Friday, December 30, 2005

Radio Frequency Identification

“How did you know we were lost?”

“The boxes told me- RFID radio tags on the boxes help track the shipment”

“The boxes knew we were lost”

“Then maybe the boxes should drive”

So goes the commercial for IBM’s On Demand Business. If you were following the trends in radio and communication technology over the past two decades, it would not be difficult to understand the above commercial. The idea of being able to track things is not new; it has been in practice since the inception of trade itself. RFID or Radio Frequency IDentification is the latest way of doing it, but this time it will not be limited to tracking commodities or shipments, RFID is set to revolutionize the way people live their lives.

Without going into the history of RFID, one can confidently say that it has been in the offing since the invention of wireless communication. The World War II was a watershed in the chronology of radio frequency identification when the British used this technique to differentiate between the Royal Air force airplanes and the Luftwaffe. The idea of using it to track the movement of animals and livestock herds caught up during the 1980’s. What has made the explosion of the use of this technique in tracking inventory shipments around the world, are the initiatives taken by the Retail Giant Wal-Mart and the US Department of Defense in early 2003 to better manage their supply chains.

Before discussing the rationale and applications of RFID, one needs to understand the technology behind it. A Radio Frequency Identification system consists of the following essential components.

· A RFID tag or a transponder

· A RFID reader or transceiver

· Application and database software to analyze the data.

The tag is composed of an antenna and a wireless device. The RFID reader is composed of an antenna, a transceiver and a decoder. The tags are generally of two types, active tags are those which have an on-chip power supply and passive tags are those which use the power induced by the magnetic field of the reader. The RFID reader consists of a transceiver which sends out a periodic signal to inquire about the presence of any tags in the vicinity. The passive tags are cheaper as they do not incorporate any on-chip power supply but the range of their operations is smaller than those of active RFID tags. Each tag has a data storage device which is used to store data about the object being tagged. The four main frequency ranges that are active today are low frequency (125 kHz to 134.2 kHz), high frequency (13.56 MHz), ultra high frequency (868 MHz to 956 MHz) and microwave tags (2.45 GHz to 5.8 GHz).

Let us now examine what the use of these tags is in efficient organization of the global supply chains. In January 2003, Wal-Mart issued notices to its suppliers requiring them to implement RFID technology for all shipments to Wal-Mart by January 2005. This was in effort to improve the inventory stocks and schedules of the various Wal-Mart stores around the world. Although many of the suppliers were taken off guard by such a directive, most of them have complied fearing that they might be left behind if they do not do so. What this means is that, Wal-Mart stores can now effectively implement supply chain excellence principles like Just-In-Time by effectively monitoring and informing the suppliers of the availability of the stocks of the commodities being sold.

The cost of the RFID tags is currently around 50 cents and hence still very costly for implementation on all items and Wal-Mart accepts that it will be along time before individual items sold in their shops are tagged. Currently, the pallets of materials are tagged and tracked. A typical situation in the supply chain cycle of commodities in Wal-Mart would be as follows:

RFID readers are installed at the receiving docks of the stores and when the shipments arrive they are “scanned”. They are again “scanned” when the boxes with the tags are brought to the sales floor. Although due to certain privacy concerns they are not installed at the sales point, the box thrashing centers are fixed with readers which “scan” the utilized boxes. All the data collected is recorded and analyzed by the application software which is connected to an extranet with the suppliers who are updated real time about the status of inventory stocked at the Wal-Mart stores. What this means is that not only can the supply be replenished at the right time, but because of real time tracking it is even possible to accommodate for sudden surges in demand and effectively tweak the supply chain to suit such situations.

This is a great way of doing business and has revolutionized the supply chain management of major retail concerns around the world. But the applications of RFID are not limited to these applications. Cars are fitted with RFID tags which store data about the driver and other related details and are already being used to pay for road tolls by automatically sensing the car’s data by readers at the toll gate and automatically debiting a pre-paid account. This kind of system does away with the any waiting at toll gates and ensures smooth flow of traffic.

On similar lines one can imagine limitless applications for such a technology. Here are a few of them, some of which are already in application in various forms.

1. Consumers with unique RFID tags can walk in to stores equipped with RFID readers where they can pick up the items they want and walk out, debiting the prepaid account with the amount of their purchase.

2. Automobiles could be fitted with the relevant documents of the driver so that there is no need to physically carry them and police officers can automatically sense these in case of traffic offenders.

3. Tags on the credit and smart cards can be made to be activated only when used by the rightful owner with a matching tag on the person so as to avoid cases of credit card fraud.

4. Tickets and other travel documents can be stored in tags which would be carried by the person, read by the readers at railway, subway or air terminals to check and verify the person’s identity before accepting to allow them to travel.

5. The most sublime use of the technology would come when these tags could be effectively “implanted” on a person’s body so that they can store data such as electronic keys and passwords which would enable only them to enter their houses, offices, automobiles etc.

6. Medicines and drug boxes can be implanted with tags which can be opened only by those with a matching prescription tag to avoid drug abuse.

These are just a few examples and the possibilities are limitless. With all these interactive possibilities the interest for this technology in the market is at an all time high. But before all these there are a few issues which need to be resolved. On seeing the above examples it becomes rather evident that misuse of such devices can become rampant. Privacy activists have valid points about how these tags with personal details can be used by corporations, government or unscrupulous entities to illegally monitor activities of people. Certain individuals can block the readers from properly scanning the details and involve in unethical activities by gaining access to restricted areas. The problems related to the use of these techniques are many but the constructive uses of this outweigh the negative impacts. When properly regulated they can prove to be a boon for the whole society and way business operates.

The task ahead in making this technology more prevalent in societies around the world is standardization. Currently, there are a couple of competing standards in use around the world regarding protocols used for communication between readers and tags, how data is organized in the tags, the level of encryption of data for various applications and so on. With proper regulations in place, the technology is on the verge of being a very critical part of the way society behaves and the future looks bright!


1. RFID tutorial:

2. The Wikipedia account on RFID at

3. Wal-Mart website and case studies.


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