Oct/Nov 2006

Sales of RFID tags are booming, and a lot of applications have a definite mobile dimension. Sharon Clancy asks if the benefits for the logistics sector are now more clear-cut

Everyone is predicting that RFID (radio frequency identification) will enter mainstream business in the next two years - at least for the early-adopter majority. According to analyst Gartner, transport logistics, supply-chain management and asset management will be adoption leaders. (See panel on page xx for more facts and figures supporting this view.)

Whilst you might argue that not all supply-chain activities necessarily fall into the "mobile" arena that is the prime subject of m.logistics magazine, a lot of current applications of RFID definitely do have an RFID dimension, as you will see as you read on. They make it possible to track, monitor and secure assets and goods as they move through the supply chain in ways that have simply never been possible before.

So what is fuelling this growth? One factor is inevitably the pursuit of cost reduction. Frost & Sullivan research analyst Rengarajan Srinivasan sums this up. "The rising need to track valuable assets and products accurately is creating significant scope for the use of RFID across a range of industrial sectors," he says.

 

However, he warns that the return on investment from RFID deployments is difficult to quantify, as the full benefits of the technology depend on its degree of integration into wider business processes. "As the RFID market starts the transition from technology trial stage towards early adopter phase, a key challenge will be to clearly identify the range of expected benefits," he cautions.

Stuart Scott, international marketing director at Intermec Technologies, says pressure from customers and regulatory bodies for better track and trace capabilities in global supply chains will drive RFID adoption. "Better read rates and more reliability will motivate more companies to pilot RFID technology," he says. "The industry needs more creative minds trying new things to improve and differentiate their service products, and those initiatives are happening."

Tracking and yard location have been identified as two areas where RFID can deliver real benefits. There are already several implementations of RFID to track trailers and vehicles within depot and on leaving and entering. Expert predicts that this will become the norm.

Container tracking might utilise passive RFID "licence plates" integrated by the owners and supplemented by additional tags to identify the contents, says Scott. Active tags are already used as one-life container seals for security purposes.

Chess Logistics Technology has identified potential for vehicle identification at a localised level, working with a warehouse management system to provide functions such as sounding alerts on the arrival of a particular vehicle, opening a loading dock door, lifting a barrier and so on.

"It may also support location-based processes inside the warehouse," says marketing director Alex Mills. "For example, tags fitted to a forklift truck could in theory be used to verify that the truck is in the right location for load placement or picking."

Microlise reports plenty of interest in its RFID-equipped trailer (m.logistics, issue 23). RFID readers in the roof of the trailer monitor tagged roll cages and pallets as they are loaded. Among benefits are faster loading times and elimination of human error in the loading sequence.

RFID can improve quality of service in tracking mail, points out Scott, and can deliver advantages in a market that is liberalising and requiring innovation and cost-saving to survive.

"RFID adds greater depth of information when integrated with mobile delivery tracking software," says mobile software specialist Blackbay's chief executive, Larry Klimcyzk. "DHL, for example, ships one billion packages per year, and has stated that it will tag every package by 2015."

Bag tracking at airports is also proving a popular use for RFID as airports seek to manage greater passenger numbers and increased security levels.

Closing the gap

RFID is also becoming more widespread in closed supply chains, reports Andy McBain of Symbol. "It is easier to deploy and reap the benefits if you don't have to rely on third parties to adopt the technology as well." McBain says express parcels companies are very keen to deploy the technology.

"They can see the benefits both from the track-and-trace point of view and in terms of speeding up the movement of parcels through hubs. That brings operational efficiencies, since parcel consignments can then arrive later at hubs, yet still meet the deadline for onward delivery."

RFID in field service, Blackbay points out, can prove service level adherence, inspection compliance and location and utilisation of high-value assets. AS Larry Klimcyzk puts it: "RFID allows us to think beyond the simple aspiration of determining where a product is, and approach a situation where it will be able to tell you where it's been, in what condition it is, where it needs to be, by when and much more. Users need to look at RFID as a technology that can transform business processes and create real competitive advantage."

Chess's Alex Mills says RFID will undoubtedly provide benefit where data such as serial numbers, pack numbers or other low level detail needs to be captured - especially where this has previously been labour-intensive or difficult using other technologies.

Market resistance

However, producers and logistics companies need to be certain they themselves benefit from the technology, not just their partners in the supply chain, warns Chess's Mills. Indeed, the question of who benefits most from RFID investment has become something of a hot topic, whether the implementation involves item-level tagging or pallet- or case-tagging (approaches that have been trialled as an interim step while the supply chain prepares for item-level tracking).

The latest report from IDTechEx suggests that only the retailers are benefiting from this type of case- or pallet-level tagging, not consumer packaged goods companies or the suppliers of the RFID systems, both of which groups are reported to losing money on the exercise.

Tagging the pallets and cases of high-volume products makes sense for retailers, but those are the items which offer low margins to the producers. The cost of applying the tag, claim CPG manufacturers, is about the same as the tag itself.

Alex Mills expresses the question in simple terms. "The questions a WMS user needs to ask is: 'Are there tangible benefits to using RFID over and above what we're doing now?' If there are, and the benefits are direct, then the investment is worthy of serious evaluation and consideration. If the benefits are indirect (a gain for the customer or other supply-chain partner) then the question is more difficult to answer."

RFID is still considered by many to lack the plug-and-play maturity that so many managers have come to expect from their technology tools, says Larry Klimczyk of Blackbay. "While there is widespread recognition of the advantages of RFID over barcoding, the fact remains that barcoding is still very cheap to produce."

Aversion to risk is another factor in the equation, he says. "The cost of implementing a solution is still high, and businesses think a trial would cost thousands of pounds, whereas the reality is that they can purchase a basic developer kit for as little as five hundred Pounds. SME-type companies are looking for tried and tested solutions to roll out that include a degree of integration into their own business for a reasonable price. RFID isn't there yet."

What to consider

Symbol's McBain thinks some companies that could benefit are holding back because they are not thinking the process through. "Decide what you want to achieve from introducing RFID. What problem do you currently have that RFID might solve? What is the potential ROI?" He points out that successful RFID deployments usually involve a change in business process. "RFID is more than a sophisticated barcode."

Klimcyzk says unless business processes also change, companies won't be maximising the benefits of RFID and the opportunity to gain a competitive advantage from early adoption. "RFID specialists have a role in educating companies who want to know how and why this technology applies specifically to their business. We must be able to demonstrate how and where it will work."

Klimcyzk suggests starting simply. "Using some basic software tools, managers can explore RFID scenarios with a view to engaging a more substantial solution as the benefits of this technology become apparent. RFID can be retro-fitted into a mobile enterprise solution relatively simply and incrementally."

RFID in the warehouse

There are still plenty of doubts over how, when and where RFID can best be used in the warehouse, Alex Mills believes. "Most good WMSes will be compatible with RFID in much the same way as with barcoding or RF. RFID builds on traditional identification technologies, and offers the prospect of holding more information with goods in transit."

However, he says, there is life in the barcode yet. "The cost of RFID compared with barcodes makes it harder to justify RFID at the moment. Barcodes can be printed by modestly-priced printers at very low cost. RFID tags, on the other hand, have a relatively high unit cost, whether bought-in or printed on-site using specialist equipment."

At the moment the equipment that is required to introduce RFID - tags, printers, readers and so on - is too expensive (around £100,000 for each warehouse) to make the investment justifiable unless there is a definite requirement. In the retail supply chain the pressure is likely to come first from the major retailers rather than producers or suppliers.

The hardware

While lack of agreed global standards is making life difficult for manufacturers, especially of readers, progress is being made.

This year has seen a proliferation of Gen 2 standard devices, mainly in reusable tags (see standards box). Such tags can be rewritten thousands of times, providing lower cost-per-use on reusable assets than even disposable labels.

Intermec predicts an increase in multi-function devices, especially in the B2C market. "Technology devices will be smaller and more rugged. We will see a proliferation of push to talk and push e-mail and a convergence of in-cab telematics and mobile computing," says Stuart Scott. "It will be very much one device performing multiple tasks - in transit, in-premise and voice."

The company's Large Rigid Tag (LRT), Small Rigid Tag (SRT) and IM5 radio module all have Gen 2 interoperability certificates. The LRT and SRT are rugged reusable tags capable of withstanding temperature extremes and hazardous exposures common in manufacturing and material handling operations. Features include a broadband antenna designed to deliver good performance on a wide range of materials, including metal, plastic and wood. The SRT is aimed at operations using plastic containers, metal cages, pallets, beverage containers, hazardous materials containers and chemical containers.

Symbol's Gen 2 RFID inlays and tags can be read at distances of up to 30 feet. The RFID dual dipole antenna design uses two antennas and allows the tag to perform faster read and write functions regardless of the position of the RFID reader antenna, which is ideal for high-speed conveyor belt applications used in distribution warehouses as well as luggage processing at airports.

Symbol has compressed the antenna and chip into a small, low-powered inlay that can be easily attached to a variety of materials from plastic and glass to cardboard and wood. Symbol's first RFID asset tag will be a 6in by 6in reusable metal mount tag designed for read-write asset management applications.

Partnerships are emerging as hardware and software specialists prepare themselves for growth in RFID sales. Psion Teklogix, for example, has teamed up with RFID specialist TagSys to develop portable RFID terminals for the distribution and logistics industries. Psion Teklogix will integrate Tagsys's RFID modules into several of its handheld terminals, including the Workabout Pro. The partnership should help TagSys expand into the logistics sector; it has already deployed over 60 million tags and 50,000 reader systems in the pharmaceutical, clothing and library sectors.

Asset management company Linpac Materials Handling has teamed up with Intellident. Intellident's FastClick RFID tags can now be incorporated into the full range of LMH's Returnable Transit Packaging. The tags can be fitted to new or existing products from LMH's family of foldable and fixed plastic crates, and its range of in-store bulk display units.

Even Microsoft is getting in on the act. Its BizTalk RFID is a plug-and-play solution designed to allow users to incorporate RFID information and data simply into a variety of applications and end-to-end business processes. The "plug and play" functionality in BizTalk RFID makes it possible for RFID devices such as readers and printers to become fully compatible with the Microsoft platform, and to integrate with third-party applications and processes. Intermec is among the companies to develop drivers for one BizTalk RFID.

ends

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PANEL ITEM

Discover RFID

Blackbay has launched its RFID U1000 Discovery kit, a series of tools designed to help businesses explore potential benefits RFID that could bring to their business. The kit, which costs £500, contains Blackbay's U1000 13.56MHz RFID reader with integrated Bluetooth for wireless connectivity to PDAs and a USB interface for linking to a PC.

Also included are the company's RFID Connect software development tools with three methods of integrating RFID into applications: ActiveX controls for Web-based, thin-client applications for Windows CE.Net or Pocket PC platforms; API, "thick client" software development tools including DLL library for application development; and RFID Wedge, which is similar to a barcode/keyboard wedge interface allowing "no code" interface to office applications such as Pocket Excel and Pocket Word.

There are five each of three types of RFID tag with different geometry and form-factors, plus a user manual and 24-hour technical help line.

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PANEL ITEM

Try before you buy

The RFID Centre in Bracknell is an independent information and demonstration visitor centre for radio frequency id, wireless and mobility solutions. It runs regular half-day "introduction to RFID" courses.

A typical briefing includes an overview of the technology and its business application, a tour of the RFID demonstration area, which includes over 30 implementations, and a question-and-answer session to answer delegates' specific questions. The cost is £95.

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PANEL ITEM

RFID - the growth spelled out

RFID specialist IDTechEx calculates that there are already about 10,000 examples of RFID in action globally, excluding rather specialist applications such as RFID tagging of marathon runners.

The company says deployment rate is about 60 per month. It predicts RFID active systems will grow from $0.5 billion in 2006 to $6.78 billion 2016, and says that much of the money will be spent on systems rather than tags.

IDTechEx's statistics for 2006 already show impressive growth in the sector. This year, 2006, 1.3 billion RFID tags will be sold, rising to 2.2 billion in 2007. Over 500 million tags are being applied to pallets and cases, over 200 million for contactless smartcards, and the rest in a diverse range of markets, it reports.

Item-level tagging is increasingly taking off. Two hundred million tags will be sold in 2006. New technologies are helping the situation, says the company - citing for example near-field UHF tags, which work much better around fluids than the typical far-field UHF tags.