Tracking use of Radio Frequency Identification tags in Canadian organizations

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by Mark Fakhri and Bryan van Tol

In 2006, a question on Radio Frequency Identification (RFID) tags was introduced on the Survey of Electronic Commerce and Technology. RFID tags are currently used by organizations for a wide variety of purposes. The concept of RFID tags combines radio frequencies and bar code systems, giving mobility to logistics. The data on RFID tag usage in Canada show the application of this technology is in its infancy. The small number of organizations that use RFID tags can be explained by the newness of the technology and the potentially high costs of investment and implementation. Despite the initial costs, organizations that use RFID benefit in the longer run.

About this article
Findings
Summary
References
About the authors

About this article

What do a retailer, a hospital, an international airport, a law firm and a college all have in common? They all may use Radio Frequency Identification (RFID) transponders, or RFID tags, in their unique daily operations.

RFID tags are newly deployed in the Canadian business world, with only an estimated 2% of all private organizations and almost 7% of all public organizations utilizing RFID tag technology (Statistics Canada, 2006) (see Definition).

Findings

What is Radio Frequency Identification anyway?

RFID systems consist of three main components: a tag, a reader, and a supportive hardware and software computer system. This automatic identification system is similar to a bar code system; however, it is mobile and more sophisticated through its use of radio frequencies to transmit and receive information and microchips to store a substantial amount of information.

There are two different kinds of RFID tags: a ‘read-only’ tag is hard-coded with identification information; a ‘read–write’ tag can have its information changed many times.

An interrogator, or reader, is used to communicate with the RFID tag. The reader sends out a radio signal; the tag picks up the signal and sends it back to the reader with the identification information. For effective information transfer, the distance between the tag and the reader can range from a few centimetres to about 200 metres. The reader can be handheld or fixed at strategic locations, such as an organization’s shipping and receiving bay.

Combined with a software and hardware system, RFID tags can assist users in accurately tracking various items through a given environment.

Use of this technology by organizations

Two examples show how RFIDs are currently utilized around the world (Bacheldor, 2007a, 2007b). The first example is from the health care industry. In the United States, the medical staff at a hospital in Pittsburgh, Pennsylvania, use RFID tags to administer the correct medication to patients. RFID tags containing a unique identification number attach to the patient’s wristband and medication package. Before the medication is administered to the patient, a nurse must first log in using the RFID-enabled reader to scan his or her badge’s tag. Then the reader is used to scan the unique identification numbers from the patient’s wristband and medication package. The identification numbers are automatically cross-checked with the hospital’s database system, which contains the patient’s medical history. The staff is thus able to verify the patient’s medical needs at his or her bedside with the use of this RFID technology.

The second example is from the airline industry. In Thailand, the international airport in Bangkok uses RFID tag technology to keep a record of all air freight passing through its cargo terminal. All cargo items in the terminal contain an RFID tag to track their arrival and departure. Readers located at fixed positions in the terminal send a radio signal to the tag as the cargo passes by them. The radio signal is then returned to the reader with identification information such as a description of the cargo and its time of arrival or departure. Read–write RFID tags are used because they can be attached to an item when it arrives and detached before it leaves.    

RFID tag technology is being used in many environments and Canadian organizations are gradually exploring its capabilities.

A relatively small percentage of organizations use this technology

In the private sector, approximately 2% of all organizations use RFID tags. The percentage of usage for each industry does not greatly deviate from this total. For all industries surveyed, the proportion of their organizations using RFID tags ranged between a high of 5% in the Utilities sector and a low of less than 1% in the Health Care and Social Assistance sector (Table 1).  

Some sectors, such as the Administrative and Support, Waste Management and Remediation Services sector and the Arts, Entertainment and Recreation sector, are more likely than others to benefit from the use of RFID tag technology. Each is a compilation of diverse subsectors, which include Packaging and Labelling Services, Investigation and Security Services, Business Support Services, Waste Management and Remediation Services, Gambling Industries, Heritage Institutions, and Amusement Parks and Arcades.

For the majority of private sectors, however, no more than about 2% of their organizations use RFID tags (Table 1).

In the public sectors—Health Care and Social Assistance, Educational Services and Public Administration—almost 7% of all organizations use RFID tags,although there is wide variability among sectors (Table 2).

The generally low percentages of usage in the private and public sectors are likely due, in part, to the high costs involved in implementing an RFID system (OECD, 2006). Although some RFID tags may cost less than a dollar it’s the required number of tags and readers combined with the computer systems with their specialized hardware and software, and employee training that together contribute to drive up the total cost significantly.

Reasons other than cost may also influence an organization’s decision to apply RFID tags. For example, the size of the organization, as determined by number of full time employees, may be a factor: large organizations potentially adopt newer technologies more quickly than medium-sized and small organizations (Uhrbach and van Tol, 2004). Additional reasons include awareness of the technology, pressure from competition or the market to adopt the technology, and the suitability of RFID to operational needs.

Summary

It is clear that the early adoption rates for RFID technology are low in both the private and public sectors. There are many possible reasons for this, including lack of awareness of RFID and its potential applications, and investment and startup costs.

Research and analyses continue to explore the viable application of RFID tags by industry and firm size—in Canada and around the world.

References

Bacheldor, Beth. 2007a. “RFID-enabled handheld helps nurses verify meds”. RFID Journal (accessed January 9, 2008).

Bacheldor, Beth. 2007b. “Thai airport tests RFID to track cargo, streamline customs”. RFID Journal (accessed January 9, 2008).

Ferguson, Renee Boucher. 2007. “A healthy dose of RFID”. eWeek. June. p. 27–28 and 30–31.

Organisation for Economic Co-operation and Development (OECD). 2006. Radio Frequency Identification: Drivers, Challenges and Public Policy Considerations. Directorate for Science, Technology and Industry Committee for Information, Computer and Communications Policy. March.

Statistics Canada. 2006. Survey of Electronic Commerce and Technology (accessed January 3, 2008).

Uhrbach, Mark and Bryan van Tol. 2004. "Information and Communication Technology Use: Are Small Firms Catching Up?". Analysis in Brief. Catalogue no. 11-621-MWE, no. 009 (accessed January 3, 2008). Ottawa.

About the authors

Mark Fakhri and Bryan van Tol are with the Science, Innovation and Electronic Information Division (SIEID) at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.