Why It's Wrong to Think of RFID as a Barcode Replacement
The RFID tag is not the next evolution of the barcode. It is technology you should treat as complementary to barcodes. Here’s why.
There’s always talk about “what’s next” in the tech industry. Disruption is celebrated and stagnation criticized. “Progress” is always the aim. As such, there’s an assumption that all “next-gen” technologies will eventually become legacy technologies – that they will eventually be replaced by something better, something different.
Yet, the barcode is still here – 75 years after its original inception and nearly 50 years since the first UPC-marked item was scanned at a store – and it is just as influential on your business’ success as it ever was. Even as RFID technology has matured, the barcode hasn’t been retired. Why? Well, RFID tags aren’t necessarily meant to replace barcodes. They’re designed to complement barcodes – and co-exist in some cases. Though both are used for product tracking and inventory management in some capacity, their capabilities vary, and purpose differ. For example, you can’t use barcode technology to confirm a product’s precise location right now unless that product is in your hand or sitting directly under a fixed barcode scanner. But you can’t beat the cost (free) and practical application of a barcode.
Here to shed light on why RFID tags might continue to sit next to, rather than in place of, barcodes on product packaging and labels for the foreseeable future, is Bob Grant, who has spent the last 30 years at Zebra working first on automated data capture (i.e., barcode systems) before shifting his focus to location systems (i.e., RFID). He is well-versed on both sides of the label, so to speak. You’ll want to hear what he has to say on this matter….
Your Edge Blog Team: For the last five years, you have been focused on developing and deploying advanced location technologies such as RFID and real-time location systems (RTLS). Yet, you believe the barcode is here to stay for a long while. Why is that?
Bob: Well, let me say this as an RFID advocate now: if everything in the world was RFID tagged for free, and those tags could be read without issue, then there may not be a need for barcodes. But the world isn't going to change that quickly. It’s going to take a very long time before we see RFID tags and readers as prolific as barcodes and barcode scanners. Will that be 10 or 15 years from now or longer? I don’t know. I don't think it's five years, though. It may not even be in my lifetime. So, the barcode is going to be here – and be very valuable – for a while.
In fact, it may not be RFID that ultimately replaces the barcode one-for-one but rather AI-driven vision systems that can just look at a can of peas passing by and say, “That's a can of Del Monte canned peas and the EPC number is 12345.” There will be so much information around that type of tracking experience that I could start to see a shift occur where you might see barcodes used more selectively and RFID and visions systems become more predominant technology tools for track and trace or even transaction completion.
Then again, barcodes are free because you must print some kind of label for packaging and, as you're printing that label, you print a barcode. So, the cost benefit may be hard to pass up.
Your Edge Blog Team: Does it really matter if you’re printing a label with an RFID tag versus a barcode? You’re buying supplies either way. If the costs of tags came down, do you think barcodes would still be used as much?
Bob: Well, even pennies add up. If you put a billion pennies together, that’s $10 million dollars. I think as an industry we're around 38 billion RFID tags projected in 2023. So, even if adding a tag is a penny more than the typical barcode label today, that would be $380 million spent. That’s why we see people trying to justify the price tag – they’re having to run cost-benefit analyses for each scenario.
Your Edge Blog Team: What if the cost of an RFID tag gets down to 1/10 of a cent?
Bob: Well, that might take some time and, even then, some people may not be willing to pay that cost, mainly because it’s just one cost component. That’s why I think the cost-benefit analysis of RFID is taking a different approach, and the business case for RFID is being built around broader business opportunities, or perhaps weaknesses and threats.
Your Edge Blog Team: What do you mean?
Bob: Let's just say an RFID tag is $0.05 right now, for argument's sake. From a business leader’s perspective, they’re saying “I have to pay $0.05 to identify this thing, whether it’s a product, package or pallet.” Is it worth it to them? It really depends.
In the retail apparel space, you’ll find brand conscious people who think it's worth $0.05 to tag their things at the item level. But they're selling T-shirts for $20 each compared to a big-box retailer who may be selling its t-shirts for $1-2. So, there might be value in tracking the $20 item for five cents, but maybe not the $1 item.
Then you look at global shippers who are tagging every item in their cross dock as they move back and forth through control points or between airports because they are high value assets. They're willing to spend the five-to-10 cents to track them. Some are even thinking about tagging every single one of their parcels, which, when you think about it, amounts to a lot of tags and a lot of money.
Your Edge Blog Team: It does but, on the flip side, if they lose a package, the cost of recovery or replacement would be so much higher. I mean, we see retailers locking up things like shaving cream and toothpaste, which are low dollar items in the scheme of things. But they're taking so many losses, that spending a little bit of extra money for loss prevention pays off. You gave the example of the $1 t-shirt at a big box store. On paper, adding a $.05 RFID tag may seem excessive. But if they’re continuously losing t-shirts because there is no tracking mechanism and people can just walk out with them undetected, then maybe there is a cost benefit, right?
Bob: Absolutely. That’s actually something we talk about with members of our Advanced Location Technology (ALT) team here at Zebra because electronic article surveillance (EAS) has a strong value proposition, regardless of an item’s retail or replacement value. When you tag everything with an RFID tag, you get insights into what's going on beyond the point of sale at a store or restaurant where the barcode scan traditionally occurs. Likewise, you can see what happens once that product or package rolls off the conveyor in a factory, warehouse, or package sorting center.
But when you start to break down every part of an operation, you see just how valuable real-time inventory visibility has become in this on-demand economy, from being able to pick orders quickly to ensuring the right package is getting routed to the right truck or plane. And if something seems to go missing, with RFID, you can locate it quickly with RFID tag reads. You can’t find items using a barcode unless that item happens to appear under a barcode scanner at some point in the future and you can say, “Oh, there it is.” But that’s why so many things go missing so easily. RFID actually helps avert organized retail crime as well, especially returns fraud, because retailers and manufacturers have ways of using the tags to verify authenticity. Instead of being limited to just tracking the SKU or part number, they can use RFID to document the color and size or other unique identifiers to ensure people aren’t swapping tags or trying to return stolen items.
Your Edge Blog Team: Can’t supplemental barcodes offer that additional information as well?
Bob: Yes, and some retailers go that route today, but it's usually not done very well. And barcodes still don’t help you avert losses at the exit. You really need an RFID tag to track each item’s movements and confirm whether an item walking out – or even walking back in – has been paid for. RFID is a better theft prevention tool. It’s also the best way to derive inventory insights from both a big picture and more granular perspective.
Your Edge Blog Team: So, even though the barcode brought us into the automated checkout world in retail, you feel that it’s RFID that’s going to automate inventory visibility in the modern store?
Bob: In stores as well as hospitals, pharmacies, warehouses, shipping hubs, factories, restaurants, hotels, casinos, and really anywhere else goods are made, shipped, stored, distributed, sold or used. Inventory management is a universal requirement and a universal challenge in every business setting. Even governments and field service companies have assets to manage, and they can’t do it as well as they need to in this on-demand economy using the barcode alone. So, we’re going to see the barcode and RFID live harmoniously together in more complex environments for a long time. Plus, there are many places in which a combo approach will be necessary for track and trace, such as in manufacturing environments where there's a lot of metal and a lot of interference for RFID.
Your Edge Blog Team: Do you foresee RFID tags becoming the more predominant tracking tool as engineers work through the readability issues with metal, water, etc.? We only ask because we remember a time when people said it was impossible to tag and track frozen food and liquid medication bottles using RFID. Yet, today, Zebra is working with several customers – including one of the world’s largest fast-food chains and one of the largest pharmaceutical wholesalers – on RFID track and trace projects. These seem to prove nothing is impossible forever.
Bob: I actually think we’re going to see RFID being used in conjunction with the barcode and vision systems. For example, a retailer might use RFID at the case level or the pallet level to watch things being brought into the back room. Then, when an employee brings that case out to the floor, you might see a combination of RFID and vision systems to watch the pallet or case breakdown. A camera will see employee A stocking 24 cans of tomatoes on the shelf and be able to help confirm they were put in the right place at the time the employee said the task was complete. That same camera can then watch consumers take those cans away, report an empty shelf, and trigger a restock or complete reorder if the backroom RFID system isn’t confirming any additional cans on hand.
Your Edge Blog Team: So, companies should be looking at multiple technologies simultaneously – not to compare but rather to understand how they can coexist to help each other?
Bob: That’s right. It could make sense to stick with just barcodes, just RFID or just vision systems in some specific applications. But in most cases, we’ll see the different technologies online at once, collecting data and feeding it into a system that – on the business end – delivers a single source of truth about on-hand inventory status, sales and more.
Your Edge Blog Team: Any last advice to business decision-makers and technology buyers?
Bob: Whatever you do, don’t write off RFID – or any type of technology – as inappropriate for certain types of applications. In the past, reading RFID tags on liquid medication bottles or metal was a challenge, yet we’re doing it and it’s working very well. The focus for business leaders, IT teams and front-line operations managers should be on figuring out how to automate track and trace. Leave it up to the experts, like our engineers at Zebra or our extensive network of channel partners, to recommend which technologies are going to be needed to accomplish that goal. Educate yourself on how the different technologies work, but don’t waste time trying to compare them side by side. That won’t deliver the outcomes you want because this isn’t a case of “new technology replacing old technology.” The best practice here may be to embrace all types of technology at once. So, view these technologies as partners rather than competitors.
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