It is Monday morning in Essen: a truck with several palettes rolls up to the METRO Group Distribution Logistics (MDL) warehouse. Up until a short time ago a worker from the warehouse would have had to accept the consignment and check the contained boxes. This is now much easier. The palettes pass through a special lock at the store’s goods entry gate and all labels on the palettes and boxes are read within a matter of seconds. It’s not magic, it’s RFID. RFID is the abbreviation for Radio Frequency Identification: a key technology which is going to revolutionize the process chain in the consumer goods industry in the coming years. It enables the non-contact reading and transmission of data.

Radio Frequency Identification is not new. It is an advancement of wireless data transmission technology that was originally developed by the military. The technology was then later deployed in civil aviation and container logistics. During the 70’s the technology proved itself in traffic management. RFID transponders, for example contained in the windscreen toll stickers in Austrian trucks send out their ID number when passing toll gantries.

A new generation of lightweight transponders is finding its way into many areas of public life. In contrast to their predecessors of the 1960’s and 1970’s, today’s tags can make do without their own energy source and are therefore called passive tags . They are not much larger than a price label and about just as thin. More importantly, they are now much cheaper to produce. Increasing production is of course reducing production and purchasing costs. Transponders are becoming increasingly cheaper. At the moment they cost around 6 eurocents each. Experts predict that the price will fall to around 1 cent in the next few years and that would then make the use of the tags in products economically viable. Generally, the market for RFID tags, hardware and infrastructure is continually growing. Researchers estimate the global market volume to grow to about 4 billion US dollars by 2008.

RFID is already being used in a wide range of areas and is being tested in a host of new applications. Libraries in Vienna, Munich, Siegburg, Stuttgart and even the Vatican library have already fitted their books, CDs and video films with RFID tags. The process of getting material is easier and faster as well as cutting administrative work for libraries. RFID chips are used in the ski passes of many ski resorts. Skiers can pass through gates to the lifts without having to wait or pull out their cards. Also, the tickets issued for the World Championship 2006 contained RFID chips. This then made it possible to check in a databank that the ticket holder had come into possession of the ticket legally. In this way the organizers took an important step to counter black market activities. Another area where RFID is being used is in museums. The technology enables the visitor to access information on the individual exhibits. The exhibits themselves have transponders attached. A further use is in patient care where interesting projects are underway. Patient information and treatment is managed using RFID technology.

The features of RFID chips in use today have also awoken the interest of the consumer goods industry. RFID technology helps companies to optimize and accelerate processes. Products can be tracked and managed from the manufacturer to the shelf. Manufacturers and retailers can check stock levels at the touch of a button and reduce stock levels in the process. RFID accelerates order, transport and delivery processes.

“Sold out” is a thing of the past. Business partners do not lose revenues because customers reach into empty shelves. All involved parties can work more efficiently. Furthermore, RFID technology meets the increasingly higher safety expectations of consumers, retailers and manufacturers. Growers and producers, together with the retailer can track the path of their products from point of manufacture right along the chain to the supermarket. This helps ease the legal requirements demanded in this area. EU directives 178/2002 and 1935/2004 governing food safety require manufacturers and retailers to be able to trace food and feedstock in an unbroken chain directly back to their source. This measure is to ensure that companies can recall goods swiftly and effectively. RFID supports them in doing so and is therefore a valuable contributor to quality assurance.