RFID and the Supply Chain: How the Technology Is Increasingly Being Used By Procurement

Radio Frequency Identification (RFID) is one of the major technologies that will become ubiquitous in the supply chain and is poised to have a dramatic impact. RFID technology has actually been around since the 1970s, but it has only started to have a real effect on the supply chain within the past few years, and its use is expected to increase as a means of tracking goods and assets.

Similar to bar codes, RFID identifies “things.” Bar codes require a laser to read a single item within line of sight of the reader. In contrast, RFID technology uses a “reader” and antenna that produces radio waves to read product identification at a short distance and does not require direct line of sight. There are 2 types of RFID tags – active and passive. Active tags have their own power supply and are therefore larger and more expensive. Passive tags attached to items use the radio waves as a low power source when the reader scans them. They have limited capability compared to their active counterparts, but they are tiny in comparison and a fraction of the cost. Passive tags are rapidly becoming a commodity and they generally only add 20 cents to each item’s overall cost.