Introduction
Radio-frequency identification (RFID) technologies have been on the rise over the past several decades, laying the foundation for groundbreaking processes in various organizations. Such technologies offer a system of components, such as tags and readers, which can offer extensive pieces of information quickly. RFID technologies are widely used in various sectors, including healthcare and retail. However, while RFID technologies offer many benefits, challenges involving affordability, commercial application, and maintenance persist, which must be resolved through robust systems and training.
Challenges and Issues Facing RFID Technology
If RFID technology is to be widely adopted, issues such as cost, compliance, interoperability, reliability, privacy, and hardware changes must be addressed. The industry’s immaturity is one of the primary concerns regarding the use of RFID (Kumar et al., 2009). Currently, a rapid rate of modification and improvement is occurring with tags and readers (Kumar et al., 2009). Such a continuing evolution may render tags and equipment obsolete, invalidating investments in previous equipment and necessitating costly transformations and replacements (Kumar et al., 2009). Therefore, it is crucial not only to research the main issues associated with the technologies but also to explore possible solutions.
The first issue related to the implementation of RFID technologies is its cost. Although RFID has transformed asset tracking, it can be expensive. The cost of the chip remains the biggest challenge in using RFID. In 2009, passive tags were priced between seven and fifteen cents (Kumar et al., 2009). An extra $15 spent on a shampoo bottle that costs $4 would result in a 4% margin reduction (Kumar et al., 2009).
Demanding higher costs from CPG companies, which already prioritize low margins, is likely to be met with resistance and will most likely be passed on to consumers (Kumar et al., 2009). Moreover, more expensive equipment will be required to maintain RFID (hardware or software) throughout its lifetime (Abugabah et al., 2020). Although the cost has decreased since its introduction to the market, businesses remain cautious about adopting this technology due to rising costs (Abugabah et al., 2020). Therefore, such a factor can be a significant barrier to implementing the technology.
Another issue connected to technology integration is poor compliance. It is logical to believe that a significant business like P&G will utilize its assets to implement this innovation. At the same time, an experienced competitor will forego the cost and grow more price-competitive (Kumar et al., 2009). However, one must understand that entire industries must agree to comply for RFID to function. In a highly elastic business, competing against a company that fails to absorb these expenses will result in a reduction of market share (Kumar et al., 2009).
Additionally, compatibility can be viewed as an additional challenge faced by retailers. Despite the high entrance barriers to RFID manufacturing, numerous companies have entered the competition (Kumar et al., 2009). Asking a firm to commit to a specific producer is challenging because there are numerous different formats for tags and scanners. (Kumar et al., 2009) As a result, compliance and compatibility can be significant issues if there are no standardized manufacturing and production procedures.
Aside from the issues mentioned above, another concern is reliability. According to Kumar and colleagues (2009), the operations manager for Procter & Gamble stated that reliability remains a topic of discussion. The confidence in data gathering needs to be addressed because errors are often hidden when scanning goods that are deep inside pallets or containers carrying liquids (Kumar et al., 2009).
Businesses will spend a significant amount of money with little return if hand counts are reinstated, as scanners are not accurately reflecting the number of RFID chips. Radiofrequency dead spots should be minimized by utilizing multiple readers and circularly polarized or multi-axis antennas (Kanwar, 2020). As a result, without much effort aimed at improving the signal and reliability, the technology will be irrelevant.
Moving aside from commercial issues, privacy concerns account for the majority of consumer mistrust of RFID. The implementation and use of RFID technologies face a significant public policy challenge in the acquisition and utilization of private data (Kumar et al., 2009). Instead of the technology itself, a significant portion of this concern revolves around the gathering, use, and storage of data (Kumar et al., 2009).
The primary concern is the loss of privacy, as anyone who uses an RFID reader device has access to patient information, and there is a significant risk that criminals will exploit private medical information (Abugabah et al., 2020). Even with a person’s consent, no adverse consequences can be avoided (Abugabah et al., 2020). In this case, without a more robust system, the only way to protect confidential data is to use it.
Finally, hardware upgrades must consistently be implemented by companies, which can pose challenges. Trucks, warehouses, and portable scanners will all need to be modified to employ RFID (Kumar et al., 2009). However, a business can be reluctant to invest in the existing technology because it believes that better hardware will become available in the near future at a lower cost (Kumar et al., 2009).
If there is a lack of technical knowledge and assistance, understanding the many RFID tags and frequencies can be difficult (Abugabah et al., 2020). Therefore, training the labor force to operate the technology and translate the data into useful information is the second issue to consider (Kumar et al., 2009). Thus, much effort will be required to make the technologies simpler and less costly to use.
Solutions to Challenges and Issues
RFID technology indeed presents various challenges and issues, ranging from cost to implementation and training. However, several solutions can be presented to help eliminate these challenges. For example, the first solution focuses on costs, primarily by encouraging economies of scale.
To make RFID technologies more cost-effective and reduce manufacturing costs, they should be more widely adopted (Want, 2022). Additionally, alternative pricing models, such as pay-per-use agreements, can also be implemented (Want, 2022). Such approaches will help make the technologies more affordable for companies.
Moreover, as mentioned above, compliance issues are a concern for the adoption of RFID technologies. To address this issue, implementing better regulatory frameworks and standards can improve the situation (Want, 2022). Governments can also engage in processes that promote ethical standards and the responsible use of technologies.
In terms of compatibility, standards can also be applied, primarily universal ones, which can promote interoperability and facilitate data sharing among stakeholders (Want, 2022). As for reliability, organizations can pay more attention to implementing redundant systems and backup solutions. For example, to minimize risks and issues associated with these technologies, companies can invest in high-quality hardware and conduct regular checks, which can help businesses maintain the reliability of their infrastructure (Want, 2022). However, as was listed above, more challenges affect the incorporation of technologies.
Another issue is related to privacy, and to address this, companies can focus on encryption and access controls that will enhance cybersecurity safety (Want, 2022). Finally, when discussing hardware upgrades, priority must be given to scalability and flexibility (Want, 2022). Partnerships with reliable vendors of RFID technologies can be an optimal solution for this challenge.
As shown above, several issues can be faced by any business. Meanwhile, industries that benefit from this infrastructure include financial services, healthcare, manufacturing, and retail. At the same time, the one sector that could benefit the most is the retail sector.
By 2026, it is anticipated that the retail sector will hold the largest share of the RFID market, with an ownership percentage of approximately 34% (Kasiri, 2021). It is followed by the transportation industry (25%), banking and security services (22%), as well as other sectors with lesser shares, such as healthcare and manufacturing (Kasiri, 2021). Compared to barcodes, which have limited data storage space and can only recognize a group of products, RFID tags can store additional details about every product in real-time and have customized recognition for each item (Kasiri, 2021). Therefore, considering the unique needs and interests of the retail sector, it is likely to benefit the most from the mentioned solutions.
When discussing the promising nature of the retail sector, Walmart appears to be the company that can best apply such solutions, given its extensive scope of operations. The United States division of Walmart has informed its suppliers that it will expand its tagging standards to products in numerous new categories starting in 2022 (Kay, 2022). These products had to have RFID smart labels by September to be delivered to Walmart retail locations (Kay, 2022).
Walmart plans to expand this initiative to other divisions and categories following the project’s success (Kay, 2022). RFID will enhance the precision of inventory management, providing online and in-store pick-up options, thereby improving customer experiences and increasing sales prospects (Kay, 2022). Thus, Walmart can significantly benefit from RFID technologies and appears to be working on addressing its weaknesses and challenges.
Conclusion
In summary, while RFID technologies offer numerous advantages, issues with cost, commercial use, and maintenance persist, necessitating the development of reliable systems and training to address these concerns. Among the significant challenges that companies face are cost, compliance, interoperability, reliability, privacy, and hardware upgrades. Among the solutions to such issues are the promotion of economies of scale, regulatory frameworks, universal standards for RFID protocols, robust hardware, privacy-enhancing technologies, and future scalability and flexibility.
The industry that can benefit the most from these solutions is retail, and the company that can implement them is Walmart. With attention to such an effort, Walmart plans to expand this campaign to additional divisions and categories. As a result, RFID will help improve inventory accuracy, leading to alternatives for online and in-store pickup, enhanced customer experiences, and improved sales prospects.
References
Abugabah, A., Nizamuddin, N., & Abuqabbeh, A. (2020). A review of challenges and barriers implementing RFID technology in the Healthcare sector. Procedia Computer Science, 170, 1003-1010.
Kanwar, G. R. (2020). Challenges for RFID technology used in libraries. International Research Journal on Advanced Science Hub, 2(10), 112-120.
Kay, M. (2022). Walmart to use RFID to improve ‘store level’ inventory accuracy in home goods, consumer electronics. Forbes.
Kumar, S., Anselmo, M. J., & Berndt, K. J. (2009). Transforming the retail industry: Potential and challenges with RFID technology. Transportation Journal, 48(4), 61-71.
Kasiri, N. (2021). RFID applications in retail. In L. Wang (Ed.), Electromagnetic wave propagation for industry and biomedical applications. IntechOpen.
Want, R. (2022). RFID explained: A primer on Radio Frequency Identification Technologies. Springer International Publishing.