RFID one bit at a time!

Paul ODonnell, chief operating office of PEAK Technologies Europe discusses how best to plan for RFID throughout the supply chain. He assesses the steps that should be considered and looks at the available low cost options that will aid a smooth migration path from todays bar code infrastructure to a financially advantageous RFID future.

Despite the many unknowns surrounding RFID, there is an inevitability that mandates will be issued, and business cases will be made, in favour of deploying RFID technology into the supply chain. It will happen, and when it does, the value of the global RFID market will run into hundreds of millions  of pounds. Furthermore, whilst building the infrastructure will be treated as a one-off capital expense, the ongoing running costs, which remain sketchy, are expected to be millions rather than thousands of pounds. And while many of the worlds dominant software and hardware vendors are talking about RFID bringing about a revolution, with better efficiencies and lower labour costs, the return on investment remains a debatable point. There is too much talk of better efficiencies and lower labour costs but few hard facts that support a return. Or is there?

So for clarity, lets establish what RFID is likely to bring to the table. RFID stands for Radio Frequency Identification, a combination of newer technology which identifies objects using radio waves to communicate with a small radio tag. The tag is most likely to be an adhesive sticker incorporating a microchip and antenna attached to, or imbedded into, an item. The good news is that the tag will be able to carry significantly more data than a traditional bar code  such as, what it is, the date and place of manufacture, batch, serial number, cost, maintenance history and so on.  Alongside holding valuable data, the tag will communicate with central systems throughout the supply chain, to provide a seamless account of the assets progress and life cycle. Tags contain antennas to enable them to receive and respond to radio-frequency queries from an RFID transceiver. So in essence, the use of RFID technology is expected to provide enhanced asset management by delivering visibility and real time financial and inventory data, with guaranteed traceability and availability. It is a paperless process that, in time, promises to be error free.  Never before has the manufacturing, distribution and logistics supply chain been offered such a seamless and efficient way of tracking assets. Hence while exact returns remain unknown, there is no doubt that there will be significant operating cost reductions because of the elimination of manual handling, which in turn removes risks and errors while increasing value, accuracy and certainty throughout an items life cycle.

There is a myth developing that every product to reach the consumer will be RFID tagged. Today this is not viable, it would simply be too cost prohibitive given the unit costs of using RFID tags at the generic item level.  Sure, having invested in an RFID infrastructure means that the supply chain, from manufacture to store-front, will utilise RFID tag technology, but this does not necessitate every item being tagged. After all, a can of baked beans is a can of baked beans; a tag will have much more value when applied to an item of equipment or a specific part where it can offer data which has value from end-to-end, i.e. date of manufacture, when it was sold, installed or repaired, plus when and where maintenance took place. Tags can even hold the identity of the person who completed any work. Whereas, a pallet of commodity items, such as baked beans,  may continue to be treated pretty much as they are today, in terms of traceability through the supply chain, it is likely that a combination of traditional bar code technology, at the item level, and RFID technology at the case or pallet level, will form the basis of an overall solution. Therefore, in the RFID world, its more sensible to tag the case or pallet rather than every item.

Having addressed some of the doubts over return on investment, lets consider some of the issues over cost of implementation. Some parts of the industry may be suggesting a big bang approach to RFID. This will not be the best way forward, so dont be tempted to throw the baby out with the bath water, just yet. RFID is still an emerging technology, with constantly changing specifications impacting adoption into the mainstream. Not least of which is the licensing of air wave frequencies to enable RFID transmissions. In addition, there has yet to be a final set of industry wide standards, although there are standards such as EPCglobal, which are driving technology mid-points and European Telecommunications Standards, which refer specifically to the EU. Standardisation is not far off, therefore, many companies are beginning to consider entering the RFID market, and will have already assessed the technology through small system trials backed up by  appropriate business plans that outline the likely return on investment. Such companies will see RFID as a competitive advantage and will use their early adoption of the technology in an attempt to gain market share.

For all of these reasons, and of particular importance to those businesses that would be at the mercy of a potential mandate, now is the time to take stock and develop an RFID strategy. By developing a business strategy it will be possible to devise a cost effective and efficient migration path from what is - to what will be. With this in mind, there already exist a number of products that offer multiple functionality, to operate and switch between existing radio frequency (RF) implementations and future RFID systems. Such products offer the flexibility to cater for short and long term strategies and any imminent purchases should be assessed for their future RFID compatibility. For example, Symbols  MC9000 rugged mobile computer is a multi-modal device offering traditional bar code scanning, together with image capture and RFID data capture.  Within the scope of such devices the intention is to offer one device for all applications and infrastructures, to protect the customers investment, to maximize interoperability and to stress the complementary nature of traditional and advanced data capture. As well as looking at available multi purpose products, it is sound advice to also look at any new products and evaluate their alignment to existing ERP supply chain architectures, allowing for any imminent purchases to benefit from a degree of future proofing.

At this juncture, integration between existing investments and future deployment becomes critical.  It is predicted that existing products and services, such as mobile computing and bar code scanning, will co-exist with RFID well into the next decade.  As an integration specialist, PEAK Technologies has spent time researching and evaluating how RFID technologies will integrate into existing RF infrastructures and how users can maximise the investment they have already made in RF technology.  If users are looking for a very low cost entry point into RFID, they may consider the deployment of a tagging solution that merely includes a tagging station in a distribution centre to which pallets ready for shipment are re-routed for breakdown, tagging and re-assembly.  Such an implementation would undoubtedly have limited reporting capabilities,  but it would offer a degree of compliance whilst controlling the costs of utilising RFID technology.  It is by no means a total solution, but it would get an RFID programme off the ground. PEAK estimates that such a start-up programme, which would include an RFID printer, compliance software, services and support, would cost in the region of 25,000.  Printer ribbons and RFID tags would be an additional cost, with the tags estimated at twenty to twenty-five pence each.

However, it is imperative that the initial investment should  be seen as the first step towards a long-term strategy of integration. Today, it is possible to have an integrated solution to drive return on investment in selected application areas. Any investment should be built around a strong business case. The goal would be to integrate RFID data into an ERP and/or warehouse management system. Such a deployment would extend across multiple nodes within the supply chain and would provide a seamless means for sharing RFID data with trading partners, both upstream and downstream. Furthermore, enterprise data in addition to specific Electronic Product Code (EPC) data is then made available to end users for supply chain visibility and decision making processes. 

There are and there will be many options for RFID compliance. However, many organisations will look for a cost effective, straightforward solution that satisfies short term requirements whilst providing a migration path that makes both application and financial sense, timed to evolve as the RFID market matures.  This approach is all well and good, as long as few mandates exist. However, if compliance becomes a pressing need, it is still possible to adopt a low cost programme that supports the management of the basic use of RFID technologies within a supply chain.  Until RFID becomes mainstream technology and widely deployed, the debate will continue over how financially advantageous it is or for that matter it isnt.  Given this fact, it is perhaps wise to move into RFID technology with due caution as mistakes could prove costly.

Paul ODonnell is CEO for Peak Technologies Europe. PEAK Technologies, an RR Donnelley company, is an international systems integrator of automatic identification and data collection (AIDC) equipment and systems. Our systems integration specialists and factory-trained technicians are experts in wireless radio frequency network and ERP integration solutions, enterprise printing, bar code scanning, mobile computing, terminal and software technologies. PEAK's primary applications include solutions for warehousing, manufacturing, distribution, retail, and field-based operations.