- Image via Wikipedia
Bar codes were the standard method of tracking consumer items in retail supply chain management systems. They are still widely used in most retail stores. Bar codes can also be used in theft protection. For instance, cars are equipped with bar codes that record the VIN number and address of the owner so auto insurance companies can track stolen cars. However, RFID has certain advantages over bar code tracking, which is one reason why larger and more sophisticated retailers like Wal Mart use RFID extensively.
RFID is a small microchip device that emits a radio signal to a nearby receiver. This signal contains data about the commodity to which the RFID is attached. The data is processed by the receiver into a central database, and in this way, processing and movement information about millions of goods items are kept organized and up to date.
Bar codes do almost the same thing, but use a different method. Here, a hand held scanner is used to do the data transfer. A human being is generally involved in the scanning. The data is then transferred through wires to a central computer.
RFID saves a lot of money for retailers. Since rfids word automatically, it takes a much shorter time than bar codes. On average, scanning 50 containers takes only about 5 seconds with RFIDs, but using hand held bar code scanning can take over 5 minutes for the same number of containers. That means that RFIDs work about 60 times faster than bar code scanning. When you are working with a million containers or product items, it is easy to see how much time rfids save a retailer.
This converts to saving money in 2 ways. First, a lower amount of costly manual labor needs to be employed, since most of the work is done by computers and radio signals. This also means less chance of human errors, lower numbers of missing items etc.
Secondly, the waiting time for products on shelf or in warehouses before they are scanned is also much less, so there is less chance of a product going bad or expired. This literally saves a retailer millions of dollars, so they can afford to spend a few million on rfid devices and still save money overall.