Passive tags are a subset of RFID tags, that use an external power source to 'trigger' their operation, and to allow tracking. These tags are suitable for the following purposes:

• For tracking items within a facility - without having to necessarily know exactly where they are at any point of time (which would require 'active' technology). This requirement falls within the realm of "Access Control and Management", and is usually accomplished by protecting all entry and exits in the facility with readers, which capture movement of tags in and out of the facility.
  
  
• For automated inventory management, including expiration tracking/notification, ad-hoc operations (e.g. The "Smart Shelf" concept where the system should track when items are taken off or put back on the shelf without any human intervention), and for fast and efficient (and automated) tracking of material movement and placement within a facility.

Technology

Passive tags operate on principle of parasitic power transfer through electromagnetic induction. The core RFID chip on a passive tag contains a unique ID, and also necessary circuits to power (and operate) this chip when any current flows through the circuit.

The power is provided by the external reader to the passive RFID tag through electromagnetic induction, as the copper loop in the tag generates a current as it travels through the electromagnetic field created by the reader. Since the electromagnetic field power falls off as the square of the distance, hence passive RFID systems are limited in the distance of operation - often operating between only 2 to 5 centimeters.

Each tag has a unique ID that is set during manufacture, and cannot be changed. When the RFID chip is triggered, it uses the copper loop as an antenna, and broadcasts it's unique ID, which is picked up by the RFID reader, thus triggering a "tag read". This tag read can then be transmitted to an Enterprise information system, and processed accordingly.