Tracking the future - Automatic Datacapture report October 2008

Automatic Data Capture: what is the state of play, and what does the future hold? Manufacturing & Logistics IT spoke to some of the leading names from the analyst, trade association and standards community to gain a deeper insight into this fascinating, vibrant and highly beneficial technology space.

Arnab BhowmikThe flexible and feature-rich PDA, wireless and Bluetooth, the long-proven and reliable barcode and RFID; these are some of the staple technology areas regularly discussed within the context of any debate related to the AIDC space. Drilling more into the minutiae, Arnab Bhowmik of TATA Consultancy Services (TCS) also highlights such development areas as integrated biometric devices for user authentication; 2D matrix codes and symbologies (2D barcode); e-pedigree mandates to combat drug counterfeiting; and Electronic Product Code (EPC) Standards and compliance.

However, to kick off the proceedings, lets consider where things are at with regard to RFID. Many industry commentators refer to RFID as a transformational technology in automated data capture, something that is going to have a major impact on all our lives, both at a consumer and business level. And it is thought by some that as vendors strive to develop more out of the box hardware, volumes will increase and prices will eventually fall. Also, it is believed that consulting and integration opportunities will be plentiful. However, some say there has been a slow take up of RFID over the past few years, but because it is such a major paradigm shift the market cannot expect mass adoption overnight. Ongoing work on standards is undoubtedly one of the key issues here.

Importance of standards
Butler Group enterprise architectures practice director. Mark Blowers, believes that the lack of development of standards for data in the RFID world is a reason why the technology cannot deliver the real-time data exchange between trading partners. In addition, Blowers believes the volumes of data potentially generated from RFID tags remains an issue, as does the integration of the technology with other wireless technologies and existing systems. For Gary Lynch, chief executive for GS1 UK, the main current barriers to RFID adoption involve organisations not taking the time to investigate which of their processes or which areas of their data could benefit from RFID. And Tim Payne, research director, SCM EMEA, Gartner, maintains that it is absolutely essential for standards work to continue if the market is going to see more widespread adoption of RFID. He also highlights the fact that the market is currently seeing the combination of different types of technologies, such as GPS with RFID. This is being used on some asset tracking solutions and solutions that are feeding into things such as yard management, he said.

Gary LynchLynch points out that EPCglobal has facilitated the creation of Gen 2 a global RFID standard that has reduced costs and improved performance. This standard defines the physical and logical requirements for a RFID system, he said. On the subject of AIDC in general, Lynch points out that another technological development has been the introduction of a new bar code the GS1 DataBar. GS1 DataBar offers the ability to barcode difficult-to-mark products, including items that have a size or shape not suited to traditional bar codes, he explained. It will also offer the ability to include extra information such as serial numbers and expiry dates, alongside the GTIN (product identifier). The global adoption date for the new barcode will be 1 January, 2010.

Interpretation of data is another hot topic in the world of data capture, Payne explained: Were seeing demand signal repositories coming through as a means of filtering and interpreting RFID reads. In some of the more dense RFID tagged environments, how reads relate to the underlying process can require a fair amount of interpretation. So the development is to be able to feed the data into a more RFID-centric business application that can cope with that. The real value will come from being able to re-architect business applications to be able to really interrogate those reads and to interpret them. Then that starts to open up more significant opportunities in terms of where RFID can be used and in the types of business processes that it can support. Were just seeing the beginnings of this level of interpretation.

George LawrieDiversified applications
Do our commentators feel RFID is going to reach a healthy level of adoption within a short timeframe? George Lawrie, principal analyst, Forrester Research comments: RFID will become more common at the case level as new store specific assortments drive greater propensity to mixed pallets in consumer goods. Bhowmiks view is that RFID technology has prevailed fast over the past few years and has shown its presence across the globe in diversified applications. Any AIDC technology takes some time in terms of a fully fledged implementation and adoption, he said. Indeed, the barcode took 15 years to be properly implemented. Contributing factors to RFIDs prospective success, as cites by Bhowmik, are as follows:

 RFID Standards are getting matured in all industry verticals.
 RFID is supposed to hit $7.5 billion mark by the end of 2008.
 33 billion RFID tags will be produced by 2010.
 Mandates in the retail industry in the USA and the UK are thriving.
 Serialisation and ePedigree mandates by many US states.
 Inception of the RFID China Alliance project.
 RFID tags and systems in healthcare will rise rapidly from US$90 million in 2006 to US$2.1 billion in 2016.
 RFID is in action in 76 countries; up from 49 countries 18 months ago.

Bhowmik adds that RFID has successfully been implemented in many geographical regions, including:

 RFID implementation at Correos (Spain Postal service provider) Europe.
 RFID enabled licence plates to identify vehicle UK.
 RFID implementation at Walmart USA.
 Infant protection with RFID at Wisconsin Hospital USA.
 Occidental Petroleum is using RFID for personnel tracking USA.
 RFID implementation at University of Connecticut USA.
 NANACO RFID e-money system (Suica & Edy) Japan (APAC).

However, Payne observes that places such as China are still very early in their development stages. There isnt a great deal of activity over there, the focus is still on putting some fairly basic applications in place and labour is so cheap that you simply dont have the same business case, he said. However, if one looks at productivity improvements with RFID in a Europe company, thats a different proposition, believes Payne. Nevertheless, he anticipates that Western customers will start looking at using RFID at Chinese ports from a tracking perspective. This should at least start to push that technology into the export end of the supply chain in the region; so adoption will be influenced from outside as opposed to inside, he said. India, on the other hand, is a rather different case, according to Payne. This area is really quite gung ho generally around new technologies, and there is a number of Indian retailers who are really trying to make this type of technology work probably harder than some companies we have in Europe, said Payne. They see huge potential because their infrastructure often isnt as good as in the West, and so they see technology such as RFID as a means of circumventing this problem and gaining better control and visibility. And India has a huge pool of resource and talent that can leverage this.

Global increased in adoption
Lynch has observed increased levels of RFID adoption globally, with many mandating their deployment. In Europe, the Metro Group has deployed RFID on a full scale, equipping roughly 200 locations with RFID infrastructure, he said. Metro has deployed an RFID system at its Galeria Kaufhof high-end retail store in Essen, Germany, involving item-level tagging based on Gen 2 and related EPCglobal RFID standards. Blowers too reports well on healthy adoption rates, based on feedback he has received from the vendor community. He added that although adoption rates may be havent been as rapid as many had predicted, the RFID trend is growing. Blowers also pointed out that, with any relatively new technology there can be a lag between the expectations and the actuality. Wireless technologies seem particularly prone to this, he said. The development of the standards can slow down adoption, as can in RFIDs case the integration with back-end systems; the complexity of which is often underestimated.

Ard Ja VethmanArd Jan Vethman, RFID leader, global sector manufacturing retail & distribution, Capgemini, highlights the fact that there have been vertical sectors where RFID adoption rates havent been as great as some people expected them to be four or five years ago. The box-level trials at Walmart in the US, for example, were expected to grow very rapidly to a major size, and this implementation hasnt grown as quickly as expected by some, he said. However, he added that the market has seen other areas where take-up of RFID has been impressive in terms of how quick adoption has taken place. One example of item-level tagging can be seen in many of the leading academic book stores in the Netherlands, where each book in the stores is RFID tagged, he said. Some of the stores hold around 70,000 titles, so you can see the benefits in terms of speed and efficiency of relying on RFID. Indeed, RFID is being rolled out rapidly now to cover all the 40 major academic bookstores.

In terms of potential constraints regarding RFID adoption, Lawrie comments that inventory accuracy is quite high in consumer goods supply chains while the goods are on pallets and in cases. Poor inventory accuracy is most noticeable in the last 50 yards, at which point the goods are off the pallet and out of the case, he said, adding: For most consumer goods, item-level tagging will remain uneconomic so long as chips and antennae must be manually joined together.

Simon Bragg, ARCs European research director, points out that few major European retailers have announced a Walmart-like RFID initiative, although there have been odd examples Marks & Spencer for instance. Walmart mainly introduced RFID to solve their back-of-store problem, explained Bragg. Wallmarts US retail stores have a mini-warehouse at the back of each store. Land is cheap in North America compared to Europe, so the additional land costs arent important. Therefore, Walmart wanted RFID at the carton level, so that if sales staff in the store re-ordered, the company would know if the carton was out of stock, or if there was a carton sitting in the back of the store. Walmarts real problem was that the carton was somewhere at the back of the store, but no-one knew quite where. Bragg added that land is expensive in Europe, so retailers do not have a mini-warehouse at the back of their store. Nor do they lose items, he said. So the drivers in Europe for RFID are around reducing shrinkage, and improving on-shelf availability. However, both these drivers can be improved by other means.

Bhowmik emphasises that any technology takes time to nurture, so it is true that the RFID growth so far has been slow. However, he stresses that in the coming years its adoption is going to increase exponentially. According to Bhowmik, the reason behind its slow adoption can be attributed to things such as: lack of awareness regarding the technology; risks involved in changing the existing business process; small vendors indifference to adopt such a new technology; most of the mandates have not been finalised yet; regulatory compliance issues; and delayed ROI.

Tim PayneWhat do you see as some of the current prevailing barriers to adoption? Lawrie believes barriers include the lack of a business case benefiting all parties, and the complexity of middleware required and the integration between event-oriented RFID execution and essentially cyclical supply chain core apps. For Bragg, it is a supply chain initiative that requires a lot of people from different companies to work together, and each has to benefit from it. Voice, for instance, can be implemented in a warehouse, under the control of one manager, which is so much easier, he said. Bhowmik offers the following as potential barriers to RFID adoption: the cost of RFID-tagging each serialised item is very high; RFID technology is affected by metallic and moist environments; very large scale of data handling (Walmart is supposed to handle 7 terabytes of data per day out of RFID operations); technology is not yet completely stable and cannot guarantee 100-per-cent read rate.

Voice directed advantage
In terms of other key developments within the AIDC arena recently, Lawrie commented that we are also seeing more voice directed picking, which has helped in fulfilment of e-commerce orders from high throughput pick faces. Simon Bragg, ARC European research director, also references voice: A reasonable estimate would be that voice has doubled the number of users in Europe over the last two years, he said. It is now well proven, well understood and, for the appropriate picking tasks, delivers payback well within a year there isnt another SC technology that is growing at this rate.

Developing markets
And what of developing markets for AIDC solutions; both in terms of geography and vertical sector? Lawrie points out that, in general, there is now much more optimism in Asia about IT spending. Also, he believes European retailers generally seem to be most favourable regarding IT innovation. From the vertical end user perspective, Bhowmik sees some of the main developing end-user markets for AIDC solutions over the past few years as: manufacturing; retail & supply chain; pharmaceutical & healthcare; mobile commerce; security and access control; automobile immobilisation; and toll collection & transportation. In terms of geographical strengths, new avenues for AIDC in APAC countries, according to Bhowmik, are: animal tracking, postal tracking, sport timing, and automatic toll collection. In the US, he highlights retail supply chain, pharmaceutical & Department of Defence, while in the UK, he points to retail supply chain.

Simon BraggThe future of the barcode
And what of the barcode; will continue to dominate the data capture space for the foreseeable future? It is all a question of building the business case for the appropriate technology, reflected Lawrie. Many companies are currently assessing where RFID can help them gain the most efficiency and cost savings. The initial results for a strong business case are not encouraging as stakeholders become more educated and are able to separate the myths from the reality. However, Lawrie believes there is a silver lining. As firms re-evaluate their existing processes to determine where their supply chains can benefit from RFID, they often uncover simple alternatives for improvement. In many cases, these process changes leverage existing technology to drive greater benefit than systematically retooling applications to support RFID across the supply chain. Supply chain executives will have to carefully consider closing existing efficiency gaps with mature technology before taking on full-scale RFID adoption.

Bhowmik reminds us that RFID and barcodes are both AIDC techniques. They are complementary to each other and neither can replace the other, he said. The advent of RFID has provided item-level visibility in the track & trace scenario, which was missing with the barcode. Apart from this, RFID has other benefits over the barcode, such as no line of sight required. Information can be re-written, multiple reads with a single event, etc. I believe RFID is going to be the most predominant technology in the AIDC space and the barcode will co-exist.

Lynchs view is that the case with RFID and the barcode is still very much one of horses for courses. While the two technologies have similarities, they have strengths in different areas and therefore different uses for identifying goods from the manufacturer through to the point of sale. Working in tandem, RFID and barcodes can track all types of goods throughout the supply chain using both methods of identification to help with traceability, product recalls and anti-counterfeiting. RFID is appropriate for use in the wider supply chain. Since it does not require line of sight for scanning, it can easily track and trace cases, pallets, roll cages and high value goods throughout the supply chain to ensure that they arrive in the right place at the right time. Items such as loose produce dont need to be uniquely identified, so RFID tags or an Electronic Product Code (EPC) makes no commercial sense there would be no business benefit to embedding an RFID tag on a can of baked beans, for example. In this case, it would be best to identify the can of baked beans with a barcode.

For Vethman, RFID adoption may be growing at an impressive rate, but barcoding will still be applicable for a long time to come. It doesnt make economic sense to try to put an RFID tag into everything that can currently carry a barcode, he said. As an example, its great that when you check in online for a flight and your printer produces a barcode on paper. It would be ridiculous to try to make that an RFID tag. GS1 has introduced some innovations on barcoding to capture more data and so I believe it is more than capable of living side by side RFID for the foreseeable future.

Handheld flexibility
Ruggedised handheld data capture terminals and PDAs seem to be kitted with everything from cameras to signature capture and even the ability to be traced by head office via GPS. Is there anything left to add in terms of functionality and other add-ons? Lawrie has no hesitation in mentioning voice communications; as well as, perhaps, data. Bragg also makes a beeline for voice. The next technology development could be to use more VOIP for communication, with processing on a central server, he said. This could dramatically reduce the cost of hardware. However, this technology does require considerable internal IT skills to make it work

Bhowmik maintains that PDAs are really the best handy device available, with multiple features in one devices. Within the context of AIDC, PDAs can support both RFID data capture and barcode scanning capability as well, he said. These devices are very good for taking inventory in a warehouse and passing data to back-end systems using wireless communication. Bhowmik adds that the striking feature is the PDAs mobility and convenient portability. He points out that PDAs can also be enriched by adding such features as: multiple interfaces for RFID reading (HF/UHF) agile RFID reading; integrated biometric component for supporting eCommerce application; and 3G/HSDPA.

Looking straight ahead
As for the future, what are some of the key technology developments to look forward to over the next five years or so? Bhowmik believes that Automatic Identification Technology (AIT) & Automatic Data Capture (ADC) will witness development in following areas: machine vision; Smart Cards & Super Smart Cards; NFC (Payment scenario); manufacturing process; thermal printing; real time location system; and sensor networks.

Mark BlowersBlowers concludes that the future for RFID adoption looks bright: RFID will become increasingly more pervasive; being used, for example, in retail outlets on individual products and in ticketing applications. He also foresees the increased integration of RFID with other wireless technologies and location tracking solutions. Lynch highlights the fact that the global adoption date of 1 January, 2010 for the GS1 DataBar will mark when the barcode will start appearing at retail check outs. In terms of RFID, Lynch points out that the Electronic Product Code Information Service (EPCIS) will enable trading partners to exchange RFID data and track the progress of their goods as they move through the supply chain in real time, which will improve supply chain visibility of global sourcing.

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