Understanding RFID Technology within a Business Intelligence Framework


Radio Frequency Identification (RFID) technology provides new and exciting opportunities for increasing organiza- tional, financial, and operational performance. With its focus on organizational efficiency and effectiveness, RFID technology is superior to barcodes in its ability to provide source automation features that increase the speed and volume of data collection for analysis. Today, applications that employ RFID are growing rapidly and this technology is in a continuous state of evolution and growth. As it continues to progress, RFID provides us with new opportunities to use business intelligence (BI) to monitor organizational operations and learn more about markets, as well as consumer attitudes, behaviors, and product preferences. This technology can even be used to prevent potentially faulty or spoiled products from ending up in the hands of consumers. However, RFID offers significant challenges to organizations that attempt to employ this technology. Most significantly, there exists the potential for RFID to overwhelm data collection and BI analytic efforts if organizations fail to effectively address RFID data integration issues. To this end, the purpose of this article is to explicate the dynamic technology of RFID and how it is being used today. Additionally, this article will provide insights into how RFID technology is evolving and how this technology relates to BI and issues related to data integration. This knowledge has never been more essential. While IT academic research into RFID development and issues has declined in recent years, RFID continues to be a vital area of exploration, especially as it relates to BI in the 21st century.

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R. Herschel and P. Rafferty, "Understanding RFID Technology within a Business Intelligence Framework," Intelligent Information Management, Vol. 4 No. 6, 2012, pp. 407-414. doi: 10.4236/iim.2012.46046.

1. Introduction

There has been substantial academic research conducted on Radio Frequency Identification (RFID) technology, along with its capacity to enhance organizational decision-making. Some of this research has focused on RFID and information systems; however, this has diminished as a topic of examination over recent years. This is unfortunate and ill timed, as there have recently been many noteworthy developments and issues that warrant scrutiny, especially with regard to the relationship between RFID and business intelligence.

RFID has been identified as one of the most important technologies of the 21st century because it allows for real-time tracking of objects or products within the supply chain [1]. RFID is a wireless technology that incurporates a tag containing a chip and an antenna for sending and receiving data. The technology interfaces with an interrogator (reader), which has an antenna that communicates with the tag. Middleware then manages, filters, aggregates, and routes the data captured from the tag to the organization’s enterprise systems for storages and analyses [2]. This type of technology offers an improved alternative to barcodes. For example, scanning barcodes requires labor, which is costly. Because it is more expensive to collect information via barcodes, retail companies typically conduct inventory counts only once or twice a year, often yielding inaccurate data despite these costly efforts. However, inventory accuracy for apparel stores averages just 65 percent. Unfortunately, this problem just scratches the surface. Retailers consistently have a lack of meaningful and high-volume data regarding the movement of goods from their warehouse to the back of the store, then on to store shelves. Barcodes are not typically scanned when items arrive at the warehouse, nor when they are shipped to a store, arrive at that store, when the items are placed at a particular location within the confines of the store, including the store’s selling area. As a result, retailers lack the information and knowledge of how long these processes take to complete or how well the stores are executing these tasks [3].

Similarly, barcode data cannot provide information as to whether an item did not sell because it was unpopular with shoppers or because it was simply missing from the shelves when shoppers were ready to buy. This inability to accurately measure product sales success is one of the most fundamental questions for retail operations today; however, barcode technology does not address this essential question, thus hindering meaningful merchandiseing improvements.

These impediments are readily overcome by RFID technology because, unlike barcodes, RFID is not constrained by a need for line-of-sight reading and multiple RFID tags can be read simultaneously. Similarly, RFID tags can store critical information regarding the individual item, can be read in a dirty environment, and have the potential as reusable data containers since they have the potential to be written multiple times. These resultant advantages to barcodes have made RFID a critical component to an enterprise’s data supply chain. RFID automates data collection for goods and services, which allows for the application of both automated and ad hoc analytics. This drives drive decision-making capacity that seeks to enhance organizational and process-oriented effectiveness and efficiency [3].

This organizational and process-oriented effectiveness and efficiency is most apparent in RFID technology’s capacity to function on a proximity basis. RFID tags can be read and processed as long as they pass within a given radius of a RFID reader. Unlike barcode technologies, where each barcode tag must pass directly in front of a reader, hundreds of RFID tags can be read simultaneously, since there is no requirement for line-of-sight scanning of each tag. In shipping applications, this enables scanning and tracking to be done at a palette level, with tagged items remaining snuggly packaged in a box or shipping crate. RFID eliminates the need to scan each tag on a one-by-one basis. This ease and enhanced speed of data collection affords firms the opportunity to use BI more rapidly, as well as exploit or correct situations that have a direct impact on enterprise performance.

2. The Evolution of RFID

Predominantly used in the consumer goods industry [4], RFID technology continues to evolve. Today’s enterprises now employ RFID data for many diverse applications, including airline luggage tracking, electronic security, asset tracking, and supply-chain management [5]. Other uses for RFID include monitoring out-of-stock merchandise, product distribution, receiving documentation, proof of delivery, asset management, product life cycle tracking, recall management, product rotation, inventory and shipping accuracy, inventory management, product shrinkage, military applications, and service sector applications [6-9]. Facebook is experimenting with RFID chips embedded in wristbands or badges that allows its members to carry out a variety of social networking tasks without the need for a computer or smartphone [10].

Many governments and academic institutions now utilize RFID tags. For example, RFID technology is being adopted for such applications such as tracking farm animals, non-stop road tolling, library and document tagging, and national ID cards and passports. Colleges and universities are beginning to implement RFID identification for attendance and alert solutions. For example, Scholar Chip, a New York-based provider of RFID attendance and payment solutions, has issued close to 750,000 RFID tags in various formats, such as ID cards, fobs and stickers. Students hold their RFID-enabled ID badges to readers as they enter the school building, and again as they enter classrooms, where readers are mounted on teachers’ desks. Additionally, Universidad Regiomontana in Mexico is using RFID technology to prevent theft of laptop computers issued to staff and faculty [11].

Further examples of loss/theft protection is apparent in the manner in which RFID tags are poised to provide anti-theft for laptops and tablet computers using a Wi-Fi tag. Ekahau, a provider of Wi-Fi-based real-time location system solutions, has announced the launch of a Wi-Fi tag that incorporates a location-tracking device designed to prevent laptop theft and misplacement. The RFID embedded device is a small, flat unit that is plugged into an ExpressCard and can be activated via a few keystrokes. The tag is designed to track and manage the tags anywhere on a campus equipped with Wi-Fi coverage. By determining a tag’s location and status, the system can alert a user if a laptop or tablet computer leaves a designated area, or enters an unsecured area [12].

2.1. RFID and the IT Organization

IT organizations are also becoming a major consumer of RFID technology. Market revenue for RFID tags, hardware (such as readers and printers), software and middleware, and integration services used to track and trace IT assets within data centers reached $96.3 million in 2011. Revenue is expected to grow to $952.6 million in 2017, due to the widespread implementation of RFID technology in data centers globally. RFID tags can quickly locate and track innumerable servers and vast numbers of data tapes within large data centers, thus lowering their replacement expenses. Likewise, the lack of asset visibility sometimes results in the duplication of existing assets, ultimately adding to total costs. RFID technology can eliminate this duplication, thus providing significant savings, as well as preventing theft and loss through real-time tracking [13].

RFID provides opportunities for organizations to realize cost efficiencies and effectiveness as they seek to streamline their physical processes. Roberti [14] suggests five ways RFID technology facilitates these objectives:

• Deploying RFID to track the 7 - 10 percent of shipping containers typically replaced annually because they are lost or damaged;

• Tagging IT assets with RFID tags instead of bar codes enables more efficiency for tracking and accounting;

• Providing suppliers with RFID tags to be placed on shipments so that the manufacturer can more efficiently and more accurately associate them with parts, raw materials, or products;

• Using RFID to track rental equipment utilization;

• Deploying RFID on subassemblies, large parts, and parts bins to increase throughput with less labor and costs associated with locating parts and subassemblies.

2.2. RFID Growth Potential

The number of RFID applications continues to present unbounded opportunities, with diverse industries applying this technology throughout the world. In 2006, cumulative sales of RFID tags reached $2.4 billion (USD) [15]. In 2011, the value of the entire RFID market was $5.84 billion (USD), up from $5.63 billion (USD) in 2010 [16]. RFID market value continued to grow in early 2012, where the cumulative number of RFID tags sold was 15.1 billion, 20 percent of which were sold last year [13].

Even with this unprecedented growth, the RFID market is predicted to grow steadily over the next decade, rising four-fold within that period to $26.19 billion (UDD) in 2022. A recent research report entitled “Global RFID Market Forecast to 2014” states that the RFID market is expected to grow at a compound annual growth rate of around 18% through 2014 to reach approximately USD 19.3 billion. It also notes that the RFID market in the Asia-Pacific is growing at a faster rate than those of Europe and America [17]. Further, according to ABI Research, it is expected that $70.5 billion will be generated between 2012 and 2017 from sales of RFID readers, transponders, software and services, with sixty percent of the accumulated revenue over the next five years being generated from government, retail, transportation and logistics. These four sectors have been identified by ABI as the most valuable sectors for RFID growth potential. The market is expected to grow 20 percent, year over year, per annum [18].

To foster the further growth in the deployment of this technology, new and cheaper RFID chips are now under development. For example, microelectronics developer, Terepac, reports that it plans to begin manufacturing a “near field communication” (NFC) RFID tag that is expected to be the world’s smallest RFID tag. This tag would be cheaper and much smaller than other NFC tags currently on the market, and thus could be embedded in almost any paper label, product or item. The tag could be interrogated via an NFC reader in a user’s mobile phone, thereby making it possible to link a customer with information regarding a particular product, or link an individual with a social-networking site, medication data or other Web-based information [19].

2.3. The Future of RFID Technology

At MIT, Bhattacharyya, Di Leo, Floerkemeier, Sarma and Anand [20] are working on an inexpensive, passive RFID chip that may dramatically enhance data collection on the status of food items requiring refrigeration. Their research reports on the design of a temperature RFID threshold sensor that registers the violation of critical temperature thresholds by inducing a permanent change in an RFID tag antenna’s electrical properties. This inexpensive sensing tag would be useful in monitoring the state of certain items, such as perishable food produce or other fragile goods that must maintain a constant temperature threshold at all times. The sensor would provide the RFID user with binary state information indicating whether critical temperature thresholds were reached during transportation allowing the user to make a decision of whether to keep or discard the goods. Since the state of most goods are examined at the distribution centers in a supply chain, rather than in transit, this type of RFID advancement would dramatically improve realtime monitoring for items, such as orange juice cartons, milk and meat products. Within supply chain applications, an accurate and timely assessment of the state of the product will be automatically monitored as soon as the products pass an RFID reader at the dock door of a distribution center.

These types of examples illustrate the manner in which RFID technology continues to evolve and innovate at an unprecedented rate, not only in the design of the technology, but also in its application. In 2011, the RFID journal reported 101 innovative ways to use RFID [21]. New RFID applications include saving endangered species, smart supermarket carts, liquor pouring tracking at bars, protecting miners, cigarette smoking cessation programs, at-home pain management, and the detection of gunfire.

3. RFID Technology and Academic Research

RFID technology has been an exciting area for academic study due to its relative novelty and exploding growth [22]. Scholarly and practitioner-based exploration into RFID technology has led to the emergence of a new research area that builds on existing study in a host of diverse disciplines, such as electronic engineering, information systems, computer science, and business strategy. This has resulted in a significant increase in the number of scholarly papers on RFID in research journals from 1995 to 2005. During this time, topical areas of research provided a general view of the use of RFID technology in the areas of retail and supply chains. This research also dealt with the potential of utilizing RFID technology, the perceived benefits, effects, and challenges for retailers, how consumers are likely to respond to the technology, and the market drivers for RFID implementation in the grocery industry. Within this 10-year period, the majority of research had been published in technical journals, but it is expected that papers related to RFID technology will continue to grow in management and other business journals.

Bendavid, Lefebvre, Lefebver, & Fosso-Wamba [4] note that RFID has been a topic of interest in various fields of research related to the technology itself, such as: 1) Innovation management and potential trajectories for RFID adoption; 2) Implementation in an inter-organizational context; 3) Customer relationship management (CRM); 4) Product lifecycle management (PLM); 5) Reverse supply chain activities (e.g., returned goods); and 6) Supply chain management. Recent research has also investigated the impact of RFID technology on retail sales and service operations. For example De Marco, Caglian, De Marco, Caglian, Nervo, and Rafele [23] found that sales growth resulted from the dynamic and integrated impacts of RFID technology, especially in the areas of improved inventory control, faster inventory turnover, and longer time available for store personnel to assist consumers as an effect of more efficient backroom operations.

Ferrer, Dew, and Apte [9] studied several different RFID applications within the service sector to discover how this technology can be used to enhance various aspects of the service delivery, as well as the costs and benefits realized form this technology. Their research reveals how RFID impacts service operations in a variety of scenarios. The authors note that decisions about the selection of new technologies, such as RFID, require significant investment and can have a strategic impact on the organization. To ensure that the right RFID configuration is selected, Ferrer et al. assert that management must be an informed consumer of the technology in order to understand how the data adds value to their operations. In their investigation of RFID utilization in service industries, Ferrer et al. identify four benefits that RFID applications provide, including: 1) Replacement of labor through automation; 2) Cycle time reductions; 3) Enabling self-service; and 4) Advances in loss prevention. They argue that these benefits lead to better control and lower costs.

Baars, Kemper, Lasi, and Siegel [24] find that the dominant focus of RFID research today deals with increasing local efficiency gains by implementing a more efficient handling of items or pallets, along with a reduction of processing times. However, while substantial benefits are expected to result from the sharing and processing of RFID data along the supply chain, Baars et al. argue that these applications do not yet take the full potential of RFID data into account. They argue that RFID also requires integrating, enriching and analyzing RFID data for the purpose of supporting decision makers. Supporting data-driven decision making means paying special attention to how RFID technology affects and supports the use of business intelligence capabilities within an organization.

4. BI and RFID Technology

BI is widely adopted in organizations and successful BI initiatives have been undertaken across major industries and for varied applications, including health care [25,26], security and event management [27], telecommunications [28], web analytics [29], and Six Sigma [30].

Herschel [31] defines BI as the application of data, technology, and analytics in the pursuit of insights and knowledge that enables decisions and actions that yield value for a firm. He asserts that BI creates value by providing evidence that organizations can use to make informed decisions about people, processes, products and services. Herschel’s definition suggests that because RFID technology has inherent capabilities for capturing and transmitting product data for decision-making, it should be seen as an important data source for BI.

Figure 1 presents a vision of BI as an integrative application of technologies, models, techniques, and practices. In Miori and Klimberg’s [32] framework, each of the three circles of the Venn diagram represent applications that had previously been considered quite distinct, which include 1) information systems and technology,

Conflicts of Interest

The authors declare no conflicts of interest.


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