There are various technologies and ‘tags’ available to help track assets, particularly inventory in supply chains and retail. The three key technologies most commonly used are:
- RFID (Radio Frequency Identification)
- QR codes
Each of these technologies is capable of being deployed to track inventory, and the choice of which provides the best solution for a particular business application depends on a range of factors including utility, effectiveness and cost.
We’ll look at each technology in turn (from the most basic barcodes to the most advanced RFID), including how they work, and some of the benefits and drawbacks of each. Then we’ll consider when each may be relevant as an inventory tracking or management solution.
Barcodes are the most established and widely-used solution for inventory tracking in retail supply chains. A barcode was first used in 1974 on a pack of Wrigley’s Juicy Fruit chewing gum. They are simple and cheap, and hold the bare minimum of product information, such as a universal product code or stock-keeping unit (SKU) number, or both.
Barcodes need to be manually scanned, one at a time, to be cross-referenced to a product database that will contain more information such as weight, colour, size, date purchased etc.
Barcode scanners are also relatively cheap, due to their ubiquity, and with scanning apps available for iOS and Android, a basic inventory tracking system does not require a lot of hardware to set up, and is therefore relatively cost-effective to implement.
There are some drawbacks to barcode technology in inventory tracking. As noted, they don’t contain any detailed product information, so product data needs to be accessed via a separate inventory management system.
In addition, during regular stocktakes, warehouse or retail staff need to scan barcodes manually, one at a time, and have close proximity (a few centimetres) and direct line of sight. This can be problematic in busy environments where staff are rushed, and can result in scanning errors and inaccurate stock counts.
Finally, barcodes need to be scanned perfectly flat and at just the right angle, and any damage or wrinkling to the barcode can result in it not being able to be read at all, wasting time and compounding inaccuracies.
QR (or Quick Response) codes were first used in the car manufacturing industry in 1994. They will be familiar to anyone who has had to check-in to a store or venue during the COVID-19 pandemic. Prior to that, QR codes have mostly been used in marketing as a call to action whereby a reader scans a QR code on an advertisement or poster with the camera on their mobile device, which redirects them to a website to provide more product or promotional information.
They are similar in many ways to barcodes. While barcodes are made up of black and white lines of different widths, QR codes are comprised of tiny, pixelated black and white squares. And like barcodes, given their static nature, QR codes are also relatively cheap to produce and print.
Where QR codes differ to barcodes is in their ability to hold and communicate far more data than barcodes – in fact over 4,000 characters of text. Another crucial difference is that QR codes have a much lower error rate than barcodes, since only 30% of a QR code needs to be intact for a successful scan or read.
One obvious drawback to QR codes is that they are not widely used for inventory tracking outside of Asia, so there is a lack of compatible POS systems and scanners for this type of tracking technology.
Of all these technologies, RFID is the newest, having been used since the early 2000’s as a retail and inventory tracking solution. Since then, the explosive growth in the use of RFID technology around the world means it is the most powerful, holistic and integrated inventory tracking solution on the market today.
So, how does RFID technology work?
RFID stands for Radio Frequency Identification and is a form of wireless communication. It uses radio waves to identify a wide variety of ‘tagged’ objects from a distance. Unlike traditional barcodes, RFID does not need a direct line of site to ‘see’ an object.
RFID technology solutions use a combination of tags, readers, software and networks to create a customised solution to track a wide range of valuable business assets, including inventory. The key components of an RFID solution are:
RFID tags, or smart labels, that have an integrated circuit and antenna that transmits data. Tags can be classified as passive or active (see below). While the term ‘RFID tags’ is widely used as a catch-all descriptor in the industry, the first thing to understand is that tags can take many forms including stickers, adhesive labels, hang tags and hard tags that suit any environment. RFID tags can also carry a traditional barcode(or QR code) if required.
RFID readers, that receive data from tags, then covert that information into a more usable format. RFID readers can be mobile (handheld or App-based on a smartphone) or fixed (mounted) and pick up radio signals transmitted by RFID tags affixed to inventory items. Handheld readers are able to sweep a room and identify tagged items much faster, and more accurately, than manually reading each item from close proximity as with traditional barcode technology. Fixed RFID readers can be placed at strategic locations in warehouses, stock rooms and retail stores to track the movement of inventory in or out. RFID readers provide the crucial link in an RFID technology solution between tagged objects and the software that records and displays locations (and other information) in real-time.
RFID software, that receives data from readers and stores that data for record-keeping and analysis. RFID asset tracking and inventory management software captures data from fixed and mobile RFID readers to provide real-time asset and inventory visibility across your business or supply chain. An example of RFID software is RAMP’s locally-developed Loca.fi, a powerful, cloud-based platform designed to suit the requirements of a wide range of industries including manufacturers, retailers and transport and logistics providers, to name a few. RFID software not only captures and manages huge amounts of location data and other information, but it provides insights to help drive smarter, leaner processes and informed business decision-making.
As mentioned previously, there are two different types of RFID tags, passive and active. It is worth understanding the key differences between them:
Passive RFID tags do not have a battery or power source, and offer a shorter read range. Instead, they draw power from the RFID reader that sends out electromagnetic waves that create a current in the antenna of the tag. These tags lie dormant until they get a signal from a reader. Passive RFID tags are small, light and relatively cheap, and they are more readily disposable. They are suitable for fast moving retail items.
Active RFID tags have a transmitter and their own power source, such as a battery, and offer a longer read range. Power is provided to run the circuitry of the tag, and also to transmit or broadcast a signal to an RFID reader. This is similar to how a mobile phone sends a signal to a cell tower. Active tags are ‘always on’ and broadcasting their signal whether in range of a reader or not. These tags are bulkier and heavier (due to the power source) and are more costly than passive tags. They are suitable for larger and higher value assets, such as vehicles and equipment.
Generally, RFID asset and inventory tracking solutions are customised by a specialist RFID technology provider. Increasingly, RFID solutions work ‘out-of-the-box’, especially for retail applications, and they also work seamlessly with a range of point-of-sale (POS) technology systems for a complete, integrated solution.
Entire supply chains can be connected from point of manufacture to point of sale (store on online) with automatic collection of large amounts of data at every critical point along the way, providing complete visibility through the entire supply chain. This closed loop provides unprecedented amounts of data, information and insights in real-time due to the automatic collection of data at key points along the supply chain.
No matter what type of tag (passive or active) is chosen for an RFID inventory tracking solution, compared to barcodes and QR codes, they offer a range of improvements including:
- Tags hold far more data
- A far greater ‘read range’ (up to over 100 metres)
- Tags are read automatically, including updating the central system in real time
- Line of sight not required to read tags
- Hundreds of tags can be read simultaneously (in boxes and on pallets)
If there’s a downside to RFID relative to barcodes and QR codes, it is that they require new hardware, software and tagging technology (such as specialised printers) so can be relatively more costly to implement. Having said that, for larger businesses in fast-moving, just-in-time retail supply chains, investment in RFID technology solutions offers a range of cost savings including:
- Increased accuracy of stock counts
- Improved efficiency
- Reduced stock losses
- Less human intervention, saving staff time
- Less manual processes, so products move much faster
- Better management insights and better decisions
Which is the best solution for inventory tracking and management?
Firstly, it’s important to point out that any of these technologies is better than manual tracking of inventory in terms of saving time, reducing errors and forming a more accurate picture of inventory availability and movement.
But that’s where the similarities largely end, so how do you decide which technology to implement?
For the purpose of comparison, we would consider barcodes and QR codes as offering the same utility for an inventory tracking solution. Key differences between them are that QR codes can hold more data than barcodes, and also offer a lower rate of error than barcodes when tags are wrinkled or damaged in transit.
Businesses that might consider barcodes or QR codes are typically smaller, and may in fact be currently using manual inventory tracking. Barcodes or QR codes provide a very cost-effective option for inventory tracking, with a relatively low establishment cost, requiring little hardware investment given the availability of reader apps for mobile devices.
For single and multi-store retailers, online retailers and wholesale distributors, who need a more sophisticated inventory tracking and management solution, RFID technology ticks all the boxes. With retail and supply chains moving faster than ever before, automated processes are critical to increase business efficiency.
Faster, more accurate stocktakes, reduced staff time and minimised stock losses all contribute to lower business costs, and a better bottom line.
Further, the importance of accuracy cannot be overstated. Knowing what stock is on hand, what is selling and where it is most needed ensures that products can be supplied when and where customers want them. That means less out-of-stocks, more sales and happier customers.
Investing in an RFID inventory tracking solution is an investment in a brighter future for your retail business, with the cost more than offset by efficiencies, savings and increased sales.
All that’s left is to choose your preferred RFID technology specialist
Once you’ve decided that your business needs an RFID solution, talk to RAMP, the leading provider of RFID inventory solutions in supply chain management in Australia. We’ve been working with leading Australian retailers for over a decade, and offer an ‘out-of-the-box’ solution for retail inventory management that easily integrates with POS systems from leading vendors.
RAMP can help you improve retail inventory management, speed up your supply chain and gain valuable, real-time insights to make better business decisions.