RFID: Can it help your business?

Summary:In 10 years almost everything will be tagged, say the experts. So what are these little chips that are soon to be so pervasive, and how will they take over your business?


Contents
Introduction
Starving for standards
Secrets and trials
Chipping the chains
RFID a real asset
Future potential
Executive summary

Chipping the chains
"[RFID in] the supply chain is taking off overseas, [but] Australia has clearly lagged behind," says Edwards.

Hudson agrees, suggesting the local market is in "investigate and test" mode, but businesses can benefit from using the new information to achieve real-time visibility of movement through the supply chain and to assist in product recalls of faulty or tainted items as they can tell exactly where each batch went.

Tim Moylan, vice president, Manugistics ANZ and SE Asia, observes that there is no point in investing in technology if you can't make decisions based on the information it generates. Knowing the exact location of inventory makes it possible to manage by exception, but this needs to be done in a collaborative manner. Merely knowing that your consignment is stuck on the wharf doesn't really help, as you can't do anything about it, but collaborative processes involving major suppliers, logistics firms, distributors, and retailers can make things happen.

"It's still early days, but it's a viable technology to replace barcoding in particular environments."

Trevor Barrows, SSA Global
Coles Myer and vendors such as Procter & Gamble and Unilever are already sharing information, he says, with Coles Myer revealing expected demand and the manufacturers disclosing their production plans.

Manugistics is involved in a local project that involves similar sorts of sharing between supplier, logistics operator, and customer, but including information captured using RFID. The volume of data that will be generated by RFID-based systems (perhaps 20-fold for pallet level tagging, and proportionately more for case or item tagging) means multi-agent systems will be needed to identify exceptions and keep everything running to plan, suggests Barrows. Human intervention is only used when that can't be achieved.

This comes at a price, but the payoff comes from reducing participants' working capital requirements thanks to a tighter supply chain, says Dawes.

When tags are combined with sensors (eg, to check that an item has been refrigerated), the amount of data will be even greater. A single bit can indicate a threshold (eg, exceeding a critical temperature), but some applications (such as determining the use-by date of a perishable product) need more detailed information. This spills from supply chain into tracking applications: Airbus is using tags with 2K of memory, says de Jong, while Boeing is looking for 64K tags for the 787 Dreamliner.

Cost is still a barrier to item-level tagging for retail products, but using RFID on reusable packing materials such as pallets or roll cages, is worthwhile, says Lessmoellmann. Wareing notes local interest in tagging items such as these can be relatively expensive and says the companies concerned need to keep enough of them in circulation.

As an indication of the scale of the problem, Brambles "lost control of" (to use the words of its chairman Don Argus, quoted in the Sydney Morning Telegraph) around 14 million pallets in its European operations in 2003.

It's not just the cost of lost items that is the problem, notes Geha, but also the opportunity cost incurred when a pallet or cage is not available.

Topics: Processors, Security

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