July 12, 2006
Rethinking Data Flow For RFID Deployment
One of the common complaints about RFID, from companies considering its use on their products, is that item-level RFID tags significantly bump up the cost of tracking product. With the conventional barcode, one code typically sufficed for all items of a specific product. With item-level RFID, every single item has to be treated distinctly from its siblings on a store shelf, or what have you.
So if you have 1000 items to send out to a distributor, your cost of manufacturing and shipping goes up by 1000 times the cost of an item level tag, not to mention the cost of pallet- and case-level RFID tags. As well, each item's RFID tag has to be programmed with a unique code in the manufacturer's database. In this case, that's 1000 RFID codes instead of one barcode.
Imagine if you manufactured millions of items per year. This forces an overhaul in a manufacturer's product database and in system software (data collection, querying, reporting). In other words, more costs to an RFID deployment project, when barcoding works well enough for most manufacturers. (Keep in mind that, often, its the distributors that want to track items.)
At item-level RFID tags running around 40 cents, it's not always financially feasible to use them for low-ticket items. Pallet- and case-level tags tend to not only be cheaper, but there's obviously less of them required for a shipment.
But the prices of item-level tags will go down. According to an article at Sterling Hoffman, Alien Technology announced a sub-ten cent passive RF chip at some point in the recent past. In fact, a Google search suggests the truth of the claim, but the linked URL does not exist on Alien's website. There is, however, a press release for a 12.9 cent EPC Class 1 chip. Still, RFID Times suggests that sub-five cent RFID tags will become commonplace, although probably not until 2013.
I don't doubt that the sub-ten cent barrier will be cracked, and likely well before 2013. It also helps that companies like Gillette recently ordered 500 mln chips. Evan Schuman at Storefront Talkback writes that 200 mln item-level tags will be sold this year out of a total of 1.3 bln RFID tags, followed by 2.2 bln next year. Procter & Gamble (new owners of Gillette - way to corner the razor market) is also conducting two RFID tests on their Fusion five-blade razors. (Which may explain why the darn things cost so much, and why I shave once a week now lol.)
These kinds of large orders will eventually bring the price of all types of RFID tags down. Unfortunately, most small vendors cannot currently afford to use item-level tags. This financial limitation hampers initiatives such as Wal-mart's plan to have all vendors eventually supply all their products complete with item-level RFID tags.
Alternatives being looked into included both "light-based" tags as well chip-less tags that created from thin-film transistor circuits and other means. Of course, there's always the option of combining RFID with barcoding, but that wouldn't let P&G know how many times a week I'm shaving.
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