If you think RFID is simply a replacement for bar code think again (page 1 of 5)

Although RFID has become a hot technology for inventory control and a supply chain requirement for companies such as Wal-Mart, it's not just an advanced version of bar coding.

"The worst thing that ever happened to RFID is that it got called 'bar codes on steroids,'" says Jeff Woods, principal analyst for RFID and Supply Chain Management at Gartner, Inc. "For RFID, people should be looking at applications in which bar codes don't work today, such as chaotic business processes and complex business cases such as serialized invoice reconciliation."

RFID, or radio frequency identification, is a system for tracking and identifying items through a combination of tags placed on the items to be tracked and readers that interrogate those tags (via radio waves) at appropriate points in a business process. RFID tags contain tiny integrated circuits that have small antennae for communicating with the RFID readers as well as the ability to store identification information. Although many companies are investing in RFID as a replacement or extension of traditional bar coding processes, there are many differences: RFID-tagged items hold more information, can be read in bulk (for example, a pallet of items can be read all at once), and do not require direct line of sight with the RFID reader to transfer information (because it's sent via radio waves).

"Oracle thinks of RFID as an enabling technology to allow our customers to connect the physical world to the information world, providing greater visibility into their assets, enabling better operational decisions, and helping them get closer to becoming a real-time business or enterprise," says Oracle Vice President of Sensor-Based Services Allyson Fryhoff. "For us, RFID is just one enabling technology in an initiative we call Sensor-Based Services, an information architecture for solutions that will enable our customers to realize a greater return on their assets. Combining information from RFID and other sensors will help enterprises get better visibility into what's happening in their world."

One of the ways organizations are thinking strategically about RFID is by integrating other types of real-world sensor-based information besides RFID—sensors that can relay information such as temperature, moisture, or location. For example, in a perishable-goods industry such as grocery, a store needs basic inventory information about the identity of a box, crate, or pallet of bananas. But it might also want other information—such as the temperature at which those bananas have been kept, ambient air quality, or pallet locations.

"The true ROI will come from correlating the RFID data, which can provide identity, with information like location, temperature, moisture, or whatever is important for tracking that asset," says Fryhoff. "If sensor-based information is utilized appropriately, enterprises will have an incredible amount of intelligence about their operations and business processes. You need to think about how you can better capture, manage, analyze, access, and respond to the information or data being collected and turn that into intelligence about what is happening in your business."

NASA Explores RFID Potential

NASA is one organization that views RFID as not simply a replacement for bar codes but as a transformational technology that enables it to manage data confidently. The ChemSecure project at the Dryden Flight Research Center at Edwards Air Force Base in California is a good example of how RFID technologies can work in a broader context, along with sensor information from numerous sources that work together to let NASA improve operational efficiency, extend and optimize current business practices, dramatically improve safety and security, and eventually revolutionize the way it does business.