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Monday, December 12, 2011

The Tech Behind Inventory Tracking

In the distribution industry, accurately identifying and tracking inventory is job number one. You have two types of technology to perform these tasks: bar codes and radio frequency identification (RFID). But which technology type is right for your distribution company?

Bar Coding vs. RFID
Bar coding and RFID fall under the umbrella of automatic identification (auto ID) technologies. In general, such technologies serve to increase accuracy and overall efficiency in identifying and tracking inventory.

But they differ in how they work. Bar coding is a line-of-sight type technology, meaning it uses scanning devices that essentially see and read bar codes affixed to inventory. To be read, bar codes must be carefully positioned toward the scanning device and be in good condition. Dirty or damaged labels can’t be properly scanned. Bar codes also are limited in the amount of information they can include; for example, they can identify the manufacturer and product but not the specific item.

An RFID system, on the other hand, communicates inventory data via a radio frequency channel or wireless technology. A reader device transmits an identification request to an identification tag affixed to inventory. The tag relays the requested information back to the reader device, which then transmits it to a computer.

Data encoded within an identification tag may include the item type, location (such as in the warehouse or in transit), and any special handling instructions. RFID tags don’t require a direct line of sight to be read; they can be read as long as they’re within range of a reader device.

Pros and Cons
Whether RFID is better than bar coding depends on your distribution business’s needs. Bar coding generally is less expensive to implement than RFID, and it provides adequate, cost-effective inventory identification and tracking capabilities for many companies. In some cases, combining the use of RFID and bar coding technologies also may provide a cost-effective solution.

But overall, the advantage to RFID is that it offers faster data processing and broader ranges for reading data on tags, which don’t need to be positioned outward to be read and offer more specific data.

Keep in mind that continued standardization efforts are also essential to furthering the use of RFID worldwide. In fact, the frequencies used for RFID in the United States currently are incompatible with those of Europe or Japan. And in the United States, UHF-based RFID, featuring a longer read-range, has relatively new standards that distributors must familiarize themselves with if they wish to use this newer technology.

Security and Privacy Risks
Some technology experts advise caution regarding the potential for security risks with the use of RFID technology. RFID applications may lack crucial user identification and encryption features or could possess coding errors or weaknesses, making them vulnerable to hackers and destructive viruses and worms. Malicious attacks that exploit such vulnerabilities could therefore wreak havoc on your computer systems.

There’s also a concern about the possibility of businesses using RFID to track customers’ purchases and extract information from the purchases without their knowledge. Some people also worry about the government using the technology for surveillance purposes by tracking individuals’ whereabouts. This raises the need for businesses to protect and inform their customers about any data being collected on them and how it may be used.

In effect, as you compare and evaluate RFID applications, also consider the potential security and privacy risks, and how you can minimize concerns for your business and customers.

Making the Right Choice
As a distributor, you’re in the business of accounting for inventory. Whether you choose to do that using bar codes or RFID depends largely on whether your company can afford the higher-priced RFID technology. Bar codes will be less expensive, but RFID offers a host of additional benefits. Consider hiring an IT consultant to help you determine the right choice.


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