Why aren't more companies using RFID for inventory tracking?

When a technology appears on the scene with a number of advantages over an older technology, it can be confusing why companies don't adopt what seems to be the superior choice. Such is the case with the bar code's continued use over radio frequency identification (RFID) for inventory tracking purposes. Yet, with just a little investigation, it's not hard to see why.

For many years, printed and scanned bar codes have been the default technology for tracking inventory. Bar codes are inexpensive to produce and use, scanning equipment is affordable and effective, and standards ensure that bar codes are universally understood and can be used in many situations to identify objects for tracking and transaction reporting.

RFID is a newer technology that offers distinct advantages over printed bar codes. Whereas bar codes identify an object generically, RFID for inventory tracking can identify a specific individual object. Through links to a cloud-based reference database, RFID offers the ability to fully trace an individual item and learn its size, color, batch, serial number, and when and where it was made, by whom, under what conditions, and so on. In addition, unlike bar codes, RFID labels don't have to be visible to be read. The reader can interrogate a tag on an item inside a carton, in the middle of a pallet of cartons (albeit subject to certain conditions).

So, with all those benefits over the bar code, why isn't the go-to technology RFID for inventory tracking? There are two major reasons (and several less important reasons): cost and inertia. Even though the cost of a single RFID tag (common tags, purchased in bulk) is now down to just a few cents per tag, they are still quite a bit more expensive than paper bar code labels -- many bar code labels are essentially free, particularly when the code is included on the product label or packaging. The RFID reader equipment is also more costly. An equally important reason is the bar code's status as a well-entrenched technology in thousands of plants and warehouses that's working acceptably. There's little incentive to change.

RFID's future isn't bleak, however. RFID's specific identification of individual items, accompanied by its ability to carry additional information, can easily justify the additional cost if those features are needed. Such is the case in the fashion industry, where tight inventory control to insure the availability of fast-changing "hot" products is essential. In fashion, RFID is itself becoming hot.