General Business Consultants, Inc.


For Distributors, WHOLESALERS, Manufacturers                                                             

FREE Consultation  Other Contact Info   Our Focused Services  Success Stories


Workshop Clients  Workshop Subjects  Magazines We Publish In  Helpful Articles   HOME



Anyone walking through a warehouse using these technologies is not likely to see them because one would probably be hidden, and the other might appear to be a mistake. But don’t start looking, because neither is used in this industry.

The technologies that promised to prevent warehouse and inventory problems are RFID and two dimensional bar codes (2-D bar codes).


For those who have not read previous articles about RFID, here is a brief description.

Radio Frequency IDentification (no, the capital I and D are not a mistake) does not involve bar codes --- that’s called "RF". RFID refers to the reading of data stored in a memory chip that is embedded in a cardboard box, or attached to a piece of equipment, shipping container, etc. In addition to an item's code number, a chip, or "smart label" can store unit- or carton-specific data such as date of manufacture, manufacturer's Web site address, serial number, etc. Data in a "read/write" chip can be updated by users (e.g., date of receipt), which allows tracking items at every stage of a supply chain.

A wireless device transmits a signal toward a chip, which then transmits the data to the device. The data is then transmitted by the device to the computer system that communicates with all the devices; the data is then verified on the main system. These devices don’t need a direct line of sight to read, nor do items have to be standing still, which would reduce picking and QC times. And, several chips can be read simultaneously, cutting the time for tasks like taking physical inventory. Physically, chips can withstand high temperatures and humidity, and are unaffected by dust, dirt, etc. – conditions that have made many bar codes unreadable.

The benefits appeared so huge that Wal-Mart mandated that by the end of 2006 all of its suppliers place RFID chips on pallets and most cases.

The hope back then was that RFID would be adopted by other suppliers and distributors in other industries.

Now for reality.

Other than Wal-Mart, few companies are using RFID to track pallets and cases, for several reasons, starting with performance. RFID does not work well near metal, such as steel shelving and racking, lift trucks and metal trailers. Even where metal wasn’t interfering, the failure rate for reading was unacceptably high, and the ability to simultaneously read multiple chips sometimes resulted in reading the wrong chip(s). Another problem was that the signals transmitted by chip readers sometimes impacted wireless bar code readers and Voice Directed Picking.

Wal-Mart suppliers other than the last one in the supply chain were slow to adopt RFID, as were third-party logistics companies (aka public warehouses) and trucking companies.

Even when most of the parties in the Wal-Mart supply chain adopted RFID, except for Wal-Mart, few were able to quickly integrate the capture of RFID data with their other systems (such as inventory tracking).

Another factor limiting growth was and still is cost. The 5 cent chip is still not available, and for manufacturers that ship hundreds of thousands of cases each year, each penny of chip-cost adds dozens of thousands of dollars to the annual cost of doing business.

Today, in addition to Wal-Mart, the US military and its suppliers use RFID, for boxes, crates, pallets and "equipment." Manufacturers are using RFID to monitor the production progress of products that go through many steps and require a high level of quality control. And pharmaceutical manufacturers have been adopting RFID chips to distinguish legitimate from counterfeit drugs. Further down the supply chain, the retail industry is working hard to develop standards for RFID data and the devices that read/write it, and to get most retailers of size to use RFID. (One retailer using RFID determined that it saved 96% of the time it used to spend taking a physical inventory by reading bar codes).

Looking to the future, for this industry, cost is the major reason that most manufacturers and distributors are still years away from any widespread use of RFID.


These variations on the universal bar code have been around for years, but have not been adopted – maybe because there is still not 100% use of the simpler universal bar codes. 2-D codes are used in Japan, and might get here from that source of technological innovation.

There are numerous styles of 2-D code, but only two have any significant use: stacked and data matrix. The first one looks like two or more universal bar codes have been stacked on top of each other; the second code looks like a square filled with black dots or filled with lines that resemble a maze.

These 2-D codes can represent up to 500 characters of information, and do so in a space of as little as ¼" x ¼". The small size is perfect for putting a coded label on a very small product, part, item, etc. Other benefits include the ability to read a 2-D code from any direction, and the fact that this style is less susceptible to mis-reads than one-dimensional codes. And the cost of printing a code is much, much less than the cost of making an RFID chip.

Problems include a lack of standards. There are numerous shapes and sizes of 2-D codes, even color codes. There is even a 3-D code – the printing is raised, like Braille characters. As with RFID, the reading devices are much more expensive than bar code readers, and high resolution printers are needed to print the data matrix codes. And, code data cannot be updated as it can in an RFID chip.

In spite of the problems, 2-D codes could get a boost from an unlikely source – cell phones. Phones with cameras, Internet access, and the ability to use a downloaded special "app" (check out "Apple" and "app" on the Internet), can read 2-D codes, and transmit the data to another device. This relatively recent development could start a tidal wave that boosts the use of universal as well as 2-D codes in the world of distribution; it might even retard the growth of RFID use.

Even when – if? – RFID and/or 2-D codes are widely used, it will always be necessary to arrange warehouses properly, and to have the right procedures and controls in place. Otherwise, warehouse productivity and customer service could suffer in spite of advanced technology.


Dick Friedman, the author, is a recognized expert on warehouse planning, operations, management and technology for distributors. He is an unbiased Certified Management Consultant and does NOT SELL warehouse technology or systems. Dick applies more than 30 years of experience to help distributors make strategic decisions such as whether to use the technologies described here. He also reduces warehouse mistakes and costs through inexpensive, quick changes which do not require technology. Call 847 256-1410 for a FREE consultation, or visit for more information or to send e-mail.