Jan/Feb 2004

Radio-frequency identification is attracting intense interest as a technology for tracking goods and containers - but questions of cost and system compatibility still need to be resolved. A high-profile forum tackled these issues. Peter Rowlands reports

By now almost everyone in transport and logistics must have come across RFID (radio frequency identification) - although you needn't be alarmed if you haven't got involved yet. According to Britain's e.centre, 95 per cent of UK companies have no definite RFID plans in place (see News, page 8).

This could change rapidly. Delegates at the RFID Networking Forum, a high-level conference held at the end of last year by Enterprise Events, were told of the prospects of "almost limitless growth" in the market (this from Nigel Rix, commercial director of specialist company Episys). And the pace had picked up in the past few months to the point where the question was no longer if the concept would take hold, but merely when.

In Rix's judgement the supply chain was one of the key areas for RFID application. Indeed, as has been widely reported in the past year, organisations such as Wal-Mart and Gillette have carried out large-scale trials of the concept, and big companies such as Tesco and Sainsbury's are committed to introducing the technology over the next few years.

RFID "tags" can be affixed to individual products or containers, carrying information about them that allows them to be tracked right through the supply chain. They have been described as replacements for barcodes, although they have the potential to carry much more information.

Steve Hodges of the Auto ID Centre in Cambridge maintained that RFID tags were in fact different from barcodes, and that they complemented one another. A key difference, he pointed out, was that RFID tags could each carry a unique identifier, so they need not in fact store other information about the item they described; this could be pulled from a look-up list on an external computer. "So it is possible to have a very simple tag if cost is the big driver."

Several speakers talked about the push to bring the cost of the tags down, and suggested that users were waiting for "the 5 cent tag" to appear. Steve Hodges said this target looked achievable on orders for 1 billion tags - perhaps offering a clue to the kind of high-volume operations where item-level tagging could become viable in the near future.

Inevitably, with any emerging technology such as RFID, intense attention is focused on the drive for universal standards. The one that looks like emerging as dominant is the EPC (electronic product code) standard, which is being developed by an organisation called EPC Global (www.epcglobalinc.org). This is a joint venture between EAN International and the Uniform Code Council.

Richard Foggie of the Department of Trade & Industry described the EPC standard as "a serious heavyweight solution", supported by organisations such as Tesco. He admitted there was "a lot of stuff out there that still doesn't meet the standard", including the existing ISO 18000 and 15694 standards, but added: "If we really want cheap universally acceptable tags, the open EPC is probably the way to go."

Dave Weatherby, the RFID project manager at the e.centre, said the next iteration of the ISO standard was likely to include the EPC standard. Weatherby added that his organisation's membership "want RFID now - and they want EPC."

Several real-world users reported their experience of RFID. Noel Groves of global transport and forwarding company Kuehne & Nagel saw the existence of multiple standards as a challenge to overcome, and also pointed out: "A lot of our customers have still not implemented barcoding from point of origin." But he could see RFID's potential for improving global inventory management.

K&N was working on RFID with Wal-Mart and Siemens, he said, through its Logistics Information Consortium. He said RFID had shown it could be "very very effective" for tracking containers, "but although there is a clear advantage, people are still concerned about paying for these services."

He also saw problems in the sheer amount of data that would need to be handled with RFID. "RFID will have a positive value to consumers," he concluded, "but the ROI is still unproven."

Paul Richardson, development director at Exel, said trials with Selfridges of active RFID tags (those that announce their own presence) on a closed-loop operation at Hams Hall had shown them to be very reliable and accurate. "Active RFID technology is viable," he concluded, "but the big issue is price." On a matter of detail, he also pointed out that staff at loading docks needed visual feedback of correct scans to be reassured the system was working properly.

Trials of passive tags with House of Fraser had also proved promising. Here 30,000 plastic laminated tags had been used to track trays. The cost of £1 a tag was high, but they were reusable. Richardson concluded that both kinds of tag had a place in the supply chain, but needed to be used alongside other technologies such as pick-by-voice. "And the system must be self-auditing." He was not yet able to suggest an ROI figure.

Rick Jackson, project manager at DHL, said the objectives of RFID trials at his company had been to reduce operating costs and "to remove the need for couriers to handle scanners as well as shipments." Again, cost was significant; the company had set a target of 20 cents per label. It also wanted 100 per cent reliability.

DHL had worked with the UK Government's Chipping of Goods RFID initiative, he said, as well as mounting trials of both active and passive technologies. No overall findings were available, but "DP World Net wants to assume the position of RFID leadership."