Radio frequency identification technology in retail supply chain management

RFID

The Use and Potential of Radio Frequency Identification (RFID) in Retail and Support Settings

In the increasingly globalized world of commerce and trade, the arena of supply chain management has loomed ever larger in terms of importance to operations for all manner of business, and has also continued to grow more and more complex. Not only are the logistics of production, shipping, warehousing, distributing, and finally selling to end consumers more arduous and practically difficult as trade networks and relationships become more complicated, but the tracking and quality management of product care at each step in this process also becomes more demanding as workloads and third-party service usage increase. Information and communication technologies have helped to make this complex system of global trade possible, and continue to assist it in running more smoothly and efficiently, though there are always still improvements that can be made in this regard.

When it comes to the tracking and quality management of product handling throughout the supply chain, very real little progress has been made since the development of barcodes -- an important advancement that is still utilized by almost every industry to enhance the efficiency and the consistency of handling, but with certain problems. Barcode scanning requires very specific and sometimes expensive resources in terms of factory or warehouse layouts, scanning machines, precision, etc. A new technology has emerged over the past two decades that has solved many of the lingering problems with barcodes, enhancing the capabilities of scanning techniques and thus expanding the functionality and potential applications for such technologies and devices. Like any new technology, however, adoption has been slow and in many ways slightly haphazard; despite the recognized potential of this technology, developing ways to actually utilize and apply it in cost-effective manners as a part of complex operations has remained elusive.

The following pages will provide a brief overview of this technology, known as radio frequency identification (RFID), and its current use in the area of supply chain management. More specifically, this paper will examine the ways in which RFID use can and will assist retail establishments in tracking products in order to achieve greater efficiency and consistency in a variety of operations, from product ordering and stocking to loss prevention to sales tracking and even improving checkout speeds and reducing labor costs. Though RFID is not used extensively in retail operations at the current time, its use in other parts of the supply chain that directly support retail objectives and strategies has increased significantly in recent years, and these developments will also be discussed both as background and as suggestions of potential modified uses in retails settings. Through this examination, it will be made clear that RFID should be implemented on a much broader scale over the coming decade, which will bring the utility of the technology up and the cost down.

RFID Technology: An Overview

In simplest terms, RFID tags work in a manner very similar to that of barcodes, providing unique identifiers (though through specified radio signals, not visual lines) for anything they are attached to (Spotlight on: RFID, n.d.). The RFID tag, which is itself a changing part of the technology (more on this below), is somehow attached to or embedded in the product, box, case, or other item being tracked. While powered, the RFID tag gives off a specific identifying radio signal of weak strength and limited radius, identifying the product/box/case/etc. with a range of potential information, from specific product type to lot number and more (Spotlight on: RFID, n.d.). As barcodes grew more sophisticated the amount of information they were able to contain and transmit also increased significantly, but scanning limitations still proved a persistent problem.

It is the fact that the RFID tag gives off a radio signal rather than being a static element that must be actively scanned marks the major difference between this technology and barcode technologies, not only in how the technologies themselves operate but in the functionality of the technology in real-world applications, as well. Because the radio signal is transmitted in a wide (though still very short-range) radius, it can be read by a receiver/"interpreter" situated anywhere within the proximity of the radio signal and not just, as is the case with the current widely-used technology, by a scanner that must be not only within inches of the barcode but that must also be physically pointed at the barcode with a fair amount of precision (Spotlight on: RFID, n.d.). This opens up many new realms of efficiency and of potential applications for RFID, with the ability to read multiple tags simultaneously (or perhaps more accurately, in incredibly rapid succession that is simultaneous for all practical purposes) and at greater distances eliminating the need for the item-by-item scanning required with barcodes (Spotlight on: RFID, n.d.; Totty, 2009; Swedberg, 2012).

This is not to say the some physical movement can't be employed to enhance usefulness still further; the short-range of RFID tags does limit the distance to which a receiver can be in order to record the tag (Spotlight on: RFID, n.d.). This short-range is not a shortcoming but rather an essential part of the functionality of RIFD tags, however. Though there are applications where longer-range transmission might be useful, it is the movement of tagged items that generally needs to be tracked, and for this short-range is best as it prevents the continued reading of items after they have passed a certain gate, or before they have entered (Swedberg, 2012; Totty, 2009). If a receiver doesn't stop reading a tag until the delivery vehicle is thirty yards away, for instance, it will be impossible to make sure the truck was properly loaded by checking of RFID tags as they "disappear."

Any description of RIFD technology must include the degree at which this technology is still developing. While the basic functionality of RFID tags has not changed since the concept arose, the mechanisms that allow for this functionality -- most especially the tags themselves -- have undergone significant developments (Garby, 2012; Nusca, 2010; Rothfeder, n.d.). For some time all RFID devices were embedded in relatively large plastic housing devices and were unsuitable for use with many different products and in many different industries, however upgrades to different material classes are making more applications for RFID devices possible, and are also improving the efficiency and the accuracy of transmission according to some (Garby, 2012). Cost and size reductions in the technology has also made them more appropriate for more diverse settings and applications; perhaps the most exciting move in this area is the development of printable RFID tags that use carbon nanotubes as a power supply and a semi-conducting ink for the tag itself (Rothfeder, n.d.; Nusca, 2010). This makes the tags almost as simple on the manufacturing end as barcodes, without losing any of the functionality seen in other RFID tags (Nusca, 2012).

Retail Applications

The wide diversity and large benefit of RFID technology implementation and application in the warehousing, distribution, and general wholesaling operations of the supply chain, as well as in other less related settings, makes it difficult to explain the relative dearth of the technology's usage in retail settings. There are many different ways in which these technologies can be used to assist customers, employees, and managers at point-of-sale retail locations, may of them direct extrapolations of current uses of the technology in supply chain management that takes place further up the chain. The cost of rolling out retail RFID applications on a wide basis has been prohibitive for much of the past decade, with initial costs of RFID tags running at more than a dollar in their first uses, but as the cost of the technology continues to decline -- tags are currently available for as low as fifteen cents, and this is likely to continue to drop precipitously with new technologies under development -- it is likely that retail applications will become far more pervasive.

This is not to suggest that there are currently no retail applications of the technology in use, limited though they may be. A sushi restaurant in Settle was one of the early adopters of this technology, especially in a direct customer-oriented operations, using RFID tags on their plates to track the food selections and the age of sushi dishes prepared as part of the restaurant's buffet (Totty, 2009). This allowed the restaurant not only greater control over the quality and safety of their products (by controlling the length of time that plates were left out more accurately and consistently), but also enabled the sushi chefs to more instantly and accurately determine what types of dishes were being consumed faster, and thus needed to be replaced more often (Totty, 2009). This is similar to other distribution uses, though on a smaller and more immediate scale.

The same type of application could conceivably be implemented in any retail setting, such as a standard grocery store or supermarket. If all items within the store contained a printed RFID tag, which in the next five to ten years will not at all be an unreasonable proposition given the current state and pace of technology development, shelf-stocking could be accomplished with much greater efficiency and accuracy simply by notifying an overseer every time the number of items of a specific product drops below a threshold level (Garby, 2012; Nusca, 2010; Malone, 2012). This would reduce labor hours, increase sales potential, and could be integrated with ordering processes and other logistcial information that would be passed up the supply chain to achieve greater overall efficiency, as well.

Other retail applications become readily apparent based on even a cursory examination and imagination of potentials. Simply looking at the ways barcodes are used and how these processes could be improved by switching to RFID tags provides some ideas for the retail use of RFID tags that could have immense benefits. The simultaneous (or near-simultaneous) scanning of multiple tags and the ability for scanning to occur without the direct and precise physical association of scanner with reader means the contents of an entire grocery cart full of goods could be scanned and transmitted to a register in a matter of seconds, again reducing employee time as well as employee strain and also enabling customers to be processed faster. This has clear efficiency and even health benefits for the parties involved, and can make current self-checkout machines far more easy to use.

The same basic idea can also help with loss prevention, including issues of shoplifting and other theft. Some retail establishments currently have scanners at their exits meant to respond to the movement of an item through these scanners that has not been paid for -- chances are everyone has been chagrined at least once when an alarm goes off as they exit a store despite the fact that they paid for everything in their possession. The process would not work any differently with RFID tags -- the process of the scanning for stolen items, that is -- but it would work much better in terms of accuracy, consistency, and comprehensiveness. With printable RFID tags, there is no reason that every product other than produce could not have such a tag, all of which would be easily readable by ceiling-embedded receivers at points of egress (Nunca, 2010). Receipts could even be printed with RFID tags and used to match the items associated with those receipts with items exiting concurrently, ensuring the accuracy of the system as a whole and reducing loss through theft.

Conclusion

The use of RFID technology is still very much in its infancy, but appears to be overdue for a growth spurt. It can be expected that over the following years the technology will become ubiquitous in a variety of settings, many of them more familiar to the common consumer than are the current applications of RFID tags. Retail is not the final frontier, either, but household goods that utilize RFID tags to improve ease of use and functionality are also easily imagined. Soon, RFID will be as much a part of our lives as cell phones -- and probably integrated with them, as well.