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RFID: How does it help business?

In 10 years almost everything will be tagged, say experts. So how will these little chips that are soon to be so pervasive take over your business?
Written by Stephen Withers, Contributor


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

RFID technology has been around for some 60 years but few people have been aware of it until recently because it is so unobtrusive, Tony Edwards, industry consultant on RFID at Symbol, says. It's mostly been used over short ranges, and the technology has been put to various uses including vehicle tolling, contactless security passes, car immobilisers (with the tag built into the key) and the identification of hospital patients, and cattle.
Radio frequency identification involves a "tag" consisting of a small integrated circuit and an antenna. The tag broadcasts its identity when it passes within range of a reader, allowing its presence to be recorded.

There are two basic types of tag. Active tags require a power source (usually a battery) and are therefore relatively bulky and expensive. The eTag used on tollways is a well-known example. The main benefit is that they have a greater range.

Passive tags do not require a battery. Just as old-fashioned crystal radios worked from the energy of the broadcast signal, the tag is powered by the energy radiated by a reader. The "microchip" used to identify pets is a passive RFID tag.
For commercial or industrial uses, the tags are often mounted on a label, and the chip can be programmed with a unique identity number at the same time as the label is printed. For backwards compatibility, the label can also carry a barcode as well as human-readable information.
Reading a tag is not foolproof. "There are a lot of physical constraints you have to consider," says Trevor Barrows, solutions director at SSA Global Pacific, including the presence of water or metal which reduces range, and the possibility that two tags may be in contact (although Sydney-based Magellan Technology has developed "stack tags" that can still be read even when many tags are in very close proximity).


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

Starving for standards
There have been few standards until relatively recently. EPCglobal ratified key standards in late 2004, says Will Duckworth, wireless leader Asia-Pacific at IBM Business Consulting Services, and trial quantities of the resulting Class 1 Generation 2 (Gen 2) tags and readers are already available from manufacturers such as Philips. Other manufacturers including Texas Instruments (TI) and Siemens are ramping up production, and volume supplies are expected mid-year.
One reason for the delay is that Gen 2 is a hybrid solution using the best features from various proposals, says Geoffrey Ramadan, chair of Automatic Data Capture Australia and managing director of Unique Micro Design. This means none of the companies behind the proposals could steal a march on the others.
Some organisations have been delaying RFID projects in anticipation of Gen 2, says Duckworth, and some early adopters such as European retailer Metro will move to Gen 2 as quickly as they can. The standard covers UHF operation (roughly 860-960MHz), which is where most interest lies, and Gen 2 tags are compatible with any readers in this range, whether they operate at 918-926MHz (as used in Australia), 902-928MHz (US), or another nations' allocated spectrum.
HF (13.56MHz) tags are also part of the standard, and Christoph Lessmoellmann, senior business consultant, at SAP says they are often used on spare parts. Duckworth suggests that HF tags are beginning to be taken more seriously for applications that only require short ranges. EAN Australia is looking at HF tags this year, says Fiona Wilson, general manager standards development of trade group EAN Australia, due to interest from the health and life science industries for product authentication.

Apart from compatibility, global standards mean economies of scale: "tags will be seen as consumables," predicts Edwards. Current volume prices are around 15 cents per tag, but "the five-cent tag is not a long way off yet," says Barrows.

The new standards represent a performance improvement, with 4w UHF ranges of up to seven metres with fixed readers and up to 2.5 metres with handheld devices.
Australian users are currently restricted to 1w for UHF, which limits the range to one to two metres. Wilson says that EAN Australia has been working with the Australian Communications Authority (ACA) to move to 4w, and Ramadan expects resolution by the end of this year, "then we can move forward." Meanwhile, organisations may seek a site licence to use more powerful readers, says Edwards.
"Everyone believes in [Gen 2]," says Duckworth, and its more efficient protocol allows faster reads -- up to 1700 reads per second are expected with 4w readers, or 600 reads per second at 1w. "Still a great improvement," he adds.
Wilson says the Electronic Product Code (EPC) standards are "at a reasonably mature stage" and expects ISO ratification in a "reasonably quick" nine months, as many of the ISO signatories are also EAN participants.
Most common barcode types have been mapped to EPC numbers, says Wilson, and the addition of a serial number gives a unique ID for each unit.
EPC "is more than the tags, readers and the numbers on the tags," says Wilson. One objective of many RFID projects is to connect multiple participants (eg, in a supply chain). For example, a manufacturer can serialise a tag to uniquely identify a pallet of cornflakes, and then the retailer can look up the use-by date for that batch to assist in stock rotation, using the tag as a key to the information.
EPC is setting up such a system, called the EPCglobal Network. A tag number can be sent to the ONS (Object Naming Service) registry, which provides "directions" to systems operated by the manufacturer and other participants that have handled the item. It is then up to those systems to determine whether the source of the query is entitled to access the data.
The EPCglobal Network is being managed by VeriSign, which is used to operating 24x7 infrastructure, says Ben Armstrong, VeriSign's naming and directory services manager, as it runs the .com and .net namespaces and is now developing additional services that run on the same platform.
A large US retailer is connecting with six of its major suppliers using this method to share information across the manufacturer/distribution centre/store chain, says Duckworth.
The EPCglobal Network "will mature as people use it" Wilson says. An Australian pilot will be carried out this year with EAN Australia as the sponsor and manager in conjunction with CSIRO. It will involve a retailer, two brand owners, a transport company, a packaging company and a returnable asset supplier.
While organisations express some concern about sharing information, the EPC model lets everyone store their own information and decide how to expose it to their partners, says Duckworth, although the standards to support the privacy and security controls needed are still being developed.
While there is some concern that companies will be reluctant to share information with their partners, Wilson draws a parallel with vendor managed inventory, an arrangement that works well for both sides.
The real question is how to use that information. "That's the whole secret," says Wilson, but it hasn't received much attention yet. "Now's the time to think about it holistically" before anyone mandates the use of RFID, she suggests.
New business models will evolve once there is an infrastructure to automatically access information associated with tags, says Armstrong.


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

Secrets and trials
Companies are generally secretive about RFID trials because they don't want publicity until they have worked out exactly what they want to do with the technology, suggests Scott Dawes, general manager of applications, Oracle.
"There's a lot of talking and trials in Asia-Pacific," says Lessmoellmann, but most of the activity is in the US and to a lesser extent in Europe.
Australian organisations tend to be "fast followers" rather than leaders, says Jason Taleb, director, Capgemini. Boards do not see RFID as a strategic agenda item, so nobody is stepping forward.
The Department of Defense and Wal-Mart pushed the whole US market ahead, but our retailers are "stepping back and waiting," says Jeff Wareing, managing director, industry distribution and transport, LogicaCMG Australia.
Eelco de Jong, European practice leader for RFID solutions at LogicaCMG suggests private-sector reluctance is partly due to existing agendas for process changes, and it takes time to fit RFID into these plans. "It is a long term process," he says. "The real winners are going to be the innovative companies that take the lead in adopting [RFID]."
Another reason, says Frank Habraken, auto ID technology program manager, CSC, is the budget cycle -- even if a pilot is successful there may be a delay before a full-scale project is funded. The Australian government is looking at the potential role of RFID in the defence supply chain, says Taleb. If front line units cannot see the progress of the items they've ordered, the tendency is to re-order in the event of a delay, which leads to waste and shortages for other units.
Pilots that were carried out last year have proved that the technology works, says Duckworth, and organisations are now looking for the areas where RFID can deliver the biggest business benefits. There is still interest in retail, but there is also activity in the automotive, electronics and logistics industries. The aim is to track raw materials and work-in-progress through the manufacturing process, and then potentially through the supply chain. For example, IBM Business Consulting Service has worked with Philips on a project to tag consumer goods during manufacture in Taiwan, using RFID to provide visibility within the factory and through to the Hong Kong distribution centre.

Apart from retail and supply chain, interest is being shown internationally by the military and manufacturing industries such as automotive (eg, to improve operational efficiency), aerospace/defence (almost everything on the new Airbus is tagged, says Habraken, and de Jong predicts lots of action in the aviation industry during the next year or so), construction and pharmaceutical (eg, to support pedigree laws such as those introduced in Florida -- the EPCglobal Network allows the upload of the time and location that a tag was read, so if a "cloned" tag was attached to a counterfeit bottle, the pharmacists that received the real and fake bottle could be alerted to the duplication).

RFID will change the way items are traced along the supply chain, says Lessmoellmann, for example to trace a food product back to a specific animal or a pharmaceutical preparation back to batches of raw ingredients. Japan and Europe are already demanding traceability of imported meat, says Ramadan. RFID can't do this automatically, but it does address the problem of collecting the information that feeds into systems designed to perform such tasks.
Although there is little use of passive tags in Australia as yet, Barrows says exporters may need to adopt the technology to meet legislative or customer mandates. He sees lots of interest, but no compelling reason to adopt the technology in the absence of mandates, as barcodes are still more cost-effective in most cases.
"It's still early days, but it's a viable technology to replace barcoding in particular environments," he says.
"RFID means more data," says Mark Hudson, director of Business Objects' strategic business group. But data needs to be put to use, and that means reports and dashboards for people such as logistics or warehouse managers that haven't previously been touched by business intelligence (BI) tools.
"It's all about information democracy," he says -- providing the right information at the right time and in a familiar way (eg, within Office) to allow these people to do their jobs better, and with the right granularity to increase efficiency within the organisation.
Most companies do not make full use of the data they already have, says Fadi Geha, Viewlocity's Asia Pacific MD, "there's a gap between reality and the vision."
Viewlocity suggests a four-step process, starting with building synchronised views of data generated internally and by supply chain partners.
The second step is to use this information to build supply chain resilience by acting on the data before potential issues become real.
Thirdly, re-identify the exceptions you need to act upon (step two will have changed them) and automate the required contacts with supply chain partners.
Finally, refine the granularity of the system by using RFID to collect more detailed information about the products or components that are causing problems.


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.


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

RFID a real asset
"In the short term, we think asset tracking is going to be the growth area [for RFID]," says Taleb, because it's easier to make a case that covers the relatively high cost of tags and because asset tracking is an in-house activity that doesn't rely on collaboration and standards to work. Only a small amount of data is involved (eg, the ID number of the asset and its location at a particular date and time), so it is a relatively simple application and it is easy to migrate from a barcode-based system, says Edwards.
Hong Kong airport has the world's largest RFID deployment, says Edwards, with around 500 read points to check that passengers' bags are going into the correct containers.
The healthcare industry may use RFID to track medical instruments, says Hudson, as it is important to know the location of expensive items when they are needed.

Barrows says a steel company is using tags to identify reels of steel. This means the overhead crane operator can "see" the reel's identity and movement instructions on a screen inside the cab, rather than relying on people on the floor to do the identification.

This change has a significant occupational health and safety impact, he says, as well as maintaining an accurate record of each roll's location. Packaging firm Visy has described a similar system for tracking reels of paper in a warehouse, directing the forklift driver to the right spot and ensuring the correct reel is picked up.
One Australian company has piloted the use of RFID to track specialised tools between a shared store and multiple workshops, says Habraken, while a mining company has used active tags thrown into the ore as it is removed from the face to track the quality of different batches.
Many applications are driven from a compliance or safety perspective, says Dawes. RFID can be used to ensure goods are not stored in conditions that may cause (possibly hazardous) degradation, geriatric,or paediatric patients can be protected from wandering or unauthorised removal, and the authenticity of goods can be checked.
RFID also provides an opportunity for capturing and using the history of an item. For example, the service history of a machine might yield clues about the likely cause of the current failure or help predict imminent failure of another component.
Once manufacturers start item-level tagging, purchasers will be able to use those tags for their own asset tracking and for other initiatives, avoiding the need to attach their own tags, says Armstrong.


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

Future potential
Privacy implications may inhibit the adoption of item tagging, so potential users need to work with standards bodies and legislators, says Lessmoellmann.
As a result, public education will be necessary to explain to people that the tags simply identify items and there are ways of removing or disabling them.
As the tags get come down in price, there will be more opportunities to deploy RFID, says Hudson. He says a law firm could tag documents to track them around the practice -- but "we have to be careful not to get into a complete Big Brother approach," he warns.
"It is a long-term process. The real winners are going to be the innovative companies that take the lead in adopting [RFID]."
Habraken says "that's a pretty important application" and notes the development of ink-based antennas printed directly onto documents so that only the chip itself needs to be attached to the paper.

Hudson also points out the opportunity to optimise store layouts by using RFID tags on items, trolleys, or baskets to track people's movements around a store with the aim of optimising the layout, or to locate readers at exits to help reduce "shrinkage" caused by staff or customers. Item tagging also has the ability to simplify the handling of returned goods.

Volume adoption of RFID in Australia is unlikely until around 2010, says Barrows. Dawes is a little more optimistic, predicting supply-chain infrastructure will peak a year or two earlier, although he suggests item-level won't be viable until 2009 with broad use occurring in 2011 or 2012.

Taleb, on the other hand, tips a large-scale supply chain adoption within at least one industry in two to four years -- the lower end of that prediction assumes government pressure or some other trigger.

Almost everything will be tagged in eight to 10 years, predicts Habraken, and these tags will be widely used -- perhaps even in homes. Maybe the smart fridge that can remind you to buy milk on the way home from work really will materialise.


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

Executive summary
  • RFID is an established technology, but new standards enable inter-organisation collaboration, eg along a supply chain.

  • UHF Gen 2 tags can be read using various frequencies allocated to RFID in different countries. There is broad support for Gen 2, and some organisations have been waiting for compliant tags so they can put their plans into effect.

  • Australia limits UHF readers to 1w, limiting the read range. This may change in the near future.
  • There is still a place for HF tags, especially in applications where the read range can be very short.
  • The EPCglobal Network will provide the infrastructure needed to provide and retrieve information about tagged items, supporting collaborative projects.

  • Australia is regarded as being behind the US and Europe in RFID adoption.

  • Supply chain and asset tracking are the two main areas for RFID projects.

  • RFID asset tracking may improve OH&S by removing the need for people to enter hazardous areas.

  • RFID potentially produces vast amounts of data. Mechanisms are needed to manage, filter and make sense of it all. Management by exception is considered a key approach.

  • Large-scale Australian RFID implementations are expected within five years -- less if it is needed to comply with government regulations or commercial mandates. Most items may be tagged within a decade.

This article was first published in Technology & Business magazine.
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