RFID with a wide range of recognition and item unit recognition, but the reason why it doesn't work is because
'expensive' to activate rfid, solve 'recognition' problems.

Written by Lim Yeri
What is RFID?

Radio Frequency Identification (RFID), also known as wireless recognition. This is a technology that allows the identification of objects or people using radio frequency (RF). RFID is not a recent technology. To see the birth of technology, it has to go back to the 1940s, and Korea has already been paying attention to RFID in logistics and distribution for more than a decade. So is RFID widely used at this point? Industries say that this is not the case.

Before looking at the reasons, it is necessary to understand RFID technology. Hardware devices that make up RFID include 'tag', 'reader', and 'antenna'. The tag consists of an IC chip and an antenna where information is stored again. The reader uses radio frequencies to check the tag information sent by the antenna. The reader sends the information received to the server.

▲ RFID Basic Configuration

RFID using frequencies is divided into low frequency (LF), high frequency (HF), microwave (UHF), and microwave depending on the frequency used. Features vary depending on frequency band. The transportation cards we commonly use in our daily lives use high frequency RFID. However, this transportation card is selected as a unit of items, and in fact, there is not much difference from the barcode. Unlike high-frequency RFID, the difference is that barcodes require people to hold their own readers and find and photograph barcodes at the top of the product.

On the other hand, RFID, which was spotlighted in logistics and distribution, is UHF band frequency. This has the advantage of being able to recognize multiple products at the same time. Unlike transportation cards (HF), which can be recognized only when it is close to the reader, the range of recognition of the UHF band is up to 100 meters.

"UHF frequency bands can recognize hundreds and thousands of tags at the same time," said Seungwon Lee, CEO of 4STEC an RFID-based solution developer. "POSTECH is currently using RFID for managing national records and books, but the time required for full inspection has been reduced to 1 to 2 days.

RFID is also capable of tracking the location of item units, unlike bar codes. Barcodes have limitations in identifying products by item. For example, A and B coffee were assigned a barcode number because they were selected as one item. Then, whether you take A or B with a reader, the two are recognized as the same information. In order to identify products by item, barcodes cannot be stamped on each item. This required a new system, and RFID became the focus.

▲ Reader and Tag

Two reasons RFID is not enabled

Nevertheless, why can't RFID be activated? According to industry officials, less than 10 percent of RFID management systems have been distributed to the management of records by agencies such as the National Archives, the National Assembly Library, and the prosecution office. According to industry evaluation, there are two main factors that hinder RFID's distribution. That's the price of tags and the recognition rate.

Among them, "price" is the biggest problem so far. According to data from the Korea Communications Commission (formerly Ministry of Information and Communication) on RFID tags, prices of RFID tags decreased to 2,000 won in 2004, 500 won in 2005, and 200 won in 2006.Currently, Chinese companies are mainly in charge of manufacturing tags (based on 900 MHz band, pilot project, and main project), so the price has been lowered to one-tenth of the first level.

Nevertheless, considering that the price of the courier waybill is only a few tens of won, it is difficult to commercialize the current tag price. In addition, considering the cost of building hardware facilities, the cost burden becomes even greater. Of course, there is an opinion that tag pricing will be solved naturally over time, but this opinion was three years ago and five years ago. Due to this situation, tags have been mainly used in expensive products and public institutions that emphasize high work efficiency. On the other hand, the use of RFID in the private sector was slow.

'Recognition rate' is also an obstacle to RFID activation. According to Chung Tae-soo, a professor of industrial management engineering at Korea University, the recognition rate problem is the biggest weakness of RFID technology. According to him, RFID technology is an analog technology that has existed since the past and has the inherent problems of analog technology. A typical problem is whether RFID is sensitive to the surrounding environment or shows differences in recognition rate depending on the nature of the tagged product.

In fact, 10 years ago, when an antenna fired frequencies, a collision between the two antennas occurred. To solve this problem, it had to be tagged considering the location of the antenna. In addition, tags are basically weak in iron and water (humidity), so when the tags are attached to steel products, the recognition rate is reduced.

To compensate for this, metal tags (metal tags), tags that can withstand strong shocks, and tags that can withstand high temperatures were created, but this again caused unit price problems. In the end, the special tags created in this way are only used in plants, power plants, and construction sites.

In short, RFID is tasked with solving both recognition rate and unit price problems at the same time. When RFID was just coming to mind, many people drew in their heads a scene in which the reader recognizes the item and automatically calculates it without having to put the product on a barcode and pass through the store where the reader was installed. Like Amazon's Amazon Go. However, in order for this scene to become a reality, the recognition rate of RFID must be 100%. If the recognition rate of 100% is not guaranteed, retailers will have to hesitate to use RFID.

In this situation, RFID is used in a product line such as clothing or books that can be introduced even if the recognition rate is not 100%, or in a field where tags can be attached and tracked to products that can be reused without burden.

In some cases, the use of RFID is compulsory for legal reasons, such as medicines. The government plans to make it mandatory for distributors to use the serial number system of medicines within this year to ensure transparency and efficient information management of drug management. If the system is proposed, it is mandatory to attach a barcode or RFID tag containing distribution information to packaging medicines.

RFID's investment-compensating effect is

What private companies need to utilize RFID is a return on investment (ROI), which is a clear investment preparation effect. However, until now, RFID's investment-ready effects are not clearly understood. Experts advise that RFID technology should be tested according to the purpose of inventory management and tracking before gradually expanding RFID introduction. This is to reduce the cost of establishing RFID systems including hardware devices.

Another problem arising from the lack of a political assessment method that can clearly determine the ROI is the issue of 'profit sharing among the entities forming the supply chain'. For example, Wal-Mart has demanded that RFID be attached to its suppliers' products in order to streamline supply chain management (SCM) since 2003. In 2007, director Simon Langford of Wal-Mart said, "By applying RFID technology, we have achieved a reduction of 15 to 20 percent out of stock, 30% out of stock, and 10% to 15% of over-orders." However, this can be seen as a cost reduction that has already occurred in the presence of RFID infrastructure. Under these circumstances, it is not easy to distribute revenue on cost savings.

If distributors with strong market power like Wal-Mart demand RFID attachment from suppliers, suppliers will have to spend money to install hardware facilities such as RFID tags and readers, and build software such as middleware to learn how to use them. In fact, when Wal-Mart introduced RFID at that time, industries pointed out the burden of suppliers.

"These problems arise from the supply chain structure where different interest groups are gathered," Professor Chung Tae-soo said. "Also, since one interest group does not belong to a single supply chain, distribution of price reduction may be a hindrance to RFID's introduction.

RFID, 'Standard' is needed.

In addition, a basic code system must be prepared in order for RFID, which was created to be utilized in the supply chain, to be utilized according to its purpose. Since only code is stored in the tag, the reader should read the code and utilize the data in a standardized way. If only one organization uses RFID, it can use its own code system and establish a system that can recognize information through wireless recognition.

However, in terms of global supply chains, if the standards established by each entity are different, there is a situation where data from each other cannot be recognized. Furthermore, it is difficult to see effect through RFID introduction without a unified standard because one subject is not dependent on only one supply chain.

▲ Size of RFID market in Korea

Currently, code standards are mixed and used. Therefore, it is expected that it will take some time for the unified standard to spread throughout the supply chain. It seems that it is not easy to determine when RFID will be activated if the aforementioned issue of profit distribution among players in the supply chain is also combined.

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Nevertheless, the RFID market will not disappear. Rather, the RFID market is growing little by little. CEO Lee said, "RFID can be used in various fields such as healthcare and environment, even if it is not for logistics." "In particular, there has been an issue in Korea that RFID can be used in smart factory and smart city."