The RFID system contains the following component:

RFID Transponder
A RFID Transponder, contains three kinds of transponder, Proximity smart card (contactless smart card), RFID Tag and Smart Label, is made up of a microchip with a coiled antenna and is used to identify objects, which can be uniquely programmed with information about the objects. RFID transponders can be encased in hardened plastic coatings making them extremely durable and able to be tracked through harsh production processes. They can be read through grease, dirt, and paint. RFID transponders can store large amounts of data. High-end RFID transponders can contain up to one megabyte of memory (one million characters), although most tags only contain a small fraction of this memory, perhaps as little as 64 bits. 

Data within a tag may provide any level of identification for an item during manufacture, in-transit, in-storage, or in-use. With additional data, the tag may support applications that need item-specific information. For example, shipment consignee or destination ports can be readily accessed upon reading the tag.

Some RFID transponders are able to support read/write operations, enabling real-time information updates as a tagged item moves through the supply chain.

Readers (handheld or stationary) 
A reader, also called interrogator, is comprised of a transmitter, receiver, control module and a transceiver. The transceiver acts as a communication function to link to a controlling computer or PLC. A reader should have an attached antenna, which is used to transmit and receive the RF signal. Each reader is accompanied with software that allows the user to read and program tags. Serial (RS232 or RS422/485) or Ethernet are the typical communications methods, though others are available.

A data handling and processing system.