Introduction to RFID Inventory Management in Retail

Radio Frequency Identification - RFID is an established data-carrying and automatic identification technology used throughout industry, and in the retail sector, has long been touted as the Holy Grail of Inventory Management. I can remember a conversation I had with one of the IT Directors of Tesco who said to me '..whichever Retailer cracks RFID first, wins. Period'. Dramatic words indeed.

Within Retail, think of RFID as an Intelligent barcode. Intelligent because it not only identifies the product, but it uniquely identifies the product. ie I'm not just a 300g tin of beans, I'm 300g tin of beans number 54167. It can do this because data relating to the specific item is stored on the RFID tag which is attached to the item. Like a bar code, a tag is a data carrier. A bar code carries data in a visible symbol and is read by a bar code scanner using optical or infrared wavelengths. An RFID tag carries data programmed into a small computer chip and operates at a wide range of radio frequencies.

The tag is activated by radio waves emitted from an RFID reader. The reader communicates wirelessly with the tag across what is known as the air-interface. Once activated, the tag sends data stored in its memory relating to the item back to the reader.

The RFID readers vary in the range at which they can read the RFID tags. This starts from the tap and go type readers which operate at the 0 - 1cm range, think TFL Oyster card, where you tap the card on to a reader (Interestingly such system are called contactless, despite the need to touch them to the reader). This area of RFID isn't really suitable for Inventory Management and is being explored more as a quick payment method.

Long range RFID scanners can pick up tags at range's up to 200m, and its these long and medium range scanners that open up the opportunity within warehouses and store backrooms for automatic inventory counting, goods in scanning etc. Imagine being able to take in a delivery from a supplier and automatically know each individual product that is on the pallet.

Aside from the infrastructure and setup challenges associated with an RFID solution, is the challenge of what to do with all that data. The increase in data volumes associated with a change in supply chain management from pallets to individual items is huge. I've worked at 4 out of the top 5 UK retailers and they all have enterprise datawarehouses measured in the 10's of Terabytes, driven by holding data mostly at SKU level. (Some of the data held will be at transaction level, which is almost individual item level, but the volumes of this typically range in the 0 - 5% of total space utilisation). To change the granularity to be at individual RFID rather than SKU is to scale that volume by a rough factor of 10,000. (based on 1000 stores and 10 incidences of each item per store).

The data challenge for RFID Inventory Management therefore becomes how to cope with a new level granularity, which systems need to use it, how they talk to other systems, how to cope with the increased network and storage requirements.