RFID implementation cost for warehousing

RFID technology briefly

The RFID (Radio Frequency ID) technology is not new. An early version was developed in 1973 with a passive radio transponder with memory. A reader or interrogator sent a signal to the tag which bounces the memory response. Since then, both the tag's and the readers have gotten more sophisticated and they have slowly permeated our everyday lives.

 "Its more common than you think!"

Today, these tags can be found everywhere. Your credit card may contain a tag, passports, automated toll booth systems, waste collection bins and keycards to name a few. The distance that tag’s can be read varies between 3 ft and roughly 24 feet. This is dependent upon the tag and the readers performance.

Uses and applications

Industrials have also caught into to the movement with railroad cars having RFID tags but often, they are not considered a direct replacement to barcodes. Barcodes still serve a purpose, especially when needing to be distributed electronically via email for example. RFID tag’s are generally considered to be better when used on bulk level and Universal Product Code (UPC) or EAN barcode’s on item level.

"Tag's are cheaper than they used to but still expensive"

Cost of Tag's

The cost of RFID’s has decreased which has enabled wider adoption. In 2001 an RFID tag cost roughly $1.15/ea. Today, the same tag can be bought for $0.20/ea. Some tag’s, depending on ordering volume can be had for much less. But even then, the cost is significantly higher than a barcode label at $0.01/ea which is why they should not be considered substitutes for each other. 

With such a difference, the application needs to therefore justify the cost difference. Often, its not practical to read a barcode for example on a pallet of boxed items of high value. For inventory tracking, it may make sense then to have RFID tag’s that are much less dependent upon tag placement.

"You need a special printer!"

Printer Considerations

The RFID printers have also come down in price. Today, they can be integrated with a regular barcode printer. The RFID tag is encoded at the same time as a barcode is printed on the label. This enables the best of both worlds. A quick survey of barcode printer costs yields that basic RFID printers can be bought for between $900-$1100.

"And there's no use in the system without a tag reader"

Software and Readers

The software to encode tag’s add’s some expense but can be considered a one-time expense, perhaps $700 per license. An RFID reader system, often built on an Android platform is slightly more expensive, starting around $2000 with everything included. But at these prices, its easy to see that the startup costs of a system are relatively low.

"Start with the end in mind"

Budgeting and Planning

With a budget of $5000 you can have an RFID system up and running in under a week. It does require some technical understanding of tag encoding and setting up the reader has its own challenges. But after that, the sky is the limit in how you utilize the system. For example, in a warehouse setting it can greatly improve your cycle count process.

Good advice would be to specify what you want to accomplish with the system, design your processes around that and then get to work on the technical implementation.

References:  Forecasting the Unit Cost of RFID Tags, Richard Moscatiello, March 27, 2003