Using RFID For Supply Chain Management: Electronic Business Course

DPARTEMENT DINFORMATIQUE /
DEPARTEMENT FR INFORMATIK
Information Systems Research Group

Electronic Business course
Using RFID for Supply Chain

Management
Project work
Written by
Fabien Ropraz
Student Number: 04-212-320
Cotagery 31
1642 Sorens / FR
fabien.ropraz@unifr.ch
Fribourg, May 2008

Table of contents
1 Introduction ............................................................................................. 1
2 RFID technology overview ........................................................................ 3

2.1 General concept ............................................................................................................ 3
2.2 Brief history.................................................................................................................. 3
2.3 Basics of RFID technology .......................................................................................... 4
2.3.1 Operating principles ...................................................................................................... 4
2.3.2 RFID system components ............................................................................................. 5
2.3.3 RFID system performance .......................................................................................... 10
2.4 Standards .................................................................................................................... 12
2.5 Application fields ....................................................................................................... 14
2.6 Main benefits .............................................................................................................. 16
2.7 Main issues ................................................................................................................. 16
3 RFID in the supply chain ......................................................................... 19

3.1 Definition of supply chain management .................................................................... 19
3.2 How RFID helps improve supply chain management ............................................... 20
3.2.1 Tracking the movement of goods: from bar code to RFID technology....................... 20
3.2.2 RFID in logistics operations ........................................................................................ 22
3.2.3 RFID in manufacturing ............................................................................................... 25
3.2.4 RFID in retailing ......................................................................................................... 26
3.2.5 EPCglobal Network..................................................................................................... 26
3.3 RFID system planning and integration....................................................................... 27
3.4 Examples of companies involved in RFID ................................................................ 29
4 Conclusion ............................................................................................. 30
Bibliography ............................................................................................... 31
i
List of figures
Figure 1 : RFID system components ......................................................................................... 5
Figure 2 : An example of an RFID tag ...................................................................................... 6
Figure 3 : Tags of different shapes and sizes ............................................................................ 7

Figure 4 : Dock door fixed mount reader and portal ................................................................. 9
Figure 5 : Forklift mounted RFID system ............................................................................... 10
Figure 6: Common RFID frequencies for applications ........................................................... 12
Figure 7 : Structure of EPC on SGTIN-96 basis ..................................................................... 14
Figure 8 : Supply chain flows ................................................................................................. 19
Figure 9: The elements of the EPCglobal Network system .................................................... 27
ii
1
Introduction
Have you ever imagined a world where every item could be traced, so that, for example,
inventory control could be done automatically or customers could self check out without
waiting in line in shop? As fanciful as it may seem, this can be realized to a certain extend
thanks to RFID.
RFID stands for radio frequency identification and has become one of the most talked about
and promising technologies in the market today. The media are frequently bringing up the
potential benefits users of RFID can reap. The adoption of the technology by the businesses
has been recently stimulated by several factors including falling implementation costs, the
establishment of key standards, retailer and government mandates and improved technology
performance. Indeed, more and more businesses are considering investing or are investing in
this fast growing automatic data-collection technology in the purpose of improving
convenience, accuracy, safety and security.
This tracking and identification system basically consists of placing a radio frequency
transponder containing a microchip on an item to be tracked. Then, whenever the item passes
under a reader that interrogates it via radio waves, it will emit or reflect a signal to exchange
its data and identity without human intervention.
Based on this elegant idea, this technology supports a wide range of applications not only in
trade and retail, but also in public services, administration, research and development, and
even in sports. In spite of that, supply chain represents the most significant development
potential for the use of RFID according to organizations. In fact, this is not surprising because
RFID is in essence exactly what companies are seeking to enhance supply chain management.
By granting to everyday objects the ability to communicate without physical contact, RFID
provides organizations with the capability of tracking, securing and managing items through
their entire life cycle, thus considerably improving the efficiency of internal business
processes and the visibility in the supply chain. For that matter, businesses place confidence
in this technology to securely track the locations of their assets, shipments and inventory
items.
However, integrating an RFID infrastructure in its information system requires intense
planning and testing not only because it represents a huge investment but also because it
1
Introduction 2
implies business processes reengineering, in addition to the fact that the technology is subject
to changes. Misperceptions about what RFID is and what it can do can also stand in the way
and discourage some companies from taking advantage of the technology.
The paper precisely aims at learning to know the RFID technology and at explaining how it
can concretely be used for supply chain management and how it can help improving it. Being
aware of its capabilities, its purpose, its benefits and its challenges is indeed the first step to a
successful implementation.
Chapter 2 describes how RFID technology basically works, what elements an RFID system is
composed of and what are the application fields of this technology. It also highlights the main
benefits and issues of the technology and addresses in particular the matter of standardization.
Chapter 3 is dedicated to the use of RFID in the supply chain and for supply chain
management. It starts with giving a brief definition of supply chain management before
dealing with how RFID contributes to the improvement of the supply chain. More precisely, it
explains why companies are transitioning from bar code to RFID technology and covers the
use of RFID in logistics operations, manufacturing and retailing. It also briefly explains the
new global standard EPCglobal Network, which allows goods to be tracked in the open
supply chain, i.e. beyond the boundaries of an enterprise. It then treats the planning of an
RFID system for a successful implementation. Finally, the last part gives a list of a few large
companies involved with RFID.
2
RFID technology overview
2.1 General concept
RFID belongs to the class of technologies that exchange data wirelessly. It is considered as an
enabling technology, because it does not provide much value on its own, but it makes it
possible for companies to develop applications that create value. Even if different RFID
systems or different categories of RFID applications exist, they all rest on the same
fundamental principle: the attribution of a unique identity to physical objects, persons or
animals that can be easily transposed to the virtual world of computer systems.
Communicating, identifying and detecting things are natural and trivial activities to humans
but when it comes to computer systems, they turn out to be rather complex. RFID technology
has precisely the power of getting around these difficulties by being able to give everyday
objects the ability to communicate their presence, their identity and the content of their ever
increasing memory. In other words, RFID enables objects to be connected to the Internet, so
that companies can track them and share data about them, which fosters the new concept of
the Internet of things.
2.2 Brief history
Contrary to what people could think, RFID has been around for decades. It is generally said
that the origin of RFID can be traced back to World War II, where a system based on radio
signal was used, so that pilots could be identified as friends by the radar stations.
The first RFID U.S. patent was given to Mario Cardullo for an active RFID tag with
rewritable memory in 1973.
Over time, companies commercialized systems operating at different frequencies. Until the
end of the 90s, tags were operating as a mobile database that carried information about the
items they were applied to. But the vision people had about RFID changed thanks to Sarma
and Brock, who turned RFID into a networking technology by launching the idea of storing
the data associated with the serial number on the tag in a database accessible over the Internet,
thus linking the objects to the Internet. This was an important change for the companies,
3
RFID technology overview 4
because suppliers and customers along the supply chain could now automatically share data
about shipments, products, etc.
One interesting question one could ask is why RFID is only flourishing now, given that the
idea has been developed for decades? In most cases, a technology establishes itself when the
right time for deployment occurs or when the economy is suitable and ready to welcome it,
which depends on the scope of the problem it solves, the maturity of the technology, and the
cost of deployment. Over the last decades, the world has precisely changed concerning these
three points, giving the technology the opportunity to grow on. Inventory tracking has become
a necessity nowadays, in order to remain price competitive despite the relatively high labor
cost in the developed countries. Furthermore, the components used to build the tags and tag
readers have become more sophisticated and the purchasing prices of the RFID system
components begin to decrease with the increasing demands for the technology. Finally,
greater functionality, reading range, and speed of data transfer provided by these components
have contributed to improved performance of the technology.
2.3 Basics of RFID technology
2.3.1 Operating principles
Essentially, RFID is an automated identification tagging method for storing and retrieving
data from a distance using RFID tags, which are attached to items and which contain a
microchip and an antenna. Using an RFID reader, a remote device with one or more antennas,
data on the microchip can be read at appropriate points in a business process via radio waves,
allowing the tagged item to be automatically identified without a direct line of sight. The
information picked up by the reader is passed on to middleware and application software that
validates and process the data, so that they can be used to create business value.
More concretely, in order for the communication to happen, a reader sends a radio signal to
request or capture the information contained on the chip of the tags. The signal is received by
every tag present in the radio frequency field tuned at that frequency. The generated signal
serves two purposes: it provides power for a tag and it creates an interrogation signal. Once
the tags receive the signal via their antennas they execute the commands sent by the reader
and respond by transmitting a signal the reader receives via its antennas and interprets as
meaningful data using a sensitive receiver. The reader usually requests the unique digital ID
(e.g., the EPC-96 standard uses 96 bits) that can then be looked up in a database accessible by
the user to determine the identity of the tagged item and to gather other stored information
about it (e.g. manufacturer, shipping date, price and expiry date). After decoding the signal,
the reader transfers the data to the computer system either through a cable or a wireless
connection, as RFID technology can be used in conjunction with Wi-Fi networks without
them causing interferences. If multiple tags are present in the field, there is a chance of data
collision. This can be the case for example in a shopping cart full of grocery items. In order to
reduce the chance of two IDs being transmitted at the same time, more efficient RFID
implementations have anti-collision algorithms, which determine the order of response so that
each tag is read once and only once.
An important point to emphasize is that an RFID read does not require any operator
intervention and data is exchanged automatically. In addition, in order for the system to work,
each tag must absolutely hold a unique serial number.
2.3.2 RFID system components
The previous basic technical description of RFID technology mentions the main components
that an RFID system typically comprises (Figure 1). Here is a summary of them:
One or more tags (also called transponders),
One or more read/write devices (also called interrogators, transceivers, or simply
readers),
Two or more antennas, one or two on the tag and at least one on each reader,
Application software and a host computer system.
Figure 1 : RFID system components
The next part will take a closer look at some of these components.
RFID tags
An RFID tag is at least composed of two parts:

RFID technology
t overview 6
a tiny siliconn integratedd circuit forr storing an

nd processiing
innformation and
a other sppecialized functions.
fu
onne (or moore) antennna to receiive and trransmit raddio
frrequency siggnals to resspond to RF
F queries from
fr an RFID
reeader.
Most of
o the timees, the tagg also conttains a sub bstrate or an
encapsuulation mateerial. The chip and thee antenna arre mounted to
form ann inlay, whiich is then encapsulateed in another material to
form thee finished taag.

Figuree 2 : An exam
mple of an
The miccrochip mayy hold a vaariety of daata elementss, includingg a RFID tag
unique serial nuumber, actiivity histoory like date d of laast
maintennance or whhen the tag passed
p a specific locatiion, or evenn data proviided by sensors like
temperaature. But in
i most casses, it conttains at leasst the uniqque identificcation codee for the
tagged object.
o
There are
a many tyypes of tags, varying att different levels.
l Beinng aware off these varieeties can
thereforre help executives knnow what tags to lo ook for, when
w impleementing an n RFID
infrastruucture, and opt for the most conveenient and cost effective tags.
Increasiingly miniaaturized, taggs come in various shaapes and sizes in ordeer to serve different
d
environnmental connditions (cff. Figure 3).
3 For exaample, tagss can be tthin enough to be
embeddded within ana adhesive label, leadiing to what is also know wn as smaart labels. They
T can
be prodduced by priinter/encodeers and are very suitab
ble for taggiing cases annd pallets. Tags
T can
also be incorporateed into an IDI card, a wristband
w orr special paackaging to resist heat,, cold or
harsh clleaning chemmicals.
Tags vaary greatlyy in read/w write abilityy, memory, power reqquirement, and also range r in
durabiliity, dependiing on the application
a a environ
and nment. RFID D tags can bbe made suitable for
lifetimee identificattion unlike other imperrmanent ideentification methods. T The tag com
mplexity
dependss on the taag functionality, on itts way of communica
c ating with rreaders and d on the
presence of a poweer source. Inncreasing thhe complexity of tags results
r in inncreased cossts. Tags
with addvanced funnctions requuire more expensive microchips,
m and tags w
with a poweer source
require a battery.
RFID technology
t overview 7
Figgure 3 : Tags of different shapes

s and sizes
s
It is posssible to classify tags based on at least

l three different
d critteria:
Read/write
R abbility:
- Read-only
R t
tags:
Read-only tags
R t are proogrammed at
a the factory
y with unallterable dataa. They are the least
e
expensive.
- Write-once
W tags:
D can bee written onn the tag onee time in pro
Data oduction or distributionn.
- Read-write
R tags:
Read-write tags can be freely repprogrammed
R d by users, thus new ddata can bee written
a erased as
and a needed. TheyT are reuusable tags and they haave becomee the most common.
c
T memorry often stilll contains a read-only
The y area to store the uniique ID num mber for
i
instance. Thhe degree of o programm mability deepends on how
h much ppower the tags can
h
have or reeceive. Addding user-programmaable memoory to a taag opens up new
p
possibilitiess for its usee. Companiees throughout the supply chain cann take advaantage of
t writeabble portion of the tagg memory in order too support ttheir own business
the b
o
operations. That way, partners accross the su upply chainn can avoidd having to share a
c
common daatabase to fiind informaation about the history of the tagged item, as data are
d
directly storred within the
t tag and remain
r assoociated withh the taggedd product. However,
H
t
there are stiill no standaards that reccommend ho ow to use thhis memoryy.
Power source:
- Passive:
Passive tags, which are by far the most common, require no internal power. They
receive transmission power from the incoming radio frequency signal sent by the
reader. They require no maintenance and are cheaper than active tags. They cost from
20 cents to 40 cents, whereas active tags generally cost from $20 to $50. Because of
their lack of onboard power supply, they can be very small. Of course, all RFID smart
labels are passive. Passive tags can operate at low-frequency (around 125 kHz), high-
frequency (13.56 MHz) and ultra-high frequency (UHF, 850 to 960 MHz). Their
practical read distance can range from about 10 cm to a few meters, depending on the
antenna size and design and the chosen radio frequency. One of the most important
factors that determine read range is the method passive tags use to transmit data to the
reader, which is related to the frequency. Low- and high-frequency tags are usually
powered by magnetic induction (inductive coupling), where the reader and the tag
form an electromagnetic field to interact, thus limiting the read range of the system.
Passive UHF systems use electromagnetic capture (propagation coupling) to
circumvent the range problem at higher frequencies. The technique involves the use of
electromagnetic energy (radio waves) that propagates from the reader antenna and data
are sent to the reader using radio frequency backscatter. This explains why companies
are more interested in using UHF passive systems in the supply chain, as they need to
read tags from at least a few meters for an RFID system to be useful in a warehouse
for example.
- Active:
Active tags include a battery to power transmission, which makes them larger and
more expensive than passive tags. On the other hand, they have a much faster data
transfer rate and a larger storage capacity, allowing more programming options. Due
to their onboard power supply, active tags are suitable for longer distances and can
transmit at higher power levels than passive tags, enabling them to work better around
such offending materials as metal and water. They have ranges anywhere from tens of
meters to hundred of meters. Whereas passive tags are more appropriate for smaller
objects, active RFID tags target larger objects such as containers or pallets. Despite the
higher cost of active tags, their potential value can justify their use especially when
coupled with a temperature sensor or any other type of sensing, as sensor applications
need to use battery-assisted tags and power for the sensor. Such tags can be used to
capture and record inputs from sensors to detect drastic changes in the variable being
monitored. For example, interfacing tag with a temperature sensor can enable it to
send an alert whenever the temperature reaches a preset upper or lower limit. This
RFID technology
t overview 9
ssolution coould be veryy useful too frozen foo ods producer, becausee it allows them to
m
monitor temmperatures during
d shipm ment or storrage.
- Semi-passiv
S ve (also knoown as semii-active):
Semi-passivve tags com
S mmunicate like passive tags in thaat they use tthe energy from
f the
r
reader to brroadcast a signal. Howwever, theyy have theirr own poweer source, which
w is
u
used to pow wer the miicrochip annd to perforrm active functions
f suuch as tem
mperature
l
logging. Thheir advanttages includde greater sensitivity than passiive tags annd better
b
battery life than active tags.
Radio
R frequeency:
L frequeency tags (between 1255 to 134 kilo

- Low ohertz),
- High frequuency tags (13.56 megaahertz),
- UHF
U tags (8868 to 956 megahertz),
m ,
- Microwave
M tags (2.45 gigahertz).
g
Modern RF
M FID tags aree now able to t operate at frequenciees greater thhan 900 MH
Hz in the
U
UHF band, which impproves a taag readers ability to read r the identity of many
m co-
l
located tags because thet data traansfer rate is higher and
a the datta from eacch tag is
t
transferred in a shorterr interval off time.
RFID readers
r
RFID readers
r aree transceiveers designeed for radiio
communnication wiith tags of a compatibble type. Th he
radio waves
w emittted by reeaders conttain enoug gh
energy to activate the tags, which
w can thhen transm
mit
their daata. It is immportant to notice thaat all of thiis
happen in a tiny fraaction of a second.
s
Readerss have one oro more external antennnas that em

mit
radio waves
w and thhat are connnected to them
t usuallly
by coaxxial cables.
Due too the fact that directt line of sight s is noot

necessaary and thaat read rannges can be b extensivee,
readers have a reaal flexibilityy for placeement. Therre
are fixed-position readers
r thatt can be mouunted on do
ock
Figgure 4 : Dockk door fixed mount
door, coonveyor linee, doorwayss, gates andd other areass in
reader and portal
order too read itemss traveling through
t theem. There also
a
exist poortable readders integraated with mobile
m com
mputers or attached too forklift trrucks or
RFID technology
t overview 10
vehicless in order too automatically identifyy pallets and other item

ms that are bbeing moveed. RFID
readers can also bee used withh bar code scanners
s in case both technologie
t s are needeed. If the
reader has
h the activve/passive modem allowing it to swwitch from passive to acctive mode and vice
versa, itt is called a hybrid readder.
Fiigure 5 : Forrklift mounteed RFID system
Middle
eware
The maanagement of numerouus RFID reeaders as well w as the managemennt of the data d they
generatee usually require a special inttermediate software layer l knowwn as middleware.
Middlew ware permitts reader cooordination, system mo onitoring annd the identiification of multiple
reads onn a single ittem. It is alsso in chargee of routing and filterinng the flow of reader-generated
data in such a way w that duuplications are eliminated and thhat only reelevant opeerational
informaation is passsed on to thee organizatiion's higher-level enterrprise managgement softtware. In
fact, it acts
a as a reaader interfacce to the appplication software.
Applic
cations
Once filltered by thhe middlewaare layer, innformation produced by the RFID

D readers is ready to
be proccessed by thhe enterprisse's manageement appllications. All
A main ERRP softwaree editors
such as SAP or Oraacle alreadyy offer RFID D connectivvity options..
2.3.3 RFID sysstem perfformance

e
Many factors
f can affect the performancce of RFID D systems, which varyy by the raange and
frequenncy used, chhip memoryy, security, type
t of dataa collected and other ccharacteristiics. This
section briefly deescribes soome of thee main eleements thatt can stronngly influeence the
perform
mance of RF FID systemss.
Frrequency
Frequency is the leading factor that determines the read range, resistance to interference
and other performance attributes. The reason is that radio waves behave differently at
different frequencies, thus generating different properties such as different ranges.
Furthermore, it is known that it is difficult to transmit radio signals through metals and
liquid. Products with lot of water and metal are thus particularly challenging to tag and
can lead to reduced read range and reading tags reliability due to interferences as well
as detuned antenna. This inconvenience is mainly an issue with UHF systems, as low
and high frequency systems work better than UHF systems around metal and water.
Indeed, radio waves dont bounce off metal and are better able to penetrate water in the
latter systems. One way of dealing with this problem is to design antennas that can be in
tune when close to these not RF friendly materials. Another way is to create an air gap
between the tag and the item.
In fact, which frequency is suitable depends on the kind of application, as certain
frequencies are not readable from short or long distance. The Figure 6 shows which
type of RFID applications is typically used at different frequency ranges.
Frequency band Description Typical ranges Common applications

125 135 kHz Low frequency To 18 inches Animal identification
Vehicle identification
Production control
Automation
13.56 MHz High frequency Near contact Ticketing (public transport,
HF 1 1.5 meters events, ski lifts)
Access control
Commercial laundry and
garment tracking
Merchandise (individual
products)
Contactless payment
Automation
858 930 MHz Ultra-high 2 4 meters Pallet, carton ,case
frequency Europe identification
UHF 7 meters USA Returnable container
tracking
Work-in-process tracking
Asset management
Baggage tracking
2.45 GHz Microwave Up to several Long-range identification
hundred meters with active tags
(container identification)
Figure 6: Common RFID frequencies for applications
Range
Besides frequency, the power output and the directional sensitivity of the antenna may
also influence the systems read range as well as the immediate physical environment.
As mentioned above, the presence of metals and liquids may cause interference that will
affect not only range abut also read/write performance.
Antenna
Orientation, position, proximity and reading area of the tag antenna are crucial to
consider in order to ensure optimal reads. Antenna orientation of some tags may
interfere with the orientation in other tags, especially when products are arranged close
and in any order, such as in a shopping cart. Of course, adding more reader antennas
enables the tag to be read in more positions or even regardless of its location. Another
point to pay attention to is that the reader cannot communicate with an active tag that is
oriented perpendicular to the reader antenna.
Signal attenuation
Signal attenuation is not only due to the fact that an emitted signal attenuates naturally
with distance and that a reflected signal attenuates at much faster rate. The way a
system is installed or external factors such as the material of the tagged item can also
attenuate the signal causing poor performance.
Electromagnetic interference
A wide variety of machines such as conveyors with nylon belts or manufacturing robots
can interfere with RFID systems.
2.4 Standards
Standards are critical for many RFID applications such as payment system and goods or
reusable containers tracking in open supply chains. Without standards, such applications
would be simply meaningless. Although it is commonly said that there are no standards in
RFID, there exist many well-established standards and a few emerging standards that ensure
diverse frequencies and applications, so that tags and equipment from multiple sources can be
used together in open supply chain systems. For instance, RFID standards are already in place
for item management, logistics containers, fare cards, animal, tire and wheel identification,
and many other uses. However, fewer standards have been finalized with regard to the use of
RFID to track goods in open supply chains, as the idea is relatively new. In any case, a great
deal of work has been done and is being done to develop standards for different frequencies
and applications.
Standards have to deal with the air interface protocol (how tags and readers communicate),
data content (the way data is formatted and organized), conformance (ways to test that
products meet the standard) and applications (how standards are used on shipping labels, for
example).
Two standards organizations particularly relevant for the supply chain are the International
Standards Organization (ISO) and EPCglobal Inc. Many national and industry standards are
based on ISO and EPCglobal standards. ISO has already created several standards covering
many areas, such as the air interface protocol and automatic identification and item
management. EPCglobal Inc. aims to achieve a global standardization to enable universal
traceability and is working on an international standard proposal in order to normalize the
technical uses of RFID. It succeeded to Auto-ID Center, which was originally responsible for
developing the famous Electronic Product Code (EPC) among others.
The EPC is a standardized number code, which is used to uniquely identify objects, so that
each of them can be tracked separately using RFID technology. It is thought to be an eventual
successor to bar codes. Contrary to the bare code technology, EPC allows the identification of
each item manufactured and not just the manufacturer and the class of products. So, the EPC
consists of a header and three sets of data partitions, in order to identify the manufacturer, the
product class and the item itself with the unique serial number. The Figure 7 shows a typical
encoding of an EPC of 96 bits. This type of EPC is large enough to cover all products
manufactured worldwide for years to come.
Figure 7 : Structure of EPC on SGTIN-96 basis
In fact, the goal of EPCglobal is to provide an homogeneous tags distribution system, so that
each item can have an EPC in the supply chain of every company in the world, which would
allow trading partners to easily track goods around the world. In other words, EPCglobal
strives for increased visibility and efficiency throughout the supply chain and higher quality
information flow between companies and their key trading partners. In this perspective, it has
begun developing a network architecture that would allow any authorized person to look up
any information associated with the serial number stored on tags. This architecture is
discussed in more details in chapter 3.
To distinguish tags type from each other, EPCglobal has established five tags classes to
indicate capabilities a tag can perform and has developed or tries to develop protocols for
these different classes.
The major shortcoming linked to this standardization process is that EPCglobal has created its
own UHF and air interface protocols for tracking goods through the international supply
chain, which are incompatible with ISO standards in addition to other interoperability issues.
However, in an attempt to be closely aligned with ISO standards and adopted more
internationally, EPCglobal designed the EPC Gen 2 standard. In other words, ISO and
EPCglobal are working on resolving this issue in order to satisfy the desire of end users for
having one international standard to track goods through the supply chain using UHF RFID
tags.
2.5 Application fields
Before examining the use of RFID in the supply chain in the next chapter, it would be
judicious to give an overview of the most typical RFID application fields first. This may help
realize the possibilities of the technology and its potential uses.
Typical application fields include:

Supply chain, logistics
RFID can be used for instance for asset management, product tracking, inventory
control, shipping and receiving, returns and recall management. As mentioned above,
the next chapter is entirely dedicated to the use of RFID for supply chain management.
Access control and security
Access cards or badges containing an RFID tag can replace keys or magnetic card to
unlock doors of a secure facility depending on the cardholders predefined access rights.
The secure automobile keys to unlock cars remotely are another example.
Public services
RFID can be used to collect toll fees.
Airport
RFID is used to track and locate baggage.
Electronic cash
Smart cards embedded with RFID chips are widely used as electronic cash.
Ticketing
For instance, RFID can be used for public transport systems, ski lifts.
Passport
Libraries
RFID is used to quickly check books in and out of libraries.
Military
RFID can be used to track military supplies on the front lines.
Healthcare
RFID can be used to improve patient care and easily retrieve the patients medical
history.
Animal identification
Human implants
Leisure time, sports
RFID is used for marathon runs for example or in amusement parks to find missing
children.
Research and development
RFID can be used to monitor a study subject for example.
Potential applications
Automating the checkout process with labeled products.
2.6 Main benefits
When carefully integrated and managed, RFID technology offers several advantages that are
worth to mention. The benefits relative to the use of RFID in the supply chain and the
advantages of RFID over bar code are extensively treated in the next chapter. This section
covers the general and most cited benefits of RFID technology and the main reasons for
choosing this technology.
RFID generally helps improve convenience, accuracy, information availability, efficiency,

safety and security. It is an easy-to-use technology, well suited for automatic operation, which
additionally provides durability, flexibility, rewritability and high data density, transfer and
integrity. It allows multiple tags to be read simultaneously. Moreover, this data collection
technology integrates easily into existing data collection systems and requires minimal down
time.
One of the most beneficial factors that encourage the use of RFID is probably its ability to
collect data where it is impractical or impossible to use other technologies or manual labor
especially because it does not require line of sight. RFID can operate in environments
exposed to extreme temperatures, gases or chemicals, where these harsh conditions typically
prevent the use of other data collection methods.
It normally allows companies to create value, increase their productivity, improve their
process and reduce costs and errors. RFID also helps them combat product tampering, loss,
theft and counterfeiting, especially as it improves product traceability as well as inventory
management and control. Furthermore, tracking objects with RFID requires less human
intervention. To sum up, RFID has the potential to offer returns on investment that are beyond
expectations.
2.7 Main issues
Despite all these benefits, RFID technology still presents a number of issues, whether they be
technical, organizational or ethical. Executives should be aware of them before opting for
RFID systems.
The main problem that usually comes first to mind is the heavy initial investment and
especially the high cost of the tags, which constitutes one of the main reasons that hold back a
bit the expansion of the technology. Because tags are eventually supposed to be attached to
large inventories of relatively inexpensive products, they really need to be inexpensive.
Otherwise, benefits and cost savings brought about by the technology will not be greater that
the deployment cost, which means for the company that the right time to implement this
technology has not come yet. In fact, for the technology to be truly competitive, it is said that
tag should cost less than 5 cents or even 1 cent, whereas nowadays passive tags generally
range from 20 cents to several dollars for more sophisticated ones.
The next major challenge is managing data. Using RFID generates masses of data as scanning
is always on, unlike bar code technology. Consequently, RFID system requires an IT
architecture that can appropriately manage, filter, analyze and respond to this significant
amount of data being captured, in order for the technology to be verily profitable and to avoid
information systems bottlenecks due to unwanted data. Failure in properly managing these
data will cause more confusion than increased visibility.
Certain technical issues have already been mentioned but here is a more complete list of the
most challenging ones:
Tag orientation: tags oriented perpendicular to the reader antenna prevent an effective
communication. Varying the position of the reader or build advanced antennas less
sensitive to orientation represent solutions to this problem.
Reader coordination: several readers in proximity to each other interfere with each
other.
Product packaging independence: certain types of packaging such as metalized
packaging adversely affect the tag readability.
Multiple standards: several frequencies and standards have been developed for RFID
tagging solutions, partly because of national frequency use restrictions and cost trade-
offs. One of the possible options to resolve this standardization problem is to build
readers that can operate using multiple standards. Nevertheless, developing a global
standard is necessary in order to achieve universal traceability.
Data formats: the way data is represented in memory of rewritable tags is not
standardized yet, which makes it more difficult for companies to share and interpret
data, as they move through a supply chain. When the memory capacity potential of
RFID has increased enough, XML may well be used for this purpose in the future.
Electromagnetic interferences: they can be caused by physical external factors, such as
machines and electric motors. In addition, liquids or metals may absorb or reflect RF
signals.
RFID is also subject to other kinds of concerns, mainly:

Security concerns:
The major risk with RFID issues from the low processing speed and low memory of
tags, especially passive tags, which renders them computationally weak for basic
cryptographic operations. As a result, the information within passive tags is vulnerable
to alteration, corruption and deletion. Resolving this problem without considerably
increasing the cost and power requirement of the tag is very difficult.
The three main attacks RFID is exposed to are:
- counterfeiting, which requires great skills though;
- denial-of-service, as radio signals are quite easy to block or jam;
- war-driving (implies the use of a device to pick up the information from unsecured
tags), war-walking (war-walkers do not need a wireless device to find RFID tag, they
can get past security to find the system that uses RFID), lifting (replacing tags with
counterfeited tags containing original data without being detected).
In any case, companies should put in place a security program including among others
security policies, procedures, standard and guidelines before implementing RFID in the
supply chain.
Privacy concerns:
RFID makes it possible to gather sensitive data about an individual without him being
aware of it, as RFID can be read at a distance. Even worse, the owner of the item will
probably not be aware of the presence of the tag. Consequently, the illicit tracking of
RFID tags, in particular world-readable ones, can pose a risk to personal location
privacy, especially as tagging at items level begins to take place, directly hitting the end
customer. To resolve this problem, tags should be disabled after check-out. For
example, this can be performed by including a built-in kill command in the tag to
make it useless, or by applying a mechanism to shorten tag read range to a few
centimeters.
3
RFID in the supply chain
3.1 Definition of supply chain management
Supply chain: represents the sequence of organizations, i.e. their facilities, functions
and activities, involved in the different processes and activities that produce value in the
form of products and services in the hand of the ultimate customers. A typical supply
chain encompasses manufacturing, warehousing, distribution and retailing.
Supply chain management (SCM): is the task of integrating the organizations along
the supply chain and coordinating materials, information and financial flows in order to
benefit from faster times to market, quicker fulfillment of orders and lower costs. In
other words, it consists of planning, implementing and controlling the operations of the
supply chain as efficiently as possible. In fact, supply chain management lets an
organization provide the right goods and services to the place they are needed at the
right time, in the right quantity and at acceptable cost. It aims at improving
collaboration among supply chain partners, so that inventory visibility and inventory
velocity can be improved. Efficiently managing this process requires maintaining
relationships with suppliers and customers as well as controlling inventory, forecasting
demand and getting constant feedback on what is happening at every link in the chain.
Figure 8 : Supply chain flows
19
RFID in the supply chain 20
3.2 How RFID helps improve supply chain management
To achieve its purpose, supply chain management needs accurate identification and tracking
of goods as well as knowledge about what inventory a company have, where it is, how much
it has and in what condition. Such information is crucial today in order for companies to
survive and thrive. Furthermore, more than ever before, there is a pressure on manufacturers,
distributors and retailers to maximize process efficiency, minimize cost and provide the best
possible value for end-customer, which boils down to further improve supply chain
efficiency.
Given that context and based on the first chapter of this paper, RFID appears to be an ideal
technology to satisfy these ever more pressing requirements. Indeed, as RFID supports better
traceability and better identification, it is in essence a solution to the tracking and
identification problems supply chain management has to deal with in order to manage the
movement of materials along the supply chain. RFID therefore contributes to better supply
chain efficiency, visibility and responsiveness and not only in one way but in many different
ways depending on which level and on which supply chain operation it is applied to.
Ultimately, this enabling technology helps provide the right product at the right place at the
right time, thus maximizing sales and profits. How RFID can be used in the supply chain
management and how it can improve it is demonstrated in the rest of the chapter.
3.2.1 Tracking the movement of goods: from bar code to RFID

technology
Tracking problems can easily emerge as items physically move from one point to another in
the supply chain. They can get lost, stolen, misplaced, damaged or spoiled during their
transport. Companies also encounter problems of tracking under-shipped, over-shipped, user-
dissatisfied items or recalled items, especially as they may not be properly recorded in the
system. Consequently, excess, idle and duplicate items may pile up in the warehouse.
Solving these problems without RFID technology results in a great deal of human
intervention because humans have to manually track down the information that cannot be
added to the bar-coded labels.
On the other hand, when using RFID, less human intervention is required essentially because
no more employees are needed for scanning. Tags can be automatically read and written many
times to track every movement, such as arrival, reshipment and departures times at strategic
locations. The communication between goods and inventory systems is direct and avoids
typing information into a database or scanning the wrong bar code, which considerably reduce
human error and labor costs. To achieve this automatic recording of movement of goods from
the production line, readers are installed in factories, distribution centers and storerooms and
on store shelves. Typically, when a reader reads a tag, it passes to a host computer system the
tag ID, the reader's own ID and the time the tag was read. Given that companies know which
readers are in which locations, they can know where a product is, as well as what it is, and
because of the time stamp, they can know when it has been where. As it can be observed, with
RFID, the tracking of physical movement of items occurs in real-time, which is a property
specific to this technology. Tags can check with databases in real-time and send online alerts
to the executives on possible order and shipment discrepancy.
To sum up, RFID has the potential to dramatically improve the supply chain visibility thanks
to its ability to track every item anywhere in the supply chain automatically, securely and in
real-time and its ability to identify uniquely each container, pallet, case and item being
manufactured, shipped and sold. This mainly explains why many companies are investing in
RFID as a replacement or extension of traditional bar coding processes. In reality, RFID
should not be considered as simple replacement for bar code technology, since it differentiates
itself through both performance and diversity of its applications and through its capabilities.
The main advantages of RFID that prompt companies to transition from bar code to this
technology are the following:
Higher storage capacity: unlike bar-coded labels, which can only hold information
about the manufacturer and product category, RFID tags can include detailed
information on the product, tracking information (such as arrival, reshipment, and
departure times at certain locations and on specified dates), changes in environmental
conditions (depending on the circuitry of the tags).
Programmability: data can be added to or removed from the tag, or updated, which is
not possible on a bar code as it is printed once. Some tags with more advanced
capabilities can even be programmed to define read/write rights.
Larger reading distance.
Much wider scanning area.
No unobstructed line of sight required with the reader to transfer information, as it is
sent via radio waves.
Ability to read multiple items simultaneously, almost regardless of the orientation,
hence RFID system potential for complete automation of the process in question. This
reduces the need for manual scanning and is advantageous if labor-intensive data
collection is needed. For example, items on a pallet can be read all at once.
Faster read rate (100 to 1000 tags per second).
No human intervention.
Reliability in heavy moisture, noisy, dirty or hot environments, which generally make
bar codes unusable.
Tags can be embedded almost anywhere.
All of these advantages undeniably lead to a more efficient and faster way of resolving
tracking problems, thus removing blind spots from inventory and supply chain operations. US
supermarket chain Wal-Mart is the first to show large scale gains in productivity realized
through the use of this technology. Airport baggage routing is also starting to benefit from the
significantly higher reliability of RFID in comparison to standard bar code systems.
Yet bar code remains the easiest and least expensive method to identify individual consumer
goods and it will probably not disappear as RFID use grows, or at least not anytime soon.
Mail delivery still exists despite the emergence of emails and cell phones. Moreover,
combining the two technologies may be the best approach in some cases.
3.2.2 RFID in logistics operations
RFID technology is already widely used in logistics, mainly to optimize the flow of goods, to
enhance visibility throughout the supply chain thanks to improved inventory tracking, to
improve fleet management efficiency and to automate certain parts of the supply chain. It is
the ideal technology for automating manufacturing and distribution data collection processes.
Large quantities of information can be analyzed and sent to internal and external systems in
near real-time, thus globally improving the quality of business operations. This operates with
the advantage that the transmission to databases works without physical or visual contact.
These databases that live with products throughout their entire life can provide the exact
routes they have taken through the supply chain as well as genealogy data including any after-
market adjustments/upgrades. With this kind of information automatically collected and
recorded, companies can reduce logistics costs, improve their planning, accelerate their
handling and consequently make better use of warehouse capacities, labor and working time.
In addition, having the complete history attached to the product can help companies minimize
warranty risk and optimize the efficiency of a possible recall.
Basically, most of the benefits of using RFID in the supply chain issue from the better
traceability, identification and automation level that this technology offers. The potential of
RFID to facilitate and automate the tracking of movements at different supply chain levels
and at minor costs makes it possible to trace the product in the different steps of its
transformation, to immediately access information in case of crisis, to facilitate product
withdrawal, to better control shipping and receiving, to optimize flows and to immediately
locate every tagged item. Better identification means much more accuracy, which allows
manufacturers and retailers to operate and collaborate more efficiently, so that both can be
more responsive to the needs of customers, thus reducing product shortage in the stores.
But the key to realize maximum return on investment and to reap substantial business benefits
consists in strategically incorporating RFID and other sensor-based into the information
architecture and business processes. For instance, RFID and wireless network systems could
be integrated to provide full-time, wide-scale monitoring. The success of RFID also depends
on the relevance of its use. The risk is excessive tagging.
Integrating RFID into the main logistics activities may lead to the following global and ideal
situation:
In manufacturing facilities, RFID can be used chiefly for automatic routing and control and
for tracking raw material, work-in-process and finished goods inventory. At this stage,
finished goods receive an RFID tag that contains a unique serial number (such as the EPC), so
that the item can be identified univocally along the supply chain. Items are packaged, either
individually or in batches and then placed on a pallet. Cases and pallets also contain an RFID
tag. When leaving the factory floor, pallets pass through dock doors in order for the readers to
read the tags on the pallets and cases, which allows the identification of the products and the
automatic generation of the manifest. At the distribution center or warehouse, tags are read
again by readers integrated into the warehouse gates for incoming and outgoing goods. The
arrival is confirmed and the information is sent into the inventory system. Every time a tagged
pallet is moved through one of the gates, the ERP or WMS (warehouse management system)
system is synchronized. The corresponding entry is updated by the date and location of
recording. The RFID readers also provide inventory and expiration date control. This level of
continuous real-time inventory visibility permits companies to avoid wasting time and money
on administration and to concentrate more on core activities.
As seen above, tagging can be performed at pallet, case or item level. However, mainly
because of the costs of the tags, deployment projects regarding traceability at item level have
not been really achievable so far. But they are expected in the near future, as the high demand
for RFID slowly brings down prices. On the opposite, tagging of pallets and containers is
quite common.
The next part examines more concretely how RFID could further convenience and efficiency
in some typical logistics operations.
Asset management
RFID tag can be permanently attached to capital equipment and reusable assets such as trays,
pallets, containers, lift trucks, tools and vehicles, in order for the company to track them more
efficiently. By placing fixed position readers within the facility at strategic points, a company
can automatically track the movement and location of tagged assets, thus avoiding wasting
labor time on searching them. Making inventory control of reusable assets much more
accurate and efficient allows manufacturers to reduce cost and improve return on investment
for these tagged assets. Readers may also alert supervisors if they detect any attempt to
remove a tagged asset from an authorized area, which provides more security. If the content
of containers or pallets is also recorded, users can have full visibility into inventory levels and
locations, allowing them to locate quickly an item that has to be found urgently for any
reason. These tags can also be read at dock doors in order to record which pallets or
containers are sent to which customers. This information could be used to document cycle
times and improve returns and recoveries for example.
Inventory control
Improved inventory tracking is certainly the main benefit to using RFID in the supply chain.
Every supply chain partner including manufacturers, distributors, logistics providers and
retailers can leverage the highly accurate, real-time and unattended monitoring of RFID for
their inventory applications to improve the efficiency of inventory management, reduce out-
of-stock, labor costs, safety stocks, and inventory inaccuracies. If, in addition, they take
advantage of the technology capabilities to collect information and provide visibility in places
and environments where tracking was not done or possible before, they can significantly gain
in inventory visibility, accuracy and efficiency.
Readers in storage area can automatically record the removal of an item and update inventory
records. Readers can also easily look for a particular item that is misplaced or needed
immediately to complete an order by reading for its specific ID number. With RFID, counting
inventory becomes much faster, as identification can be performed in bulk and could be
quickly and accurately performed by readers integrated with mobile computers.
Inventory movements from monitored locations could automatically trigger a replenishment

request. To prevent inventory theft and diversion, readers could be set to send a notification
when an item is moved by unauthorized personnel, placed in unauthorized area or removed
from storage without authorization.
Shipping and receiving
When items are assembled for a shipment, the same tags used to identify finished products
can be read to automatically produce a shipment manifest, also automatically recorded in the
shipping system. This manifest could be printed in a document, encoded in an RFID tag or
printed in a bar code on the shipping label. As soon as the pallet comes off the truck, a portal
interrogator or handheld device can read the pallet tag, which allows immediate verification
of the shipment content and provides real-time visibility to the ERP system. This eliminates
time-consuming and costly steps, enables faster invoice settlement, minimizes human error
and increases inventory accuracy. In other words, reading a tag containing manifest
information simplifies the receiving process.
3.2.3 RFID in manufacturing
Manufacturers can especially benefit from RFID, since the technology can make internal
processes more efficient. There are several possible applications that allow manufacturers to
reap real benefits in increased productivity, process improvements, and reduced errors and
costs. For example, according to a study by AMR Research, early RFID adopters in the
consumer goods industry reduced supply chain costs between 3 and 5 percent and grew
revenue between 2 and 7 percent because of the added visibility RFID provided.
RFID applications in manufacturing include:

Receiving
Shipping: if the tag carries data about pallet content, origin, destination and customer
order number, a computer can tell the delivery and inventory systems where and how to
route the shipment, which ensures proper shipment sequence and eliminates shipment
placed on the wrong truck.
Sortation: If tags contain information on the carton destination, a computer can tell the
sortation system where to route the carton for staging and delivery, which ensures
proper item placement, eliminates incorrect shipping and decreases shipment delays.
Product genealogy: by putting manufacturing data on the tag, a complete history of the
item can be built, which increases recall efficiency, minimizes warranty risk and
eliminates wasting time.
Inventory management: by using RFID capability to track raw materials, work-in-
process and finished inventory, manufacturers can improve visibility and confidence
into their inventory, so that inventory levels, labor costs and safety costs can be
reduced.
Work-in-process tracking: by applying tag to subassemblies in the production process,
it is possible to integrate readers with industrial control and material handling systems,
in order to identify materials moving down the production line and automatically route
them to the appropriate next station.
Plant management and field service: plant or field equipment can be equipped with an
RFID tag containing among others maintenance data, in order to facilitate the
maintenance and ensure proper location and equipment.
Labor tracking and security: an RFID tag containing worker identification and
authorizing data can be incorporating into worker badges in order to increase facility
and asset security and efficiently capture labor costs.
Furthermore, the use of RFID tags allows an easier product authentication, which helps
combat counterfeiting and grey market activity. This responds to the need of brand owners for
validating that the products being sold with their brand are authentic and safe for consumers.
3.2.4 RFID in retailing
Retailers interest in using RFID in particular for receiving, replenishment, category

management, traceability, counterfeit prevention and inventory. Retailers can benefit from
reduced inventory for the reason that improved supply chain visibility allows better demand
forecasting, lower safety stocks and lower order cycle times. As RFID enables automated data
capture, retailers can also leverage this technology to cut costs by reducing labor in the store
and warehouse and to lose fewer sales through out-of-stocks.
However, as already mentioned before, current tag costs are restraining the impact of RFID
on retailing for now, but as the technology improves and is more widely adopted, costs will
come down.
3.2.5 EPCglobal Network
To date most applications for tracking items have been limited to operations within a single
company, as a result of the lack of a global standard. Indeed, tracking products beyond the
confines of a single organization between trading partners requires the development of a
global standard, which must define a standardized way of uniquely identifying items within
the supply chain as well as a mean of discovering and sharing the data that describes each
identified item. Today, EPCglobal Inc. has developed standards that fulfill these
requirements, thus allowing RFID to be taken beyond the boundaries of a single organization
throughout the entire chain.
The first requirement is addressed through EPCs, which are able to identify products uniquely
at the item level. The EPCglobal Network satisfies the second requirement as a standards-
based method to discover and share real-time information associated with each EPC. It is
composed of three main elements: the Object Naming Service (ONS), the EPC information
Services, and the EPC Discovery Service.
The ONS is similar to the Domain Name Service (DNS), but instead of pointing computers to
Web site, it points them to Internet databases where data associated with an EPC is stored.
The ONS has a distributed architecture. The EPC Information Services are the actual data
repositories used to store information associated with the EPCs. The EPC Discovery Service
is essentially a chain-of-custody registration service. In fact, for each manufacturer, the EPC
Discovery Service provides a directory of all EPC Information Services that contain
information about a particular manufacturers products.
Figure 9: The elementts of the EPC

Cglobal Netw
work system
The proocess begins with an RFIDR tag being attach hed to an iteem. The tagg includes an EPC,
which isi registeredd within thee ONS at thhe manufaccturing stagee and data associated with the
item is also addedd to the manufacturer
m rs EPC In nformation Service. Thhe EPC Discovery
Service is passed the inform mation thatt this data exists witthin the m manufacturerrs EPC
Informaation Servicce. This prrocess is reepeated at eache point throughoutt the supply chain.
Whenevver a produuct arrives ata the next point,
p its arrrival is regiistered withh the organiizations
EPC Infformation Service
S and knowledgee of informaation on thiss product iss registered with the
EPC Diiscovery Serrvice. The registration
r of this prod duct knowleedge by eacch EPC Info ormation
Service into the EPPC Discovery Service enables
e fulll and real-timme supply cchain visibiility. If a
partner needs to get informattion about a product he h has receiived, he askks the ONS S for the
locationn of the mannufacturerss EPC Inform
mation Serv vice.
The EP PCglobal Network cann typically be b used to solve probblems relateed to shipp
ping and
receivinng, product theft, countterfeiting annd product recall.
r
3.3 RFID sy
ystem planning
p g and in
ntegratiion
There are
a several factors
f that can encouraage a comp pany to opt for RFID, ssuch as the need for
improviing efficienncies beyondd current leevels, the lim
mited inform
mation conttent of bar codes or
RFID mandates
m to meet.
As rolling out RFID technology represents an important initial investment and changes
business processes, it is recommended that a company conducts a cost/benefit analysis in the
first place. This analysis should consider, among other things, customer privacy issues,
security challenges, education and training, operational, logistical and IT challenges.
Companies should be aware that deploying RFID involves a lot more than purchasing the
right tags and installing the right readers. Other costs include getting a middleware to filter
data, upgrading or investing in enterprise applications that can make use of RFID data, hiring
a system integrator to install the readers and ensure the interaction with middleware and
training for employees.
As for all system integration, the key to a successful implementation is careful planning in
order to get the desired impact and maximize return on investment. A carefully planned
system will provide immediate benefits and long-term competitive advantages. Here are some
points to take into account when planning an RFID system, so that it can provide the
necessary functionality and flexibility to meet current and future needs. Companies should:
understand RFID capabilities and eliminate misperceptions.
consider starting with areas where bottlenecks frequently occur or that require labor-
intensive manual handling or where improved accuracy would considerably improves
operations.
rethink their business processes and analyze the changes that the implementation
requires to its current architecture.
investigate appropriate standards to support the application, as committing to standards
is an important way to maintain flexibility and a smooth migration path as well as to
ensure compatibility with other supply chain partners.
choose tags adapted to the environment and their use.
ask RFID vendors questions about the frequency, protocols and standards supported by
their hardware, the interoperability of the hardware with RFID systems from other
vendors, the cost of upgrading and maintaining equipment, their ability to customize
tags according to the needs of the company. To create a flexible architecture, companies
should opt for flexible equipment such as readers capable of processing tags with
different frequencies.
plan a pilot implementation, conduct the pilot, measure results and assess the feasibility
of rolling out the system.
know what it wants to do with the collected data, where it wants to place interrogators,
what it wants to tag and tag only what is necessary.
3.4 Examples of companies involved in RFID
Wal-Mart requires that its top hundred suppliers use RFID on their supply pallets. Other
global organizations, such as Gillette, Procter & Gamble, Coca-Cola and even the U.S.
department of Defense are also implementing RFID. For example, Procter & Gamble
implemented an RFID-based system to identify the pallets in order to increase dock loading
throughput and eliminate bottlenecks at the loading docks and costly mistakes.
Texas Instruments and Philips Electronics are companies with a large volume of RFID
production.
Companies with an RFID solution capability include IBM, Intel, Hewlett Packard, Microsoft
and Sun Microsystems.
4
Conclusion
RFID is a monumental advance in product tagging, tracking and information dissemination.

By equipping items with tags containing a unique serial number and using readers to interact
with them via radio waves, RFID offers automatic identification and data collection of
physical objects, which grants them the ability to communicate with the virtual world. The
collected data are passed on to the middleware layer and integrated with the enterprise
applications to create business value.
Today, the technological progress in terms of miniaturization of electronic components and

the emergence of international standards contribute to the rapid expansion of the technology.
RFID has many advantages over other automated data collection techniques such as bar code
system. The numerous reasons that prompt companies to adopt RFID include, among others,
no line of sight required, higher capacity storage, writability, fast read rate, accuracy,
durability and reliability in harsh environments. However, a number of issues still present a
challenge, such as customer concerns, high costs, offending materials, tag orientation and
interference. But once RFID has proved beneficial and has been well established, economies
of scale such as mass production should help bring down the price. This would enable item-
level tracking for high-value goods, and perhaps eventually, even tracking low-value items.
The technology can be used for many kinds of applications and its potential uses promise the
development of amazing future applications. Given its purpose, RFID is highly convenient to
use for supply chain management, where accurate identification and goods tracking are of
primary concerns. Indeed, RFID can provide immediate and tangible benefits throughout the
supply chain. Companies can essentially benefit from this technology to dramatically increase
supply chain efficiency and responsiveness, productivity, inventory visibility, accuracy and
reduce logistics, labor and error costs. RFID can be applied to all kinds of logistics operations,
such as inventory control, shipping and receiving and asset management, as well as to
manufacturing and retailing. As global standards emerge such as the EPCglobal Network,
companies are increasingly turning to RFID to track items and shipments in the open supply
chain.
Implementing an RFID system requires a large initial investment and thus requires a careful
planning in order to consider the various issues companies face when rolling out the
technology.
30
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Using RFID For Supply Chain Management: Electronic Business Course

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DPARTEMENT DINFORMATIQUE /

Information Systems Research Group

Using RFID for Supply Chain

Fribourg, May 2008

2 RFID technology overview ........................................................................ 3

3 RFID in the supply chain ......................................................................... 19

Figure 1 : RFID system components ......................................................................................... 5

Figure 2 : An example of an RFID tag ...................................................................................... 6

Figure 3 : Tags of different shapes and sizes ............................................................................ 7

Figure 5 : Forklift mounted RFID system ............................................................................... 10

Figure 6: Common RFID frequencies for applications ........................................................... 12

Figure 7 : Structure of EPC on SGTIN-96 basis ..................................................................... 14

Figure 8 : Supply chain flows ................................................................................................. 19

Figure 9: The elements of the EPCglobal Network system .................................................... 27

2.1 General concept

2.2 Brief history

2.3 Basics of RFID technology

2.3.1 Operating principles

2.3.2 RFID system components

Figure 1 : RFID system components

An RFID tag is at least composed of two parts:

a tiny siliconn integratedd circuit forr storing an

form thee finished taag.

Figgure 3 : Tags of different shapes

It is posssible to classify tags based on at least

L frequeency tags (between 1255 to 134 kilo

- High frequuency tags (13.56 megaahertz),

Readerss have one oro more external antennnas that em

Due too the fact that directt line of sight s is noot

vehicless in order too automatically identifyy pallets and other item

Fiigure 5 : Forrklift mounteed RFID system

Once filltered by thhe middlewaare layer, innformation produced by the RFID

2.3.3 RFID sysstem perfformance

Frequency band Description Typical ranges Common applications

Figure 6: Common RFID frequencies for applications

Figure 7 : Structure of EPC on SGTIN-96 basis

2.5 Application fields

Typical application fields include:

2.6 Main benefits

RFID generally helps improve convenience, accuracy, information availability, efficiency,

2.7 Main issues

RFID is also subject to other kinds of concerns, mainly:

3.1 Definition of supply chain management

Figure 8 : Supply chain flows

3.2 How RFID helps improve supply chain management

3.2.1 Tracking the movement of goods: from bar code to RFID

Tags can be embedded almost anywhere.

3.2.2 RFID in logistics operations

Inventory movements from monitored locations could automatically trigger a replenishment

Shipping and receiving

3.2.3 RFID in manufacturing

RFID applications in manufacturing include:

3.2.4 RFID in retailing

Retailers interest in using RFID in particular for receiving, replenishment, category

3.2.5 EPCglobal Network

Figure 9: The elementts of the EPC

3.4 Examples of companies involved in RFID

RFID is a monumental advance in product tagging, tracking and information dissemination.

Today, the technological progress in terms of miniaturization of electronic components and

[EPCglobal Network 2005]

[Optimize SCM 2005]

[Replacement for bar code 2005]