In 2024, Walmart’s logistics operation did something that made competitors look up and take notice – it told suppliers they must tag products using RFID. For the retail giant, this was a major acceleration of RFID adoption that began back in 2003. It has also been described as the most comprehensive retail RFID deployment in history. The reasons for the move soon became obvious – Walmart achieved inventory accuracy rates exceeding 95%, compared to 63% pre RFID1. Competitors, meanwhile, continued to struggle with manual inventory processes that hadn’t changed for years.
So, what’s the advantage of a tracking technology that has accelerated in use in the past 10 years or so? Data from McKinsey showed that deploying RFID results in:
- 25% improvement in inventory accuracy
- 10-15% reduction in inventory-related labour hours
- Shrinkage reduction leading to a 1.5% revenue increase
As an RFID solutions provider, we frequently get enquiries about the technology from potential customers. How does it work? What’s the difference between RFID, NFC and barcodes? And is it really worth the investment? In this RFID guide, we’ll answer these questions. And we’ll start with the most basic query of all.
What exactly is RFID?
RFID stands for radio frequency identification. The technology uses electromagnetic fields to automatically identify and track tags attached to objects, people or animals.
The primary advantage RFID has over barcodes is that it does not require line-of-sight, one-at-a-time scanning; RFID tags communicate wirelessly with readers, enabling bulk scanning and automated data capture. Also, nearly all RFID tags have a unique identifier, which is very difficult – if not impossible – to copy. This can help to ensure accurate traceability of products through the supply chain.
There are many more advantages, which we will look at later.
What kind of hardware and software is required?
Passive or active tags
One of the fundamental decisions you’ll make when selecting RFID technology is whether to use a passive or active setup.
For passive RFID, a reader transmits a radio signal. Any tag that receives the signal uses power from the signal to transmit the data encoded on the tag back to the reader.
For active RFID, a battery-powered tag transmits the data encoded on the tag at a fixed interval, and a reader receives the signal.
We’ll look at passive and active tags – and a third ‘semi-passive’ option – in more detail later, explaining when and where you might want to use the different options.
Integrated or handheld devices
Readers can be fixed or integrated into handheld devices, depending on the use case.
Fixed readers are typically used at points of ingress/egress to monitor passing tags, or several can be installed around an area such as a warehouse to provide complete, real-time coverage.
Handheld readers can be used more flexibly for activities such as stock checks. They are sometimes a better option when fixed readers can't reliably pick up 100% of tags, for instance in tightly packed packages.
Most readers are also able to write a small amount of data to a tag, but often this is unnecessary as the tag comes pre-programmed with a unique identifier
Software
Supporting software interprets RFID tag data and routes it to the appropriate systems, for functions such as asset location tracking, inventory management and data analytics.
The benefits of RFID
Increased efficiency
RFID technology enables bulk scanning of tags at various distances. Compare that to a point and scan, label-by-label set-up and you can quickly envisage the potential efficiency gains.
Improved accuracy
According to RFID experts Zebra Technologies, RFID is a ‘highly accurate (99.5% or better) way to identify, locate and track inventory and assets’. This compares to lower accuracy rates for barcodes. It’s hard to get agreement on the data – some suggest barcodes achieve 85% or lower – but most agree RFID is significantly more accurate. This accuracy helps to ensure better inventory management, fewer stockouts (incidents of product unavailability) and less shrinkage (theft, damage, loss and errors).
More data and analytics
RFID tags come in many shapes and sizes (more on that below), but one feature they all share is the ability to hold much more data, in more ways, than legacy tracking technologies.
Increased access to accurate information about location, temperature and speed of movement can be combined with Internet of Things (IOT) technologies and AI to unlock vast amounts of data, to inform strategic decision-making.
Regulatory compliance
Defence, pharmaceuticals, life sciences, foods and other highly regulated industries require accurate traceability and authenticity of products, to comply with strict standards. RFID and the data it generates helps to ensure end-to-end supply train tracking and compliance, and the avoidance of costly fines.
Business use cases
Here are three snapshot case studies to show the benefits of using the technology in different scenarios.
Healthcare
A hospital group uses RFID for rapid, efficient and accurate tracking that reduces administrative duties and delivers inventory savings. Key applications include patient flow tracking through the use of passive RFID wristbands; medication management to track medication usage, which ensures proper storage conditions and reduced error; and equipment tracking to prevent loss and ensure the availability of critical devices.
Logistics and transport
A logistics provider uses RFID for tracking the real-time location of containers, pallets and vehicles. This includes cold chain monitoring to track the temperature and humidity levels for transporting pharmaceuticals. RFID technology also speeds up proof of delivery by automating confirmation of shipment receipt.
Retail
A high street retailer deploys RFID to improve inventory accuracy and provide real-time visibility of individual items. This enables complex ‘omnichannel’ fulfilment, for instance ‘buy online and pick up in store’. Data shows exactly which items go missing, when, and where, significantly reducing shrinkage. It also helps teams check if items brought back to stores fall within a returns window.
The result is faster and more flexible checkouts for customers and tighter control over stock for the business.
What kind of RFID do I need?
As with so many technologies, there’s RFID… and then there’s RFID. Here are some of the things you’ll need to consider when finding a solution for your organisation.
Choosing your operating range
RFID systems operate across three primary frequency bands, each with distinct characteristics and applications:
Low frequency (LF): 125-134 kHz: has a read range of a few centimetres up to 50 centimetres and penetrates metal and water effectively. Applications include animal tracking and access control.
High frequency (HF): 13.56 MHz: has a read range of under three feet –typically a few centimetres to one metre [MP5] and has higher data transfer and data storage capacity rates than LF. Applications include security cards, smart cards and passports.
Ultra high frequency (UHF): 860-960 MHz: has a read range of around 3-6 metres for passive tags and provides the fastest data transfer and bulk reading capabilities. Applications include retail inventory, supply chain management and asset tracking. Special RFID reader antennas can increase the range of an ordinary passive UHF RFID tag to more than 18 metres. If you need even longer range than this, see below.
Passive or active RFID tags
Passive tags have no internal battery and use power from the reader's signal. Most RFID deployments use passive tags, due to their cost-effectiveness and longevity. All of the read ranges in the operating range section above assume a passive tag setup.
Active tags feature internal batteries and transmitters, offering longer range – frequently much longer than the figures quoted in the section above. For instance, active RFID with a battery energy source can broadcast a signal that provides a read of 150 metres or more. However, the cost can be significantly higher – where passive tags can cost pennies, active tags often fall into the tens or even hundreds of pounds. They are typically used for high-value assets requiring extended range or environmental monitoring.
Semi-passive tags combine elements of both approaches. They contain a small battery that powers their internal electronics; however, they do not broadcast their own signal. This gives them better sensitivity and longer read ranges than passive tags, while still relying on the reader's signal for communication. They cost more than passive tags but less than active ones, making them useful for applications where passive tags lack sufficient range but active tags would be overkill.
(Look out for our in-depth blog post on passive, active and semi-passive tags, coming soon.)
Do I need RFID or NFC?
Near field communication (NFC) is actually a subset of RFID and typically operates at close range – about 4-5cm. What’s special about NFC is that it supports two-way communication, while traditional RFID is one way. Its short range provides inherent security advantages and, along with the two-way comms, makes it ideal for secure transactions such as contactless payments.
How to choose the right RFID system for your operations
RFID technology is available in many formats, even beyond those looked at above. As an RFID solutions provider, we encourage our clients to ask the following questions before seeking a solution.
- What are you tracking? (Products, assets, people, vehicles?)
- Where will tracking occur? (Warehouse, retail floor, outdoor environment?)
- How far should the read range be? (Centimetres or metres?)
- How many items need scanning simultaneously? (Individual or bulk?)
- What environmental factors should you consider (Liquids, temperature extremes, dust, radio interference?)
- What kind of data do you need to store? (Simple ID numbers or complex datasets?)
- What level of security is required? (Standard tracking or encrypted applications?)
- What’s your budget? (Tags range from less than 10p for basic passive tags to £85+ for active tags.)
- What compliance and data protection rules do you need to follow? (GDPR, HIPA?)
Says Tom Edge, CTO at Nuffield Technologies, ‘The organisations succeeding with RFID aren't necessarily the ones with the biggest budgets – they're the ones who've taken time to understand their current pain points and implemented the right solution to solve specific problems. The real competitive advantage comes from thoughtful implementation that fits your operational reality.’
If you found this RFID guide informative, look for other articles about RFID coming soon.
Nuffield Technologies is an RFID solutions provider helping organisations implement and manage cost-saving RFID technologies. We provide consultancy to help you assess your needs, and preferential rates on RFID hardware and software via our partner Zebra Technologies. We also offer ongoing support to troubleshoot any issues and ensure your RFID technology runs smoothly and brings maximum benefits to your organisation.
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