What Is RFID ?
Why RFID Is Important ?
RFID is poised to become the fastestgrowing component of information and communications technology (ICT) applications over the next decade. It’s a fast, versatile and virtually infallible means of identifying and keeping track of items in the supply chain and of maintaining optimum stock levels. In many applications, for example in healthcare, it can provide greater safety and security for individuals. It can also help protect valuable assets and valuable people – and let you know where they are in a warehouse, art gallery or building site. The range of applications is expanding as fast as people can think of them. The Government believes that RFID has enormous potential to generate efficiencies in the supply chain and thereby boost Britain’s competitiveness in the global economy.
The power of RFID has been widely exploited for around 20 years, but only in recent times has any real level of potential been reached. It is clear that in the coming months and years the growth of the use of RFID is expected to be exceptional. Reports and surveys indicate general and sector take up rates increasing several fold over the next decade. A whole variety of reasons are put forward for this including the decreasing cost of tags and systems and the increasing public awareness of the success stories of the pioneers in various sectors.
From time to time a technology emerges that has a radical impact upon the way we live or work; examples include the internal combustion engine, radio, television, the PC, and the mobile phone. RFID can now be added to that list. It is one of the biggest issues facing business today, of relevance to companies large, medium and small.
Cost Justification & ROI
Two important considerations impact upon the economics and viability of RFID applications. One is identifying the appropriate opportunities for applying the technology and the other is in identifying the total costs involved in the applications, from inception to decommissioning and even system disposal.
So far, we’ve gone to great pains not to overhype RFID or to make unsubstantiable claims for the technology. Now we acknowledge that in the future RFID will be used in ways that today we would find incredible. But then: They all laughed at Christopher Columbus… There are other considerations for the future apart from the “science fiction” element. There are technical considerations to face, practical and financial considerations to measure, and philosophical considerations of privacy and security to embrace. What is clear is that RFID is here to stay. The part it plays in our everyday lives will grow. We must understand and exploit the technology carefully and responsibly, reaping the enormous benefits it can bring.
Manpower & Equipment
The new system may reduce the need for manpower for particular functions (for example, an automatic access control system may remove the need for a fulltime gate keeper). It will certainly release staff for other productive activity, which will then be performed at no additional staff time cost.
It is likely that certain items of equipment (such as filing cabinets, computer equipment, office furniture) will no longer be required, or at least the requirement will be reduced. The annual costs of repairs and maintenance can be calculated and treated as a saving, as well as the replacement cost of such equipment if it would have needed replacing during the lifetime of the system. Items no longer required which can be sold should also be evaluated as a saving.
Less usage of host computer time will create savings of consumables - such as stationery and printer consumables - as well as labour costs in support services such as accounts staff and a proportionate reduction in their running costs. For instance, in the example given earlier for the warehouse data collection system, the wages department will also benefit by having computerised information of hours worked by each employee on each shift, and this may reduce the effort required in payroll calculation.
Space & Stock
The use of RFID on pallets/trays of goods and “bins” or locations in warehouses, especially with real-time RF data communications systems on forklift trucks, will maximise efficiency of space utilisation as well as enabling lower stocks to be carried, since all stock is put away and picked in far less time, and the computer an instantly locate any particular item. It also always knows the exact quantity of stock being held. The cost of carrying excess “safety stock” under a manual system has been estimated as 25% of the value of that stock, which represents a significant saving to be included in your calculations. Space saving - whether in warehouse or office or production line - means quantifiable cost saving.
Every mistake eliminated represents a financial saving – not least on the time taken to rectify it and the resources involved. The cost of an error also depends on the stage at which it occurs in the lifecycle of a product: a £100 mistake in the design phase of a product could cost £100,000 in the field. Also to be considered is the vital element of improved customer service resulting from eliminating mistakes.
Similar exercises can be done to calculate the cost of errors in other areas, such as data entry mistakes, or stock miscounts. The expected level of improvement as a result of the new system will enable savings to be calculated for each area.
Summary Of Benefits
Together the various AIDC technologies provide a versatile and flexible approach to problem solving wherever there is a need for fast, accurate and secure data capture and identification. That’s why solutions can be found in virtually every sector of business and commerce.
Accuracy is the effectiveness with which data is captured. It is generally measured in terms of error rates. Performances will vary according to each technology and how it is used. Higher levels of performance can be expected of data encoding technologies, such as barcoding, magnetic stripe, smart card and radio frequency identification, compared with feature extraction technologies such as vision capture techniques and speech recognition. The gains achievable through greater accuracy are reductions in the time, effort and associated costs of checking, identifying and dealing with the consequences of errors.
Speed & Immediacy Of Data
Automatic data transfer is substantially faster than manual keying. Tens, hundreds and even thousands of characters of data can be read or transferred in less than a second, depending on the technology concerned. In addition to fast transfer, these data carriers can often be read whilst moving, often at high speed. Fast capture and direct transfer of data provides immediacy of data, with associated benefits in the speed of turn-around of transactions or process actions, such as up-to-the-minute inventory. Where portable data collection devices are used, radio frequency data communication (RFDC) links can allow direct transfer of data to the host as soon as it is captured.
Where effectively applied, RFID yields significant economic gains and fast return on investment, together with increased customer satisfaction and confidence.
To summarise: the main areas where you would expect to enjoy benefits of using RFID are:
- Capacity to handle increased volumes of goods
- Increased throughput with savings in time and without increases in staffing
- Ability to carry less stock, and therefore require less space for storage
- Decreased need for personnel engaged in manual data entry and handling of goods, enabling them to be more gainfully employed elsewhere
- Significant reduction of errors in information management systems
- Provision of time and attendance management, access control and other schemes which will reduce losses due to theft
- Improving transportation and distribution management
- Automatic sortation of goods to avoid bottlenecks and stockpiling
- Better management of information to improve management decisions.
With sufficient awareness, even a casual examination of those business processes where item data is being handled will reveal opportunities where RFID will yield significant benefits.