RFID:
From Pilots to Production
A look at the state of the RFID industry
With its origins in WWII-era radar technology,
radio frequency identification (RFID) has
passed through an explosive evolution in the
last nine years.
Starting with the MIT AutoID Center in 1999, whose top goals included
tags inexpensive enough to use on consumer goods, the RFID community
has created a powerful technology that solves a large and growing number
of business problems now. Though RFID has gone through the ups and
downs typical of a revolutionary technology, the value chain for RFID is
now complete, and users across a variety of industries are using it to save
money and enhance competitiveness. This paper surveys the state of the
industry and offers suggestions for users to keep in mind as they apply this
useful business tool.
The first wave of Electronic Product Code (EPC) RFID adoption was largely driven by retail
and government agency mandates. Early EPC technology was expensive and immature and
lacked the performance required for many applications. In addition, the value chain of solution
providers, software and process knowledge did not yet exist. Many companies applied the
tags and installed the portals required to meet external mandates, but they didn't incorporate
RFID into their business processes, choosing instead to wait for real-world RFID success
stories with documented return-on-investment to show the way.
Less than ten years of rapid and enthusiastic evolution have led to a mature technology
based on standards and supported by a deep selection of products and services. RFID's
unique capacity for truly automatic data capture reveals it to be not merely a replacement
for barcodes, but a unique technology that delivers a clear and rapid return on investment.
Performance gains in the most recent wave of Generation 2, or "Gen 2," readers and tags
have made EPC RFID preferred for many applications previously served by other technologies
To ensure success, new users of RFID should follow classic guidelines for project
management and technology adoption as they move from pilots to commercial
implementations:
› Apply the same investment metrics to RFID as to other essential business technologies
› Take advantage of education opportunities to become a smart consumer
› Select an achievable scope, measure results and learn from experience
› Scale up on the foundation of smaller, successful projects
› Demand enterprise-class manageability and reliability from hardware vendors
› Demand flexibility and accountability from service providers
Five Years of Progress
RFID hype was on the rise when Wal-Mart and Department of Defense (DoD) announced
their mandates in 2003, but EPC-compliant technology was new. As is typical with the
early waves of technology adoption, standards were being developed. In the early years,
achieving seamless interoperability and high performance was challenging and integration
with enterprise software was labor- intensive. And since RFID wasn't integrated into business
processes, many organizations implemented manual processes, such as slap-and-ship tag
application, which often devoured potential ROI.
The last five years have seen accelerating progress. Two years of focused development by
EPC pioneers and the MIT AutoID Center led to the Gen 2 protocol, a milestone in RFID
evolution that has closed all of the major gaps at the hardware level. The second wave of
new Gen 2 ICs, tags and readers have advanced to the point that performance is exceptional,
costs are dropping and interoperability is a given. Software applications have evolved into
sophisticated resource and information managers connected to enterprise software through
mature, standards-based interfaces.
Standardization is inevitably good for the customer, as it drives the creation of a wide selection
of products at a lower cost, and RFID is no exception. Tag, reader and software vendors have
worked closely on interoperability, and as with the second wave of Gen 2 ICs and readers,
interoperability among vendors' products is smooth. RFID technology has reached a stable
plateau with Gen 2; Gen 2 products and services will deliver effective solutions for years to
come. New standards waiting in the wings can and must defer to Gen 2 to maintain backward
compatibility.
The entire RFID ecosystem has come of age. Solutions providers have invested in training
and lab facilities, and have honed real-world application expertise. RFID software specialists
have moved beyond middleware and have begun delivering field-proven, use-case-specific
applications that enable rapid generation of working solutions. Encouraged by the development
of industry standards, major technology companies such as Microsoft, Intel, Oracle and IBM
have made significant investments, which puts standard, interoperable RFID within the grasp
of many more users. Major enterprise software applications such as SAP can now access
RFID data delivered though popular business software applications from companies like Red
Prairie, Oat Systems, GlobeRanger and Tibco.
A Clear Case for ROI – In and Out of the Supply Chain
As RFID products and services have developed, the promise of RFID has become apparent
to many inventive solutions providers and users. In this post-mandate wave of RFID
implementation, closed loop, non-mandate applications predominate. Though supply chain
mandates remain the No. 1 driver of RFID adoption, several other RFID-enabled applications
have the attention of more than half of companies surveyed. According to the Aberdeen
Group's RFID Benchmark Report of 2007, 66 percent of companies surveyed named material/
product tracking in the top five at the No. 2 spot. Also named are security (64 percent), asset
management (62 percent) and increased visibility to business events (58 percent).
RFID success examples include:
› Apparel Inventory Management. One large
apparel manufacturer identified an 80x reduction
in labor expenses by moving from a monthly
physical inventory count to an RFID-based
inventory system in a group of its retail stores.
With RFID, what once took four employees 2.5
days has been reduced to an hour, which allows
the retailer to measure inventory more frequently
and at a lower cost. To the surprise of the retailer,
the implementation of RFID revealed significant accuracy problems in the original manual
process, which will reduce stock-outs. The company projects annual cost savings of more
than $10 million per year after system-wide rollout is complete.
› Material Process Control. An Italian textile
manufacturer achieved a 30 percent return on
investment in just nine months with an RFID fabricroll
tracking application. The manufacturer produces
more than 300,000 rolls of fabric every year. Fabric
is tracked through the manufacturing process
which is complicated by a large number of unique,
customer-selectable configurations. In addition to cost
savings, the textile manufacturer improved customer
satisfaction due to a higher percentage of orders
correctly fulfilled and reduced error rates in shipments.
The manufacturer attributes lower costs and increased
competitiveness to the RFID application.
› In-building Tracking of Small Assets. FileTrail, a west-coast specialist in the management
of high-value documents, provides systems to legal firms, the state court systems and
financial services companies. Originally based on manual handling and labeling of the assets,
FileTrail's solution now incorporates Gen 2 RFID. FileTrail clients have seen remarkable
results with automatic data capture: In one instance, FileTrail reduced client time spent
tracking lost files for a weekly audit from 38 hours down to 4 hours. In another instance, they
cut the time spent requesting and fulfilling files from a central library by 95 percent.
More than half of companies surveyed by Aberdeen Research said they planned on
implementing corporate-wide programs in the next three years to focus on supply chain
visibility and monitoring changes in the status of assets. With RFID becoming such an
integral element of business processes, it's no surprise that companies are demanding that
the technology be highly flexible, reliable and manageable. Here are some questions to ask
vendors of readers and tags.
Readers
As deployments scale to multiple locations, organizations are challenged by the ability to
manage, monitor and control increasing number of readers in the most cost-effective way
possible. It's important to select readers that can scale to meet these enterprise requirements,
and in particular, that can deliver reliable data capture in real-world environments at a low total
cost of ownership.
Tags
As with readers,tag technology
has matured. The second wave of EPC Gen 2 ICs provides enhanced range,
which results in higher read rates. Here are some questions to ask potential tag vendors:
› What sizes are available? The smallest tag isn't necessarily the least expensive. When
determining the tag size for your application, consider high volume, mainstream options
first and then migrate to high-end or custom options if necessary. Tags optimized for highvolume,
4x6 shipping labels, such as the Alien Squiggle®, pictured below, typically cost less
due to economies of scale.
› What materials do the tags operate with? Look for tags that operate on a variety of materials.
Newer tags with flat frequency response maintain sensitivity on a variety of materials.
Materials previously considered difficult to tag have become much easier with the use of
these World Tags. Be cautious, but not deterred, by concerns about metals and liquids.
While metals reflect RF energy.
Get the Most Out of the RFID Transformation
Getting the most out of your RFID initiative is predicated on multiple factors. It's critical to
understand the potential and reality of this revolutionary technology so you can envision
how to benefit from it. Conduct a thorough analysis of the business value and define a
business case backed by a clear return on investment before proceeding. With the help of
your experienced partners, define a specific scope for your project with specific, measurable
objectives. Get educated—education is critical to being a smart consumer of both hardware
and services. When choosing RFID partners, look for real-world experience with name-brand
hardware and software.
RFID is a powerful, transforming technology that can deliver process efficiencies with a
clear return on investment. To maximize opportunities for success, companies should follow
industry best practices for project management and technology adoption as they move from
pilots to production implementations: apply the same investment practices to RFID as to
other essential business technologies; demand a low cost of ownership; and enterprise-class
reliability and flexibility from the RFID system vendors. Users who apply these common-sense
disciplines will realize improved competitiveness and lower business expenses when they
apply RFID for automatic data capture.
Christian Argenis Umaña Zambrano
Ci 17678077
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