According to researchers at the Lemelsen Center at MIT, radio frequency identification (RFID) is the tenth most innovative technology of the past 25years. RFID is a technology that helps store data about people or objects on amicrochip the size of a grain of sand and then uses radio waves to automaticallytransmit this data. This eliminates line-of-sight constraints and makes itpossible to track individuals or items without costly, and sometimes cumbersome,manual scanning. There are several methods of identification but the most commonis to store a serial number (or any other information) that identifies a personor an object, on the microchip that is attached to an antenna (the chip and theantenna together are called RFID tag). Antenna enables the chip to transmit theidentification information to a reader. The reader converts the radio wavesreflected back from the RFID tag into digital information that can then bepassed on to the computers for processing.
RFID tags can be placed on all kinds of objects such as consumer goods,shipping containers, high-value equipment, and even human beings so that theirmovement and location can be easily tracked. A school in the US is putting itinto the I-cards of students to track student movement in the campus.
RFID's adoption is being driven by not only the cost saving opportunitiesthat it offers but also the kind of new operational efficiency that it promisesto bring in many sectors-from manufacturing to retail. Industry analystsexpect the RFID market to grow by 47 percent to reach two billion dollarsworldwide by the year 2008.
Theretailing industry expects to save billions of dollars by better managing thesupply chain using RFID. RFID will not only allow them to track merchandise, andthereby improve their merchandise to consumers, it will also help them minimizelosses on account of thefts. One of the most talked deployments of RFIDtechnology has been the one by retailer WalMart. Using RFID, WalMart tracks itsinventory as it moves through the supply chain, from its supplier (ormanufacturer) to the distribution center, to the retailer stock room and on tothe shelf on the sales floor of the stores.
According to a new report, titled The RFID Life Sciences Market from ABIResearch, the pharmaceutical industry is turning to RFID as one cure for manyproblems. Drug counterfeiting may cost the worldwide pharmaceutical industrymore than $30 billion annually, and RFID technology is seen as one way to lowerthat damage. To minimize this wastage, and to raise the level of safety forpatients, many pharmaceutical companies are embracing RFID tagging of drugshipments at the item level. At least three major manufacturers-Pfizer,GlaxoSmithKline and Purdue Pharma-have already announced plans to tag theirproducts.
Airline companies too seem to be keen on deploying RFID, primarily for savingthe millions that they lose annually on account of misplaced baggage. Forexample, in the final quarter of 2003, Delta Airlines began implementing RFIDtechnology to track 40,000 pieces of passenger luggage. Typically, with bar codescanners, Delta's success rate was 80–85 percent. In December 2003, however,Delta announced that the RFID-tagged baggage recorded accuracy levels ofanywhere between 96.7 percent and 99.9 percent.
Misrouted baggage costs Delta about $100 million per year. RFID technology could cut those costs significantly, the airline is confident. Under Delta'splan, the tags will be embedded in the familiar luggage labels that airlines use to identify a bag's origin and destination. The labels will be scanned atvarious points in the check-in, loading, and unloading process, giving supervisors the ability to quickly find the location of any given piece of luggage.
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