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What Is RFID Asset Tracking & How Does It Work?

Ivan Muts
February 13, 2023
10 mins to read

Table of Contents

    RFID asset tracking is an IoT asset tracking technology that serves as an effective solution for inventory management of moving or stable objects, among all purposes. Overall, this technology provides such benefits as real-time data collection, simultaneous tracking of multiple assets, and accurate data inventory.

    Most importantly, RFID tracking helps simplify the monitoring and storage processes while reducing human involvement. In turn, this leads to minimizing the chance of errors, making physical data tracking more reliable.

    What is RFID tracking?

    RFID stands for radio-frequency identification, which is a technology that operates via radio waves. With this being said, RFID asset tracking implies that data on items are captured and transmitted to a database via radio waves for further storage. The data stored on RFID labels can contain any information on the item it is attached to, but most often it’s the following:

    RFID tracking is an effective technology widely used in IoT development services, especially when compared to other asset tracking alternatives, such as barcodes. The reason is that the scanning device can read the RFID asset tracking tags even when it’s out of sight, while with the barcodes the scanner has to align with them to receive the information they store.

    Besides asset tracking, some widespread uses of the technology include personnel tracking, ID badging, supply chain logistics, and restricted areas access control.

    How does RFID asset tracking work?

    To start using the RFID technology for inventory purposes, you need to install an RFID tracking system, particularly the asset tracking RFID software and equipment. An RFID tracking solution requires a few components to function, namely:

    Each asset has an RFID tag attached containing digital data. RFID tracking uses radio waves to read and transfer data from the tags to the reader that is equipped with an antenna. Then the reader reads the radio waves and converts them into digital data so that the information can be collected and transmitted to the database of an asset tracking system for storage, analysis, and further use.

    How Does RFID Asset Tracking Work

    How far can you track RFID?

    The available range of tracking when using the RFID technology varies. Depending on the frequency bands, and sometimes, antennas used, the distance from which the interrogator can read the label will differ. In general, since the technology is contactless, you can scan tags from as far as several feet. Overall, the possible range is from 1 to 1,000 feet. More on wireless connectivity you can read in the article types of IoT networks.

    In the table below we’ve collected more detailed overview of how the read range changes depending on the frequency:

    Frequency BandRead Range
    Low Frequency (LF)
    125 kHz – 134 kHz
    Short to Medium
    3-5 feet
    High Frequency (HF)
    13.56 MHz
    1-3 feet
    Very High Frequency (VHF)
    433 Mhz
    1-1,000 feet
    Ultra-High Frequency (UHF)
    860 MHz
    1-30 feet
    Microwave Frequency
    2.45 GHz & 5.4 GHz
    1-300 feet

    Active and passive RFID asset tracking

    There are different types of RFID tags in terms of how they operate and use energy — these are called active, passive, and semi-passive tags.

    Active RFID tags have a battery (or possibly a different source of energy) installed, which allows the circuitry to run inside the microchip. The microchip is usually a Bluetooth one, and the tag is also equipped with an antenna. Because of the battery, the label can send the signal to the interrogator continuously. This type of tag also allows tracking assets over long distances.

    Since active tags broadcast the signal continuously, they are best for applications where real-time location tracking is required. In addition, active tags perform well in high-speed environments. However, the presence of a battery means that these tags are more expensive than other types of labels, hence it’s more reasonable to use active tags for tracking high-value assets.

    Active tags using this technology are also called battery-operated or battery-powered tags. The battery used usually provides enough energy for the tag to work for 3 to 5 years.

    Semi-passive tags, similar to active tags, have a battery installed, which allows the microchip’s circuitry to run. However, the tag communicates with the interrogator by using energy not from the battery but from the electromagnetic waves the scanner sends to the label during an interaction.

    Since the battery is not essential for the tag’s communication with the reader, it can be used to support additional features the tag may be enhanced with, such as sound notifications or environmental sensors.

    In addition, semi-passive tags can support a longer read range when compared to passive tags due to the battery installed, but it’s still shorter than inactive tags because there is no onboard transmitter. Therefore, semi-passive tags suit best in conditions when they will be scanned regularly, should operate on short distances, or have additional enhancing features.

    Made of silicone and metal only, this type of tag is the simplest and most affordable among all three. Since passive tags are less expensive, they are most suitable for the majority of industries and applications dealing with multiple lower-value assets, including file tracking, access control, and supply chain management.

    Asset tracking type comparison

    There are various types of devices and technologies that track assets, such as barcodes, QR codes, NFC, RFID tracking, and GPS. With each having its benefits and drawbacks, let’s take a look at how RFID differs from barcodes and GPS and why it can be more useful for asset tracking. Check out the table below with asset tracking type comparison:

    BarcodeGPSActive RFIDPassive RFID
    Human error chances〰️〰️〰️〰️
    Real-time tracking〰️✔️✔️〰️
    Continuous scanning✔️✔️✔️✔️
    Range of scanningLowUnlimitedHighLow
    Power consupption〰️✔️✔️〰️
    Lifespan1 year10-25 years3-25 years3-25 years

    To figure out more details on the pros and cons of the asset tracking solutions being compared, we discuss each technology in detail below.

    RFID tracking

    RFID tracking allows for asset tracking in diverse industries, which makes it an effective and versatile solution. Among the reasons why this technology prevails over its alternatives, data security is a meaningful advantage. The data transmitted from the chip in a label to the scanner is encrypted, which makes the technology a secure solution for inventory and tracking. In addition, the labels are covered with plastic, which makes them reusable.

    Still, the most important benefit is that RFID tags are simple and convenient in use since they don’t require the scanner to be aligned with the labels. So the labels are readable within a long-range, which helps speed up the scanning process. Another way this technology contributes to fast and effortless scanning is by enabling multiple tag scanning at the same time.

    However, the high read range can sometimes be a disadvantage of this technology. Because it allows scanning several tags simultaneously and from a distance, the interrogator may scan wrong tags or read some tags by accident. This may cause confusion and misunderstanding, potentially leading to errors in inventory records.

    Similarly, the signal may not be stable when it’s impacted by various materials. For example, metal and liquid can make the signal vulnerable, and disrupt the technology from working properly. On top of these, these tags are more expensive when compared to alternatives, such as barcodes, because of the chip built inside. The RFID tracking system can also be quite challenging and time-consuming when it comes to implementation.

    GPS tracking

    GPS, which stands for Global Positioning System, operates via low-power satellite signals, which a single processor receives to detect the position of the asset it is attached to. The information on the location of the assigned asset is then shared via a long-range system or a cellular network to be available where it is demanded.

    The most beneficial feature of this system is that it allows for real-time tracking of assets, which is why GPS is often used for vehicle location tracking. Some other advantages of this technology include short response time, security, simplicity in use, reduced downtime, and regular alerting. By contrast, there are some huge disadvantages to GPS that make it an ambiguous solution for asset tracking. Most importantly, the system is extremely power-hungry — the processors of GPS signals require lots of power to perform due to the intense time calculations they do to come up with the location data.

    Then, data transmissions require a lot of power, too. When there is an outcome of a calculation performed to identify an asset’s location, it needs to be transmitted. The transmission is an energy-draining process, which adds up to processing power requirements and results in a huge need for a constant power supply for the system.

    An existing solution to minimize this disadvantage implies that the system is connected to the battery of the vehicle, the location of which it is supposed to track. However, GPS systems are rather ineffective when attached to assets with lower battery capacity.
    Overall, because of the significant power supply needed, GPS is a costly solution. Besides, the lack of enough power supply provokes system reliability concerns — location tracking may be unavailable if the unit battery dies. Some other concerns related to GPS tracking include privacy invasion threats and the potential use of tracking for wrong purposes.

    Barcode tracking

    A barcode tracking system consists of a sticker with black-and-white parallel lines and numbers below them. Barcodes are used for inventory tracking, with a unique barcode assigned to each item. Barcodes can be 1- or 2-dimensional.
    A reading device, which may even be a smartphone, can scan the code and transmit data about the assets to a computer or other machine. Some most frequent types of information barcodes contain about a product are:

    Barcodes are a widespread technology in terms of asset tracking because it is simple, inexpensive, accurate, and universal, meaning that a barcode can be scanned and read anywhere in the world. Barcodes also eliminate the chance of human error and do not require any effort in learning how to use them.

    However, there are some disadvantages to this technology that limit its use and application. Among such, barcodes have a short read range, which requires scanning them in a certain position only, namely in a straight line, to receive the data.

    In addition, barcodes can only store small amounts of data, and the data can be easily lost in case the barcode is damaged.

    RFID asset tracking: use cases

    RFID as an IoT asset tracking technology allows for many applications across diverse industries.


    RFID tracking is used in retail for inventory tracking, store operations, and improving customer experience. When used for inventory, RFID improves stock accuracy minimizing the risk of loss and theft. It automates the standard retail inventory process that is time-consuming and speeds up picking and packing, and delivery that boosting customer satisfaction.

    RFID provides highly accurate information about items in the supply chain which helps store managers with store replenishment. The radio-frequency identification technology provides such benefits as reduced stock out, enhanced visibility, improved security, and operational efficiency.

    Retailers that have fully adopted RFID have more than 10% ROI compared to 9.2% two years ago, according to an Accenture study.

    It is projected that in the future RFID will replace barcodes, as this technology is better suited for individual product identification (compared with product line identification as is the case with barcodes). Retailers recognize the value of RFID technology and intend to use it for self-checkout, collaboration with blockchain, reducing stockouts, and improving customer engagement with smart technology.


    RFID is used in manufacturing to improve the visibility of critical assets and provide means to track assets for maintenance and repair. Radiofrequency tags of newer generations are designed to endure extreme heat, cold, high pressures, and moisture levels, which makes them perfect for manufacturing assets such as molds, tools, and fixed machinery.

    There are myriads of use cases of RFID technology in manufacturing. It can be used for security – if a factory wanted to implement people access control instead of passwords to identify different staff members. RFID could also be implemented for inventory traceability, equipment tracking, to identify idle equipment, monitor waste and shrinkage, shipment routing, and in some cases to control and monitor large machinery activity.


    Using Radio Frequency Identification (RFID) technology has numerous benefits for hospital use. Although it is a relatively new way to secure confidential and highly sensitive information handled by hospitals, it is used to track patients and hospital equipment.

    Wireless communication that RFID technology provides can be used not only to identify and track people and equipment but also to recognize problems with hospital workflow, i.e. moving patients in and out. It is also effective in pharmaceutical tracking – RFID technology can help automate replenishments, reduce product expiration, shrinkage and waste.

    Benefits of using RFID to track assets

    While barcodes, QR codes, NFC, and GPS are all effective asset tracking solutions, RFID prevails for several reasons. These are the following:

    All these advantages of RFID trackers make the technology a leading solution for asset tracking. With the flexibility and reliability it provides, RFID tracking devices have various applications in most industries.

    How much does an RFID asset tracking app cost?

    The cost of your solution may vary, depending on the industry, the size of your inventory, the type of RFID tags you will use, and their amount. Here is a guide to calculating the cost of IoT applications.

    The starting price point for an active tag is $25, and additional features, such as sensors or a powerful battery, will increase the price dramatically. A passive tag, in turn, is much less expensive, costing from 7 to 15 cents. Of course, the price will grow depending on the additions you need. While passive tags are more affordable, remember that they have limited capabilities and therefore, may not be a suitable option for the solution you’re looking for.

    Selecting your RFID equipment for tracking assets requires some consideration. Overall, there are many somewhat similar and well-functioning types of tags out there, so narrowing down your search may help choose the one that will fit your project. Start with deciding on the following aspects:

    1. Frequency

    2. Label type

    3. Potential environmental impacts

    In addition, some other things to be considered include:

    Identifying your needs in the listed areas will help you come up with a list of requirements for your RFID tracker. And then, you can proceed to purchase the labels you need and start the system implementation process for successful and reliable asset tracking. If you need to get a technical estimation of your intended project, we will be happy to consult you.

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