A real stumbling block to extensive use of radio frequency identification (RFID) thus far has been the numbers. Supply chains involve many different people. It takes a strong leader to leverage the investment by enough partners to make it pay-to realize the value RFID can bring to all parties with sufficient participation. Wal-Mart is taking a bold lead with its announcement earlier this year that it will require 100 key suppliers to be RFID ready by 2005, tagging product at the pallet or case level. The ripples from this edict will affect many supply chains. Most notably, other retailers who share suppliers with Wal-Mart will be looking to take advantage of their suppliers' new RFID capability.

Matt Ream, senior manager, RFID Systems with Zebra Technology, believes retail is one of the biggest drivers of RFID use. "Companies like Wal-Mart have looked at potential return on investment and think the timing is right. They believe investing in RFID will yield significant cost savings in the supply chain. The economics are not yet appealing for item-level tagging, but retailers foresee significant benefits in pallet or case level tagging," he explains.

There certainly will be a trickle down effect from the Wal-Mart mandate. If nothing else, it will add speed to the already notable classic curve of technology cost. "The cost of the actual chips is plummeting," claims Marc Mitchell, transportation practice director with Enterprise Information Solutions (EIS). "It's now measured in pennies instead of dollars, if you buy in volume." In fact, the cost of the entire system-chips, readers, writers, and getting partners to invest-is coming down.

In part, costs are dropping because the physical equipment has attained near-commodity status. It is widely available and now used in broad applications beyond logistics/supply chain. Ironically, according to Mitchell, "You can buy the hardware at Wal-Mart. Eventually everyone will be required to have this kind of functionality."

An RFID primer

RFID devices are more than static identification. Not only can they store large amounts of information, they also allow changing and updating the information over time. "They can store a timeline of supply chain movement or information needed to recall a product or to track its obsolescence," states Mitchell. "And the information can be read from the RFID tag without interfacing with someone's computer system."

Unlike barcodes, RFID tags can be read without physically finding them. That makes the tags ideal for tracking work in process. Read and write tags can be updated throughout the process, like a traveling database. The available information enables more flexible manufacturing, faster changeover times, and more automated manufacturing. Manufacturers can even use the technology to track quality.

Beyond the manufacturing process, carriers like being able to capture information on a pallet without re-keying it. With RFID, they can simply wave a wand reader over the freight.

However, chips only have value if they are connected to a system that can use the information flowing in and out. The weakest link in the RFID technology arena is the infrastructure or data system. Ream claims there is a lack of qualified integrators, but more people are jumping into the pool.

On the hardware side, there have been a lot of developments and improvements, says Ream. Companies like Zebra Technologies are investing heavily to present new offerings. "Our printers are marrying barcode and RFID technology in a single device. We've added an integrated RFID reading and writing engine within the same printer. Another of our printers can print smart labels. On demand, it inserts an RFID tag within the label," he adds.

"There is continuous innovation in RFID chip technology," notes Mitchell. "The chip is miniscule with a large antenna, which gives it the ability to transmit to the reader. It's like a two-inch coil around a grain of rice." While Hitachi has introduced a new chip it claims doesn't require an antenna, the antenna actually is etched on the chip. And Flint Ink has created a new company to concentrate on conductive and advanced printing inks and printed electronics technology and processes.

Meeting the challenges

Even as technology innovations challenge companies to optimize the value received from their investments, users struggle with issues such as personal security. One chip manufacturer made a tag without a "kill switch"-in other words, there isn't a way to shut it down when the garment is sold, reports Mitchell. "A retailer could tag a garment and encode it with your name. The next time you wear that garment in the store, it would recognize you and know what other stores you entered."

Another challenge is slowness in adopting standards. "Since chips are not fully defined as to how they will work forever, or even next year, manufacturers are reluctant to order a three-year supply to get a large-quantity price break. So it's still costly to label each item," notes Mitchell.

Therefore, manufacturers are likely to start with tracking cartons and pallets (the level Wal-Mart will require). "That's fine with carriers, but limits practical applications," Mitchell suggests. "Retailers want RFID tags on individual items. They cannot achieve innovative applications such as smart shelves in stores unless each item has a chip."

Clothing retailers typically apply their own RFID tags to garments. On the other hand, food manufacturers can realize benefit if a carton of 36 cans of beans has one chip, making them reluctant to invest in 36 chips. "And each can of beans already contains a UPC label, so you're talking replacement technology," Mitchell adds.

Innovative applications

When enough suppliers are willing or required to tag each can of beans, grocers can truly smarten up their shelves. Mitchell describes smart shelves that will tell the grocer when the last can of beans leaves the shelf or when just one or two cans remain, reducing stock-outs. Smart shelves know how many cans of beans were stocked and track each one as it leaves. When stock is low, the information system alerts stocking people. Or, when shoppers confront an empty shelf, the smart shelf can tell the customer where else in the store the product is displayed. The same smart shelves would keep stock fresh by identifying older stock and pushing it to the front, claims Mitchell.

Smart labels can reduce spoilage by tracking batch information. A distiller in Europe, distributing beer and liquor, puts RFID tags on beer kegs, encoded with which brand of beer is in the keg, where it came from, and when the keg was filled. "If the beer turns out to be tainted, they know what brand of beer and what batch to dump," notes Mitchell. This ability to pinpoint could track other products subject to potential recall, especially meat. "Or producers could track when the product was packaged and the tag could sound an alert when it becomes too old to be sold," Mitchell continues.

The automotive industry truly tests the RFID systems' resistance to damaging environments. Tags track vehicles through assembly, where tags are subjected to high temperatures and painting. Yet they function to verify vehicle identity before each step in the assembly process.

RFID tags can be buried within pallets or containers. The tags work well in guided vehicle identification applications. Tags installed at strategic locations throughout the facility verify vehicle location via readers on the vehicles.

In a hospital, RFID tags can track expensive equipment such as defibrillators. The ability to pinpoint the location of each piece of equipment can potentially reduce inventory. "Instead of five on a floor, a facility may only need three defibrillators if the equipment can be found immediately," suggests Ream.

Mitchell wants to see a smart fridge-in fact, a smart kitchen. He believes that someday his kitchen will keep track of his shopping list. The hurdles to overcome in achieving that goal parallel those in logistics/supply chain. He explains, "There are many players involved in developing a smart kitchen-food manufacturers, grocery sellers, kitchen designers, and appliance manufacturers. They have to get together to implement the technology, integrate the systems, and find a way to make it profitable for everyone."

Sidebar: The RFID Advantage

RFID is an information acquisition technology. It consists of a sensing device, which transmits a radio frequency signal to a specially designed RFID tag, which responds with another radio message.

The advantages of RFID over other ID technologies include reliable operation in a harsh environment (wet, dusty, dirty conditions, corrosive environments, applications where vibration and shocks are considerations), non-contact operation, and freedom from line-of-sight constraints. RFID transponders can be read irrespective of orientation, through paint, even through non-ferrous solids.

The system consists of RFID tags and the RFID reader. The reader emits a frequency magnetic field via its antenna. When an RFID transponder passes within range, it is excited, causing it to transmit data back to the RFID reader. Transmission and reception occur simultaneously, making read time short. Passive RFID transponders contain no batteries and are designed to be disposable, while active RFID transponders are hermetically sealed in housings designed to tolerate harsh environments and will last many years. The permanently programmed code is unique, counterfeit-proof, and cannot be modified or deleted.

Source: Copytag, www.copytag.com

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• www.copytag.com