RFID

RFID, which first appeared in tracking and access applications during the 1980s, is a wireless data collection technology that uses electronic transponders, also known as tags, and transceivers. When the tag comes within the range of the transceiver, anywhere from millimetres to metres, the transceiver decodes the information off the tag. A basic RFID system usually includes an antenna or coil, a transceiver (with decoder) and a transponder (RF tag) electronically programmed with unique information.

For the supply and logistics industry, this could be a great boon as RFID tags keep real-time track of items and have serial numbers that are unique and cannot be tampered with. The code used to authenticate items is factory written and can never be changed, Allen said.
The RFID tag market was $76 million in 2000 and is projected to reach $330 million by 2005, according to David Krebs, group manager of research firm Venture Development Corp. in Natick, Mass. The hardware for this market, which includes tags and transceivers, was $660 million in 2000 and is forecast to be worth about $2 billion in 2005, Venture Development said.
In terms of units sold, ABI estimates the RFID market at $323 million and forecasts that it could reach $1.6 billion by 2007. ABI believes that RFID spending will increase and expects tag shipment growth to surpass a compound average rate of 30 percent, if the recovery is for real. ABI also believes that with the formation of standards—a large barrier to RFID adoption—better end-user understanding and the drive to create more efficient processes, companies will gradually adopt the technology as they reinvent themselves. This segment could be propelled to triple-digit average growth by 2007, according to ABI.

But RFID has many hurdles to overcome, such as industry recognition, visible return on investment, cost, standards—not to mention unseating its chief competitor: bar coding. So far, bar coding has proved to be a cheaper, more universal method of inventory management. And cost is a main issue blocking the mass adoption of RFID because of the software that has to be installed and the transceivers that have to be bought to read the tags. And that doesn't include the cost of the tags, which can range from 50 cents to $3, depending on the application.

"Companies need to see the value," said Bruce Del Porte, product manager at Atmel Corp. "You've got the same amount of paper and glue, plus an antenna. They have to extract additional value from that. On a huge scale, they haven't done that."
That value becomes more evident in a side-by-side comparison. Bar codes can be corrupted and become unreadable, while RFID tags are fairly indestructible and reusable. In addition, bar codes cannot store the same level of information that RFID tags can.

"One of the key things we focus on is the benefits of what we can bring to a business. If we present a good enough case, showing a good ROI, it's a no-brainer at some point. Early adopters have certain pain-points they want relieved, and RFID can certainly be a pain reliever," Allen said.