFID system — and how much will it cost if you do not?
RFID inventory systems resemble bar code systems in that they automate inventory procedures. But they differ in how the information is exchanged.
As the name suggests, RFID uses radio frequencies to communicate with a reader. Think of it as a proactive bar code. It does not sit there waiting to be scanned; it’s always transmitting its information. When a reader is within range of the RFID tag’s signal, the reader receives the information. And RFID does not even require a clear line of sight. As long as the receiver is within range — from a few centimeters to a mile or more — the tag will be picked up. Think of it: an entire pallet of inventory scanned just by being nearby.
And that’s not the only advantage. RFID tags can hold much more information than a traditional bar code. Manufacturers of automobiles and computers use RFID tags to hold configuration information, quality assurance, and even manufacturing instructions. Current tags can hold about 3KB of information, with smaller, cheaper, serial-number-only chips in the pipeline.
That’s the good news. Now for the bad.
RFID does require some investment. Readers range in price from as little as $50 to more than $1,000. As for tags, you can expect to pay upwards of a dollar a piece in small quantities, but prices drop to as little as $.10 each in large quantities. Being an early adopter in tomorrow’s technology not only requires a system change, but some level of financial commitment.
Silicon Valley semiconductor company Kovio promises to have a printable antenna and transistor RFID tag by the end of 2008. Other primitive read-only printed solutions with no transistor cost just $.10, however the readers for these tags are expensive.
Are you ready for RFID? If you have a bar-code-based inventory control system, RFID can do everything your current system does, and much more. If you are looking at purchasing an inventory control system, RFID is the clear winner. Wal-Mart is already requiring many of its vendors to ship RFID-enabled merchandise. You may not be selling to Wal-Mart today, or even in the foreseeable future, but their commitment to the technology probably means RFID is going to be around for a long time. Other resellers will probably implement RFID systems, and companies that are already using it will have a clear advantage. And when you do get that huge order from Wal-Mart, you will already be ahead of the game.
If your bar code system is working for you and offering RFID capability to your customers won’t offer you a strategic advantage, your best bet is to wait. RFID equipment continues to come down in price; as the technology matures and becomes common, prices will fall even further, and other hurdles will be overcome. Someday it may even be as cheap to use as bar code systems. But that day has yet to come.