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RFID Tags: Advantages and Limitations

Wal-Mart is banking on this technology to manage inventory more efficiently, reduce numbers of data entry errors, and lower human labour costs in a distribution center 

The retailing major is intending to use the data to keep track when stock is running low on shelves or when items have been stolen. The other advantages expected are:

  - The movement of inventory can be tracked 
  - Goods can be received and shipped faster 
  - Ease of predicting product demand 
  - Shoppers can save time
  - Out of stock situations can be avoided 
  - Shoppers get a better deal as system becomes more efficient 
  - The right products are available at the right stores at the right time 
  - Boost sales 

With all these advantages in sight, Wal-Mart is confident of sure success to ensue on adopting this technology.

The major limitations associated with RFID technology are: [,]

  1. No RFID standard has been set yet. (The Auto-ID center has worked with standard bodies Uniform Code Council and EAN International to come up with electronic product code, but it is not yet considered a standard).
  2. The demand should also drive down the price. (Wal-Mart says that a need for one billion RFID tags should drive down the price to five cents each.)

The other major limitations are:

  • The smart tag technology is yet to be perfected , today on an average 20% of the tags do not function properly
  • Physical limitations like reading through liquid or metals still exist
  • Accurate read rates on some items can be very low
  • Nylon conveyor belts and other RFs can disrupt the tag transmissions in warehouses
  • Increase in expenses - the suppliers will have to equip their warehouses and transport vehicles with readers. These readers have to be connected to the computer networks for exchange of information. All these mean additional costs related to hiring technical consultants and additional hardware.
  • Wal-Mart inventory networks are burdened with the task of handling data of billions of their products. The company has to hence invest in extremely sophisticated system to process the data properly.

In the tie up with IBM Global Services that has resulted in deployment of RFID equipment in grocery sections of seven pilot Wal-Mart stores, IBM consultants have encountered interference from equipment such as handheld walkie-talkies, forklifts, and other devices typically found in distribution facilities. Cell phone towers located near the premises, which transmit at the high end of the frequency band, sometimes leak unwanted radio waves into RFID readers.

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