The object of any RFID system is to carry data in suitable transponders, generally known as tags, and to retrieve data, by machine-readable means, at a suitable time and place to satisfy particular application needs. Data within a tag may provide identification for an item in manufacture, goods in transit, a location, the identity of a vehicle, an animal or individual. By including additional data the prospect is provided for supporting applications through item specific information or instructions immediately available on reading the tag. For example, the colour of paint for a car body entering a paint spray area on the production line, the set-up instructions for a flexible manufacturing cell or the manifest to accompany a shipment of goods.

A system requires, in addition to tags, a means of reading or interrogating the tags and some means of communicating the data to a host computer or information management system. A system will also include a facility for entering or programming data into the tags, if this is not undertaken at source by the manufacturer. Quite often an antenna is distinguished as if it were a separate part of an RFID system. While its importance justifies the attention it must be seen as a feature that is present in both readers and tags, essential for the communication between the two.

To understand and appreciate the capabilities of RFID systems it is necessary to consider their constituent parts. It is also necessary to consider the data flow requirements that influence the choice of systems and the practicalities of communicating across the air interface. By considering the system components and their function within the data flow chain it is possible to grasp most of the important issues that influence the effective application of RFID. However, it is useful to begin by briefly considering the manner in which wireless communication is achieved, as the techniques involved have an important bearing upon the design of the system components.