RFID Report
RFID Report examines the key developments taking place in Radio-Frequency Identification.
By Robert Spiegel -- Supply Chain Management Review, 1/1/2005
News and Trends
New wave of RFID adoption seeks business value
According to a number of analysts, the first wave of RFID adoption has passed with the January 2005 deadlines for the Wal-Mart and Department of Defense mandates. AMR Research estimates that Wal-Mart suppliers collectively have already invested $250 million to comply with the mandate—that's about $1 million to $3 million each. The investments were for tags, readers, system integration, changes to existing supply chain applications, storage, and analytics of large volumes of incoming data.
Kara Romanow, RFID analyst at AMR Research, notes that suppliers haven't yet been able to absorb and utilize the RFID data—and thus haven't been able to gain business value or return on investment from the technology. "In many cases there were too many hurdles to overcome in too short a period to consider revolutionary ways to use the technology," says Romanow. In fact, many of the suppliers involved in meeting the early compliance mandates consider their investment pretty much a throwaway thus far.
During the second wave of adoption, everyone is eager to learn from the first round's mistakes. According to Joe Owen of Rockwell Automation's RFID test center, those companies that are just now testing RFID are taking a different approach from the companies involved in the rush-to-mandate first wave. "Rather than rushing to compliance, the second-wave companies are looking at RFID from a business sense," says Owen. "They're trying to figure out what else to do with the tag—they're looking at it more as total integration and not just a bar-code replacer."
Although the first wave of RFID adoption has been costly, it has produced some important benefits. Forrester Research analyst Christine Spivey Overby notes that the early work on compliance has accelerated the move toward global standards, turning RFID talk into action and lowering B2B data-exchange barriers. She believes the key challenge now facing vendors is to bring multi-tiered RFID infrastructure and software to market that will help companies manage—and eventually utilize for business improvements—the sea of data expected to be generated by this technology.
FDA pushes RFID to tighten pharmaceutical supply chain
The Food and Drug Administration (FDA) sent shock waves through the pharmaceutical industry last November when it released a compliance policy guide requiring suppliers to adopt RFID on labels. But positives came out of the directive. According to Forrester Research, the guidance lifts labeling restrictions that may have discouraged use of technology. Previously, any changes to labeling required pre-approval from the FDA. The agency also announced the formation of an internal working group to monitor RFID adoption. Forrester's Laura Ramos notes that the group will "identify regulatory issues that surface in pilots and formulate policies that the FDA hopes to enact in 2007 when it aims to make RFID tags required for drug tracking."
Another positive note about pharma's move to RFID tracking is that the industry may finally get a grip on the murky world of chargebacks. Chargebacks occur when a supplier negotiates a reduced price with a health-care provider, and the wholesaler charges back the discount to the supplier. The transaction, however, takes place without the supplier getting a good view of the source and amount of the discounts it has to cover. "The big financial benefit with RFID is that it will allow suppliers to track chargebacks," says Robert Goodman, RFID specialist at The Yankee Group. "As much as 80 to 90 percent of the financial benefit of RFID is in this controversial area."
One-third of Europe's retailers moving ahead on RFID
A study conducted by Irvine, Calif.-based Printronix shows that 35 percent of European retailers are now experimenting with RFID technology. Nearly half of Europe's retailers are planning to conduct RFID pilots in the next six months, and 89 percent plan to use RFID by 2006. Printronix also identified barriers to widespread RFID adoption in Europe. The key concerns, cited by approximately one-third of the respondents, centered on costs and insufficient knowledge about the technology.
Technology
RFID vendor developments
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Sandtracker tries to break 5-cent RFID barrier. New Zealand-based start-up, Sandtracker, claims to be very near to breaking the 5-cent cost barrier for RFID tags. Retailers have long insisted that RFID tags cannot be adopted at the in-store product level until tags cost less than 5 cents. Sandtracker says it currently has five companies in trials with its low-cost tag.
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Avery Dennison and RF Code unveil tamper-evident RFID tag. Avery Dennison Corp. and RF Code hosted public demonstrations of their security and monitoring electronic-seal technology at industry events in December. The technology is designed to send out a distress signal when a container has been tampered with.
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RFID testing on pipe underway. FIATECH, a not-for-profit organization that works to develop new technologies for the construction industry, is conducting field trials on the reliability of RFID technology with fabricated pipe. The application is designed to automate the process of documenting the delivery and receipt of tagged construction materials and equipment.
Best Practices
RFID deployed at cross-docking site
Third-party logistics provider American Port Services (APS) has deployed an RFID system at its 60-acre cross-docking facility in Savannah, Ga. APS is using technology from AeroScout and AGI Worldwide to implement a wireless RFID system that tracks the location of hundreds of trailers at the facility in real time. APS notes that the RFID system is designed to improve efficiency, increase utilization and throughput, and reduce costs. The company is expecting a quick return on its investment in the technology.
Tatung takes RFID beyond compliance
Computer-product contract manufacturer Tatung Company of America is using Shipcom Wireless's RFID technology to tag cases bound for Wal-Mart. In addition to meeting Wal-Mart's RFID requirements, the RFID data integrates into Tatung's enterprise resource planning system. Since initiating its first end-to-end RFID implementation, Tatung has expanded the use of RFID to a second site with multiple production lines.
RFID used to track African meat shipments
SIMTAG, a European-based consortium dedicated to promoting cargo safety and security, and the U.S. Trade and Development Agency have joined with the World Customs Organization on the "SST for Africa Project." SST stands for Smart and Secure Tradelanes, an initiative that involves public and private sector participants in projects designed to secure the movement of goods. In the "SST for Africa Project," shipments of beef from the interior of Namibia have been secured with active battery-powered RFID-sensor bolt seals provided by Savi Technology. The tagged shipments are tracked automatically at key inland and seaport checkpoints between Namibia and the United Kingdom's Port of Tilbury.
Resources
RFID white papers and case studies
You can find free white papers on RFID at these Web sites.
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Zebra Technologies: www.rfid.zebra.com. The site offers case studies and white papers.
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Bitpipe Inc.: www.bitpipe.com. This site offers white papers, vendor reports, and case studies. Just enter "RFID" in the home-page search box.
Upcoming RFID Conferences
RFID World 2005
March 1–3, 2005 (Dallas)
Produced by: Shorecliff Communications LLC (rfid-world.com)
This conference will provide comprehensive information about RFID technology.
RFID Supply Chain Solutions 2005
March 29–30, (Vancouver)
April 26–27 (Montreal)
Produced by SoftMatch (www.softmatch.com/soln20.htm)
This conference provides information aimed at companies facing compliance mandates.
2005 RFID Journal Live
April 10–12, 2005 (Chicago)
Produced by RFID Journal (www.rfidjournallive.com)
This conference is divided into five tracks: retail, manufacturing, logistics, core technologies, and building the business case.
The 2005 RFID Technology Conference
May 3–4, 2005 (Boston)
Produced by the Conference Board (www.conference-board.org)
This conference looks at RFID standards, return-on-investment models, security, and implementation.
Robert Spiegel covers the supply chain technology space for a number of Reed Business Information publications.
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