RFID labels

In the early 80's de barcode was introduced. Every package had to be provided with a barcode, which lead to great resistance by all production companies, because all packages had to be adjusted.

The package became more expensive because of extra prints or because of the necessity to apply a label. The labels had to be printed by thermal transfer printers, while most of the manufacturers did not have one.

The manufacturers asked the question: "Who is going to pay for this?". Eventually, the big retailers insisted on this measurement because, otherwise they would not accept the products anymore. So, in the end, the manufacturers had to bare the costs and they did not have any other choice than to provide their products with a barcode. As far as RFID labels concerns, it will be exactly the same. All manufacturers have to participate to comply with the demands, set by retailers.

Wal-Mart, in the USA, has started to demand this obligation. On January 1st, 2005, all suppliers have to provide their products with an RFID label (not at product level, but at package level).

What is RFID?

RFID (Radio Frequency Identification) is a technology, which identifies via radio frequencies a unique object. This is the substitute for the current barcode. The benefit of RFID is, that contact, or to scan visually by hand scanners, is not necessary to identify a product.

Why RFID labels?

• It is cheap (eventually at large-scale consumption).
• Intelligent (more information can be stored with regards to a label with a barcode up to 1 Kb).
• It is thin (no space needed).
• Eventually consuming goods.

Benefits of RFID labels in retail business

• Wages.
  Wal-Mart predicts a cost saving of 8 billion dollars a year, mainly on wages, because all incoming products do not have to be scanned by hand.
• 5 to 10% lower stock.
  No "secure stock" has to be kept, because one knows exactly how many of each product is in stock.
• 2 to 4% lower cost of transport.
  No "secure stock" is necessary and ordering for new products can take place at exactly the right time.
• 2 to 10% higher turnover of goods.
  The products are never sold out, so the customer does not have to get the products at a competitor and there is no chance the customer will buy other articles at the competitor.
• 5 to 8% improvement of products on the shelf.
  It is possible to check the products minute by minute.

Benefits of RFID labels for the producers

• 5 to 30% lower stock.
• 2 to 13% lower cost of transport.
• 1 to 5% higher turnover of goods.
• 10 to 50% lowering the delivery times.
  The store has a real time status of the products.

In total 3,5% of sales of goods is being lost by an inefficient supply of products (40 billion dollars at Wal-Mart) because of:

• Products disappear.
  For instance: 100 PC's arrive, 2 are being collected from the pallet, 98 are being officially scanned and 2 of these 98 are being double scanned and being put in store. These 2 products will never be found. The system is being fooled by hand.
  Using RFID, tracking and tracing of products takes place at a very high level. Further, the protection of fake products is possible with RFID. Every product can be provided with a unique code, through which the receiver is sure, the product is coming from the "real" manufacturer.
• Recall management can be applied with RFID. One knows exactly how many products at which day and time including batch number have to be called back, in case of inferior quality.
• RFID provides better recall management. Specific products can be traced sooner. At this moment the complete dispatch has to be sent back, while 2/3 is wrong and 1/3 is right. This 1/3 does not have to be sent back, using RFID.
• View at the supply chain. One knows exactly what has been sent and to whom.
• Stock management. Stock can be controlled and tuned better.

Disadvantage of RFID labels

At this moment there is still a loss of 10%, because of:

• production of the tag went wrong;
• static electricity, which damages the chip;
• automatic applying can damage the chip;
• metal is a tough product to read by RF because radio frequencies cannot go through.