RFID is a big buzzword right now. But how does it work and is it right for your business? RFID has the potential to make a business more efficient, but like most things, it’s not a magic bullet that can fix any problem. There's some important considerations to keep in mind before you take the plunge. This guide will take you through the questions we ask our clients when helping them qualify an RFID solution. We'll also share some general information about how RFID works. By the end, you should have enough information to get started.
What Is RFID?
RFID stands for Radio Frequency Identification. RFID systems use tags or labels embedded with circuits that encode an item’s identification information and transmit data over radio waves similar to how Bluetooth works (with some exceptions). The technology is similar to barcodes in many ways. The big difference between the two is that barcodes require a line-of-sight, while RFID does not. It's important to note that RFID is not necessarily “better” than a barcode. In fact, there's plenty of applications where a barcode outperforms an RFID system. It's this guide's goal to break down when a barcode system might be better.
How RFID Solutions Can Improve Your Operation
RFID tags eliminate the need for a direct line-of-site with the barcode before it’s scanned. This is helpful if you need to scan items that are hard to reach, far away, or packaged in a box. They also dramatically speed up asset checks and inventory counts compared to a barcode setup.
Get real-time location data, aiding in locating assets or inventory within an operation. Integration with sensors allows you to measure temperatures, humidity, shock sensors, and more.
Since you're not relying on a human to scan individual codes, RFID eliminates more areas for human error. Studies have shown that implementing RFID can improve inventory accuracy by about 13%.
RFID tags can be re-encoded, unlike barcodes which necessitate new labels for updates.
Pros of RFID
Quicker Scanning & Accuracy: RFID tags eliminate the need to have a direct line-of-site with the barcode before it’s scanned. This is helpful if you need to scan items that are hard to reach, far away, or packaged in a box. A RFID reader can scan hundreds of tags at once, dramatically speeding up data collection when compared to a barcode setup.
Real-Time Location Tracking & Re-encodable Tags: RFID readers offer real-time location data, aiding in locating assets or inventory within a warehouse. The tags can be re-encoded, unlike barcodes which necessitate new labels for updates.
Cons of RFID
Higher Initial and Ongoing Costs: Setting up an RFID system is more expensive than a barcode system. A single RFID tag is around 10-15 cents on the low end and can balloon up to dollars per tag. A typical label costs fractions of a cent on the low end to about 8 cents on the high end. That’s before you factor in RFID printers and readers which can be thousands of dollars a piece.
Complexity in Setup and Use: The intricacy of RFID technology demands outside expertise for installation and ongoing management.
Parts of an RFID Solution
In a typical RFID setup, you have three parts: tags or labels with a special circuit embedded inside, an RFID reader—sometimes called a scanner—that sends out a radio signal that powers that chip which then sends out information back to the reader. Finally a software of some sort that’s connected to the reader and interprets the information from the scanner.
Different RFID Tags
RFID tags come in many different designs, shapes, and sizes. The commonality between them all is that they use an embedded circuit that's encoded with information and an antenna that can send and receive radio signals. This circuit and antenna must be powered by something to send their information. The way this power is develivered is the primary differentiator between different types of RFID tags. They can be broken into two major catagories — passive tags and active tags. There's also third catagory called semi-passive that's a blend between the other two but this guide won't focus on those since they're somewhat uncommon.
Passive Tags
The most commonly used tags are passive tags. These types of tags do not have a power source built in to the tag so they require the radio signal from the reader to provide power and send out information. Those tend to be cheaper, smaller, and typically have a limited range in which they can communicate. Because of the need for power, these tags are unable to share their information when it is not in range of an RFID reader's interrogation zone (the interrogation zone is the term for the range in which an RFID reader is able to send out radio signals and thus power a reader). These tags are the ones most commonly used for inventory tracking-type applications.
Pros
Small size & lightweight
Inexpensive when compared to other tags
Resistance to harsh environment (depending on tag)
Longer life (20-plus years)
Does not add to radio noise
Cons
Limited amount data storage
Requires presence of interrogator to power and send information
Low read range (few inches to 20 feet)
Active Tags
Active tags have internal batteries so they’re always able to send out information. Some tags can also be configured to broadcast it's data at certain times or trigger based on recieiving a certain signal. They are quite a bit bigger and are more expensive but they are more powerful so they have more range and they can be encoded with more information. These types of tags can be embedded with sensors that can track temperature, humidity, or impacts. And because they tend to have more processing power built in, the tags can sometimes process data internally before broadcasting it back to the reader. An active RFID tag is commonly used to track the movement of valuable assets that move around frequently.
Pros
Can have more memory, store more data
Longer read range (100-plus feet)
Can be embedded with sensors.
Cons
More expensive
Limited battery life (2 to 7 years)
Larger size and weight
Contributes to radio noise
RFID Readers (Interrogators)
RFID readers—also known as interrogators— are devices that can send and receive RFID radio signals. These are devices that will send radio signals that will power your passive RFID tags and then receive and interpret the radio signals it gets back from the tags in its interrogation zone. These readers are often able to re-write the data that is encoded on an RFID tag. This is helpful when you're using a tag to store information on an asset. This ability to rewrite tags with new information is a big improvement over a barcode-based tracking system where a label cannot be easily modified in real time. Like tags, RFID readers come in two major types: a handheld reader or a fixed reader.
Handheld Readers
As the name suggests, handheld readers are made to be portable. They are perfect for workers who need to scan RFID tags on items in motion, whether in a retail store or a shipping and logistics facility. Although handheld readers generally have a shorter read range compared to fixed readers, they provide superior flexibility and mobility. Handheld readers tend to be more affordable than fixed readers and are easier to integrate into an existing system.
Fixed Readers
Fixed RFID Readers are typically utilized in settings where items remain stationary, such as warehouses, manufacturing facilities, or retail stores. These readers are permanently installed at a specific location and are connected to both a power source and a network. Fixed readers tend to have greater read ranges than handheld readers and since they're always on, they're able to collect data on a continual basis. By automating data collection, fixed RFID readers can help businesses cut down on labor expenses linked to manual data entry and inventory management. Fixed readers are typically more expensive than a handheld reader and are harder to integrate into an existing system.
How to Tell if RFID is Right For You?
So, how do you know if RFID is right for you, and how can you apply this technology to your business? We’ve found that the biggest thing to balance here is whether you’ll be able to use RFID technology to improve business operation enough to make a return on your investment. That’s the single biggest driver for most businesses.
Setting up an RFID system is more expensive than something like a barcode system which is the primary technology that it gets compared to. A single passive RFID tag is around 10-15 cents on the low end and can balloon up to dollars per tag. A typical barcode label costs fractions of a cent on the low end to about 8 cents on the high end. That’s before you factor in RFID printers and readers which can be thousands of dollars a piece. So, if you’re going to be investing in a tool like this, you should feel confident that you’ll be able to implement it well enough to make an ROI. And you should feel confident that a more cost-effective approach like a barcode system won’t do the same job.
When working with clients to see if RFID suits their use case, we typically ask them specific questions about their operations and pain points. This guide will guide you through similar questions to consider for your own business.
Question 1: What problems are you trying to solve with RFID?
For most people, the answer boils down to some variation of tracking something more accurately or efficiently. And that’s an area where RFID really shines.
The biggest use case we see are operators — primarily in the warehouse and manufacturing space — trying to speed up their inventory counts. RFID doesn’t require a direct line of sight the same way a barcode scanner might need, so an employee can wave a reader around the warehouse and scan hundreds of items a second.
Tracking assets is another popular use case. If you need to slow down operations because your employees are spending time searching for a tool that might not even be there, that costs money. RFID-assisted tracking allows you and your staff to find the location of every asset across your warehouses immediately.
We’ve also seen libraries wanting to track their books, farms using it to track their livestock, and healthcare centers using it to track their visitors and patients. The sky is the limit there.
We’ve also seen RFID being used to improve accuracy in picking and shipping departments, especially for warehouses and manufacturers. RFID can be used to help employees find the item they’re looking for quicker and ensure they’re picking the correct item. If you’re selling things that are temperature, humidity or impact sensitive, you can get RFID tags with these sensors built in. Between those two, you may be able to reduce shipping returns and chargebacks enough to make your money back in no time, especially if you’re shipping high-value items.
Similar to shipping, improving accuracy and speed in receiving departments is another area where we see traction. Walmart and Target are examples of companies doing this.
A use-case we occassionally see folks looking to use RFID tags for is to track items once they’ve left their operation. Either to confirm that shipped items have arrived at a construction site before sending a crew to do the installation. Or to track tools being deployed in a field service capacity. In that case, you’re probably looking for a GPS-enabled tag. They do make tags with both, but on a normal active RFID tag, you’re only going to get around 100 feet. Putting an RFID tag on a container going to a job site would make it easier to find that container once it's arrived on site, however, and we've seen organizations put active RFID tags on containers to track their movements on a shipping yard.
On the entertainment and hospitality side, we’ve seen some businesses put RFID tags in guest wristbands and encode them with information about credits, add-ons, or experiences a customer has paid for. This could be used for contactless payments and speeding up entry to attractions. It’s relatively difficult for a normal person to replicate an RFID tag in the same way they may be able to forge a normal wristband or ticket. Disney is an example of a company that does that with MagicBands.
In summary, for most RFID applications, the use case typically boils down to tracking something. It might not be the best technology if you’re trying to use RFID for a case other than tracking something. That’s not to say it won’t be helpful, but a better tool might be out there.
But just because you’re looking to track something doesn’t mean RFID is by default, the right fit. Barcode systems have been tracking things for years just fine. So our second question can help narrow in:
Practical RFID Applications
Asset Tracking & Management
Improve asset visibilty and stop spending time looking for equipment. Leverage "Geiger-counter" location features to find misplaced assets and maintain a chain of employee custody with check-in and checkout procedures.
Supplier Compliance
Is one of your buyers mandating that you pre-label products with RFID labels? Our solutions make compliance easy.
High-Value Inventory Tracking
Companies working with high-value items are great candidates for RFID tracking. Easily take stock of your inventory in seconds and set up real-time location tracking to receive alerts when stock leaves the premises, reducing theft.
Stock Yard Management
Construction and retail yards are complex environments with hundreds of items moving around at once. Understanding where and how many items you have is essential from a time and cost savings perspective. Attach RFID tags to pallets of items to speed up cycle counts.
Document Tracking
Are you spending hours searching for important documents? Add an RFID label and locate them in seconds! Are you interested in getting rid of paper documents all together? Our Cascade Document Control software might be what you're looking for.
Question 2: What Items Are You Looking To Track?
Are you tracking things that already have RFID tags?
One reason a company like Walmart can get away with using RFID in a receiving and retail application is that the product is pre-tagged. You probably don't have that luxury if you’re a retailer or warehouse wanting to use RFID. So now you need to weigh in the cost of the labels. That is a huge practical hurdle. If you need to factor in the material and labor cost of tagging each item, that is a big hit to your ROI calculation.
How valuable are the things you’re trying to track?
If you’re looking to track an item worth only $10, it might not make sense unless you’re looking to bundle them on a pallet and track the pallet as a whole. And even then, for something as big as a pallet, you may be able to use a barcode and accomplish basically the same things, especially if you’re not tracking things at an item level.
If you’re looking to track a $1,000 piece of merchandise or a tool, that might be a better fit—especially if the item is temperature or impact-sensitive.
How many things are you looking to track and where are they located in your operation?
If you’re only looking to track 100 items in a single room, especially if they’re low-value items, you’re probably going to spend more on an RFID solution than you would’ve spent on the labor to track it using a barcode system. And since radio signals can travel quite a bit and even go through walls, you risk scanning more labels than you originally intended. That can be a pain when scanning a pallet of items for a particular shipment and scanning items from across the room or even something in the next room over. To prevent that, you may need to install a barrier to isolate your scanning area. In contrast, while barcoding can’t scan multiple items simultaneously, it offers more spatial accuracy and reliability. Since a barcode scanner captures each code individually, you don’t have to worry about accidentally scanning more items than intended.
Finally, what is the item you’re trying to track made of?
Metallic and liquid-filled items can disrupt a tag’s ability to send and receive information, making accurate data collection difficult without expensive specialized tags with an air gap between the tag and the tracked item. That’s not necessarily a deal breaker, and if you’re someone like a chemical plant looking to track the movement of potentially hazardous or controlled material around, getting the accuracy that a properly designed RFID system provides isn’t a bad proposition. If you’re a grocer looking to take a metal shopping cart full of beverages through a reader, you’ll have difficulty getting an accurate or reliable scan.
Here's an example of a practical RFID application with these considerations together:
The owner of a rug store was having trouble keeping track of the loction of rugs they had in inventory. The rugs were stored in tightly rolled tubes in these narrow racks in a warehouse. The owner noticed that these rugs would sometimes be returned by employees to the wrong bay. This made it difficult for employees to locate and verify if a particular rug was in stock, and because of that, sometimes employees would say that a rug wasn’t in stock, even if it was because they gave up before they could find it. The average cost of a rug was upwards of $1000+, so a missed sale had a big impact on revenue. By axxifing an RFID tag to each rug as it was being stocked in their backroom and showfloor, the store was able to reduce the time it took to locate particular rugs, improve their inventory counts, and ultimately make their investment back and more.
This was an example where RFID made sense. It was an operation with enough relatively high-value products being stored in a way that made it difficult to identify, even with a label. And because they weren’t trying to take inventory from a specific location as much as locate a particular product, it made sense. You could argue that the operator probably could’ve implemented a better organizing system, but it increased sales, so it worked out.
However, an apparel store selling $50 shirts that are easier to identify at a glance probably wouldn’t have the same impact. Even a sporting goods store selling $1000 bikes might not make sense if the bikes are easy to distinguish.
Question 3: Who Will Design, Implement, and Support The System You Plan To Build?
Setting up an RFID system isn’t a simple undertaking. While a barcode system can reasonably be set up in a day or two, RFID systems are a different beast. The hardware needs more configuration, a whole spectrum of RFID tags made for very specific use cases, and most ERP, inventory, and POS systems don’t natively support RFID the same way they do barcodes. So now you’re probably looking at onboarding a whole new piece of software or paying someone to develop support for your existing system. And if you’re a little overwhelmed with all that, you have a few options.
Some companies, including ourselves, sell Pre-Packaged Systems that include the software, hardware, and tags in a single package. These are great for small to mid-sized businesses with standard tracking needs because they’re quick to set up and generally low cost. However, you do lose some customization, and they may not meet the needs of people with complex requirements.
You could work with a consultant or integrator if you require more flexibility or already have an existing ERP. We do this type of work as well. They can work with you to build a custom hardware solution and integrate off-the-shelf RFID software with your existing software. Going this route would give you more flexibility at scale without ballooning the budget too much.
