Amazing accomplishments of RFID


Ram Shukla
Amity Business School
Lucknow Campus

B.E. Honors (Mechanical Engineering); MBA (Finance)
Masters in Industrial Engineering (Texas A&M University, College Station, Texas, USA)
Diploma in Export-Import Management

Definition – Radio-frequency identification (RFID) is an automatic identification technology that involves RFID tags or transponders that emit radio signals or radio waves. There are also devices called RFID readers that pick up these radio signals. The RFID tag is an object that can be attached to or incorporated into a product, animal, or a person. Chip-based RFID tag has a computer chip which contains at least some data in the form of a unique identification number and/ or some other information depending upon the memory size of the RFID tag. The RFID tag also contains an antenna which transmits the radio signals. Passive RFID tags require no internal power source, whereas active RFID tags require a power source.

( accessed March 9, 2007)

(Courtesy - research1/rfid-tag.jpg accessed April 2, 2007)

Once a RFID tag comes near to a RFID reader then, the RFID reader captures all the information stored on the RFID tag. This means that, if RFID readers are installed appropriately, we can get real-time information at all times about the product, the animal, or the person in which the RFID tag has been attached to or incorporated. A shopping mall example is illustrated to show, how this technology might completely change the functioning of the entire world. Right now, when we take the shopping cart for payment in a shopping mall, the bar code label on each and every item has to be scanned for the items to be recorded in the payment system. Whereas, if all the items had RFID tags on them, then, the entire cart having hundreds of items can be made to pass near the RFID reader installed at the payment counter. In milliseconds, all the hundreds of items would be scanned automatically and, recorded into the system. No longer would one have to pick each and every item and, scan it, to record it into the payment system! The number of areas in which RFID technology can be utilized is limitless. Even though in the inception stages, it is being utilized in a lot of industrial sectors amongst the developed nations.

Real-time information in the form of RFID (radio frequency identification) technology is becoming ubiquitous, so it's important to start learning about it, to start thinking about how it will affect the business, and to get the help required to revise the business operations and strategy to exploit this technology so that, the businesses can become profit centers. Although the potential exists for RFID to deliver the benefits, many challenges must be surmounted in order for the technology to mature and fully realize it's potential. The technology still has a long way to go before it matures. But one thing's for certain: this technology will be with us for a long time to come.

From various case studies, almost every RFID implementation manager has professed that, real time information through RFID reaps maximum benefits when, it is applied to business processes which have been 'value stream mapped' as much as possible. Value stream mapping is a methodology of 'lean thinking' philosophy by which an organization traces the flow of a customer's order from start to finish and, determines where the elimination/ improvement of inefficient processes can save time, effort, costs and, reduce the 'waste'. One of the main objectives of Lean thinking is the reduction of "waste" in a system. There are primarily 7 sources of "waste": overproduction, waiting (man or machine), inefficient transportation and business processes, excess inventory or work in process, redundant motions and rework/ defects.

Once the above aims of saving time, costs and, reducing "waste" are achieved to a reasonable extent then, the organization is said to be 'value stream mapped'. The basic practices of 'Lean thinking' can be summed up in the following 10 points:

1. Eliminate waste.                     2. Minimize inventory.
3. Maximize flow.                       4. Pull from demand.
5. Meet customer requirements.    6. Do it right the first time.
7. Empower workers.                   8. Ban local optimization.
9. Partner with suppliers.             10. Create a culture of continuous improvement.

The focal point of 'Lean thinking' is that the main way to increase profits is to reduce the cost of completing an activity. Once RFID is implemented to 'mapped' business activities, it provides real time information. This helps in 'value stream mapping' the activities even further. Hence, enabled by real-time tracking and decision support, RFID takes on the role of continuous improvement in the organization.

This article does a brief evaluation to see if, RFID can bring continuous substantial improvement in the following randomly chosen application areas of Lean thinking.

A). Real-time tracking of Hospital Equipment –

The problems of managing and tracking medical equipment have plagued hospitals and healthcare facilities worldwide. Constant replacement of lost, hoarded, damaged or mismanaged medical equipment is an avoidable expense. Implementing processes and procedures to effectively track and manage the equipment can improve the availability of necessary equipment. This leads to significant improvements in performance standards and customer satisfaction.

The main question is that, how RFID can help in decreasing inventory costs of the medical equipment, decrease time and labor in locating the equipment, reduce shrinkage/ loss/ failure of the equipment, improve delivery time of the equipment and increase utilization of the equipment. With these measurable objectives being met, the ultimate goal would be to maximize the patient safety and satisfaction during his/ her stay in the hospital.

Supply Sight Inc. did a study on RFID applications in Hospital Equipment tracking in USA in the beginning of 2006. This study showed that; how an active RFID tag (one in which transmits data via radio signals on its own to the RFID readers) can be used to easily and quickly locate the equipment. This result in tremendous labor savings, improved operational efficiency, decrease in annual inventory costs, higher utilization of the equipment and up-to-date equipment status. No longer are inefficient manual searches needed to locate the equipment. This results in improved patient care and more employee satisfaction for nurses.

( accessed 17 August 2006)

University Health System Consortium (UHC) conducted a detailed survey in late 2005 on tracking patient equipment in 31 medical institutions across USA. Analysis of survey data revealed that, equipment-management was a big problem area. All participating institutions had significant improvement opportunities in this area. The report recommended,

- a real-time tracking system for equipment
- to make equipment-management an organization-wide initiative
- train equipment-management staff and hold them accountable

The survey found only 3 out of the 31 participating institutions to be actually using some sort of equipment tracking system. Theses 3 organizations were doing much better in equipment tracking as compared to others. (Vermoch, 2005)

B). Perishable Inventory Control –

Every perishable item in the grocery supply chain (e.g. eggs, milk, bread, vegetables, fruits…) has an expiry date and travel condition history through which it reaches the retail store. Thus, each item is a SKU (stock keeping unit). The main question is that, how can RFID help in establishing an effective tracking and inventory control policy for these item-level SKU's. So that, the spoilage is reduced to the minimum and, perishable items get efficiently stocked and sold on the basis of their age and condition.

Controlling inventories is an important aspect of supply chain management. Managing inventories of perishable products is difficult because of their limited shelf lives. Due to perishability, there is an additional cost of disposal of outdated items, and this can also lead to out-of-stock situations, if not managed effectively. An alternative to avoid outdating is to lower the price of items through price promotions to stimulate the increase in demand. There has been successful research which considers an RFID-based methodology for inventory control of perishable products and price promotions. RFID technology requires very little or no handling of items and is therefore well suited for inventory control of perishable products. The technology also helps in updating the inventory status in real time without product movement, scanning or human involvement. (Chande et al, 2005).

Chande et al (2005) developed a model for the fixed-life perishability problem (FLPP) under price promotion. In their proposed RFID-based architecture, the RFID tag, apart from the manufacturer code and the product code, contains a serial number specific to each pallet or case or individual product, depending on the level of granular implementation of the tagging. They assume that the RFID tag information can be processed to infer the date of manufacture. From this, and using the product information and the current clock time, the useful life of the product (in calendar time) and therefore the age profile of the total inventory at the appropriate location can be determined. The tag is alive till the product is sold at retailers end or, the product has deteriorated (end of the shelf life). The tag can then be deactivated or reused in the case of reprogrammable tags.

A key element in their implementation model is a central processor that collects the above information and computes the state of model in terms of inventory vector at the beginning of a period. In the next step, this central processor uses an algorithm to decide the amount to order and the decision regarding promotion, if required. These decisions are then conveyed to respective supply chain partner's suppliers or distributors through an ERP system. Perishable inventory management thus can be seen as a potentially viable field of application for the RFID technology.

Li et al (2004) built a perishable inventory model taking into account the decrease in the value of a product as it progresses down the supply chain. The quality and shelf life of perishable products was assumed to be mainly affected by temperature at harvest fields, processing workshops, warehouses and on the shelf life in stores. To measure the loss of product values, deterioration rates and time periods were used in functions representing product value changes. A value deterioration parameter was used with a time variable to assess the value reduction. To optimize the loss of values and costs, an optimization model was developed to allocate products to different transit routes according to their current quality situation (i.e. loss of values in previous supply chain processes) and expected quality assurance conditions in succeeding supply chain processes. The results of the model showed that, appropriate assessment of product values in the supply chain planning for perishable products can create savings and increase product values to customers. Assessment of product values is very useful for dynamic product pricing. The model facilitated integration of supply chain planning with product pricing and marketing strategies.

Conclusion and it's impact on the world–

Thus, we see that RFID can bring continuous substantial improvement in almost all business processes across the world of which, randomly chosen 2 processes (perishable items and hospital equipment)were shown in the analysis sections A) and B). Used to instantly track everything from Pepsi to equipment to people, it is expected that, 33 billion RFID tags will be produced by 2010.

Supply chain management, tracking items from the warehouse to store shelves, is being slated to become the largest economic segment using RFID. The world biggest company, the retail giant 'Wal-Mart' is the leader in this area, requiring its top suppliers to attach radio frequency identification tags to shipments so that they can be better tracked. With RFID, information can be captured wirelessly, and information is available at all times. Thus, retailers can keep a tighter grip on inventory and lessen the chance of running out of goods. RFID can also be used to keep track of consumer purchases.

The technology is also used in collecting toll at passes on the highway, as fast moving tagged automobiles are read by the RFID readers and, thus, the corresponding toll amount is deducted from the automobile users' account. Exxon Mobil offers a device that can "talk" to gasoline dispensers and allow payment directly from the users' bank accounts. The technology is also used for security purposes. Under a program devised by the Department of Homeland Security, USA called US-Visit, people and vehicles entering the United States from Canada and Mexico are fill out forms that have RFID chips. The RFID chips are linked to a government database that checks the status of the immigrants continuously.

It does not seem improbable to think of a futuristic scenario in which, huge RFID tag readers having reading range of several miles are put on high poles at all places around the world. All important articles and people would have been "RFID tagged". RFID readers installed at the high poles continuously record the movements of all the tagged entities and, relay this information to the Central Government Web server via the satellites. Thus, all the governments across the world would have complete information at ALL times about each and everything that has been tagged. This would help in security and law and order control tremendously. With so many astounding benefits from the RFID technology, it seems wise to start utilizing this technology at the earliest. Missing out on this technology could result in huge economic losses.


Vermoch K (2005). A summary of the Tracking Patient Equipment Benchmarking Project 2005. Tracking Patient Equipment Field Book, University Health System Consortium.

§ Chande A, Dhekane S, Hemachandra N and Rangaraj N (2005). Perishable inventory management and dynamic pricing using RFID technology. Sadhana 30: 445-462.

* Li D, Kehoe D and Drake P (2004). Dynamic planning with a wireless product identification technology in food supply chains. Proceedings of the Fourth International Conference on e-Engineering and Digital Enterprise Technology: 179-188.

Ram Shukla
Amity Business School
Lucknow Campus

B.E. Honors (Mechanical Engineering); MBA (Finance)
Masters in Industrial Engineering (Texas A&M University, College Station, Texas, USA)
Diploma in Export-Import Management

Source: E-mail September 07, 2007


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