Tantra Analyst

If you have ever shopped at a Uniqlo store, you’ve likely been as amazed as I have by the automated checkout: You put all your items in a basket, and they are instantly scanned rather than needing each barcode scanned manually. That almost magic-looking setup is made possible by a technology called RFID. The same touchless, rapid, bulk-scanning technology is now revolutionizing supply chain logistics across numerous industries.

Fortune Business Insights predicts that the global RFID market will “grow from USD 19.01 billion in 2026 to USD 46.2 billion by 2034.” There are a number of reasons why enterprises are moving toward RFID: The latest advances in RFID technology are making it increasingly effective for automating the management of goods as they move through logistics channels, whether tracking inventory as it moves in and out of stores or ensuring shippers load the right packages into the right trucks. Enterprises can get highly accurate, real-time information with less manual labor, reduced waste and write-offs and overall improved efficiency. And in the future, AI models could even potentially leverage RFID data to further improve demand forecasting, trend analysis and pricing models.

What is RFID technology?

RFID stands for radio frequency identification, and it comes in many forms. The ones we are discussing here are called RAIN RFID, which comply with specifications published by the industry body RAIN Alliance.

RFID tags work like wireless barcodes. Unlike barcodes, which need to be scanned individually and manually, RFID tags can be read automatically and in bulk. RFID readers transmit a high-frequency signal that RFID tags reflect, and the reader analyzes the reflected signal to identify the tag. Tags have a small microchip and antennas that are powered by the wireless energy they receive from the reader, no batteries needed. A typical passive RFID tag has a readability range of around 10 meters.

RFIDs have been in use for many years, primarily for theft prevention by major retailers. Their usage was limited by cost (the least expensive kind, passive printed UHF labels, averaging ​8 to 25 cents per tag), size and performance in complex supply chain scenarios. But that is rapidly changing.

Advancements in RFID are making it an enterprise and supply chain logistics solution.

Efficient management of supply chain logistics is business-critical across all industries, and automation is key. Most logistics management today happens through barcodes. Barcodes are inexpensive to produce but can have higher operational costs due to manual labor and lower accuracy.

The early success of RFID in retail has created economies of scale and reduced costs. Tags that once cost 60 cents apiece dropped as low as about 4 cents a tag in 2023 (subscription required), according to Praveen Adhi of McKinsey & Co. Most importantly, its automatic, bulk and high-accuracy (over 90%) reading capabilities lend themselves well to full automation of logistics management. In my experience, better inventory management that reduces waste, lowers write-offs and enables appropriate pricing can more than pay for the RFID upgrade.

But the traditional RFID technology and systems were not suitable for such operations. They needed enhancements on two fronts:

1. Better technology for robust reading in challenging conditions, such as when goods are in motion, densely packed, scattered across many aisles or in poor wireless conditions.

2. Newer reader and tag form factors that are well-suited for logistics use cases.

Most of today’s solutions comply with the RFID Gen2v2 specification, published in 2013, but those specifications are often insufficient for logistics use cases. However, companies are already working to address this. For example, RFID semiconductor and solutions provider Impinj has introduced standards-compliant enhancements, called Gen2X, meant to improve performance by providing sufficient capacity, reach and robustness to address the logistics usage challenges. Gen2X-based readers and tags are already on the market today.

On the form factor front, RFID readers will likely need to move from traditional handhelds to ceiling-mounted, overhead readers. And tags will need to become thinner, lighter and smaller and be available in forms such as labels and thin paper tags. Fortunately, overhead readers and chipset solutions for building third-party readers are already being developed by multiple major providers, offering more powerful processing for faster, more accurate, high-capacity reading. And tags are also becoming increasingly small, thin and light. The tags used by Uniqlo and the perishable item labels announced by Avery Dennison are great examples of this.

​Strong Early Traction, Challenges, Considerations And The AI Future

As RFID technology and ecosystems are rapidly evolving, many major companies across industries have already adopted the technology. For example, along with Fast Retailing Company (parent company of Uniqlo), we’re also seeing UPS using RFID tags for accurate tracking of its shipments, Amazon Just Walk Out using the technology for self-checkout and more.