Return on RFID will take time

As consumer-packaged-goods (CPG) producers gear up to meet RFID compliance deadlines, most see their RFID expenditures as a bite-the-bullet necessity rather than a strategic technology investment. In the CPG space, few are talking about a return on investment (ROI) for RFID. "Suppliers are not making any progress in finding ROI—at least not for the fast-moving, low-cost products," says Kara Romanow, research director at AMR Research. "With the high cost of tags, it's very difficult to prove a positive business case for the majority of traditional CPG suppliers."

Romanow is more bullish about the technology's ROI potential when it comes to higher-priced goods. "There's definitely a business case for RFID at the higher end," she says. "That includes everything from TVs and DVD players to high-end watches and handbags."

Romanow notes that CPG suppliers have reluctantly accepted the reality that making pallets and cases RFID compliant is a cost without return. "They are resigned to the 'no ROI' scenario," says Romanow. "As tag prices decrease and the technology matures, the business case gets a little easier."

How long before the ROI picture brightens? "Two to 10 years," answers the AMR analyst "depending on product category and technology progress." Romanow expects that RFID costs will become less of a burden for suppliers as more retailers adopt the technology, thereby spreading the investment costs across a higher volume.

DoD updates RFID policy

The U.S. Department of Defense (DoD) has issued an updated RFID policy that outlines the business rules for RFID usage in the department as well as supplier implementation plans. This new policy, which supercedes the previous policy statements from February 2004 and October 2003, covers both active and passive RFID tags.

The new policy specifies business rules for implementing active RFID tags on consolidated overseas shipments and expansion of the DoD's active RFID infrastructure. The policy also requires suppliers to put passive RFID tags on item/case/pallet packaging for specific products going to specific DoD depots by January 2005.

One big change is that instead of requiring the DoD's top 100 suppliers to be RFID-ready on all products by January 2005, the policy dictates compliance for only specific product groups going to the DoD's depots in Susquehanna, Pa., and San Joaquin, Calif., beginning on January 2005. A year later, more locations and product groups will be added. By January 2007, all items sent to DoD distribution facilities will need to be compliant.

The new policy directive can be seen at www.dodrfid.org.

RFID test centers help adoption curve

RFID test centers are springing up across the globe as suppliers rush to adopt the new technology. Rockwell Automation, to cite one example, recently opened a test lab at its headquarters in Milwaukee. The company has gathered a group of partners to provide readers, printers, conveyors, and middleware providers to mimic an entire RFID system in the lab. Designed primarily for CPG companies, the lab will demonstrate the integration of hardware and software products, including everything from RFID tags to middleware that connects to the enterprise resource planning (ERP) system. "We're using the lab to analyze different software and hardware options for material handling and warehouse applications," says Andreas Somogyi, global program manager for wireless warehouse solutions at Rockwell.

At the Sun Microsystems RFID test center in Dallas, the focus is on managing RFID data. "Customers are looking for roadmaps on how to integrate the data," says Vijay Sarathy, Sun's group marketing manager for RFID. Sarathy notes that the center is designed primarily to test RFID systems for customers, not to conduct demos. "We use the test center to see how certain tags work around beer bottles, or to see where a tag should go on a radio," says Sarathy.

Romanow of AMR Research believes that the test centers are helpful for companies during the early start-up phase of an RFID installation. "The test centers help a little, but only at the beginning," she says, adding that the detailed testing has to be done at the user's location. Says Romanow: "At some point, manufacturers have to do testing in their own facilities because of environmental issues and possible interferences such as nylon conveyor belts and other RF systems."

"Quick Start" program for CPG and Pharma

The data-collection and integration solutions provider Acsis has unveiled an RFID quick-start program consisting of two preconfigured packages designed to help CPG and pharmaceutical companies meet compliance deadlines. Each package includes the necessary components for an RFID implementation, including a fixed-reader station, smart-label printer, light stacks for verifying the tag reading, software, and services. The packages also include Web services-based device-integration technology based on open standards to help integrate RFID data into other applications and devices.

Vendors respond to RFID demands in life sciences

RFID technology is quickly finding its way into the medical and life sciences fields as companies seek tags to store data on sample-collection containers. Responding to the market need, Maxell Corp. of America is producing a 128-byte chip for sample containers of biowarfare material such as anthrax, ricin, and other hazardous materials. The chip is 2.5 mm square including its antenna. Maxell is also developing test tubes with embedded RFID tags. This avoids the necessity of attaching tags to existing test tubes. The test tubes come 96 to a tray, and each tube is designed to be read independently.

"Gen-2 ready" readers unveiled by Matrics

RFID systems provider Matrics will soon ship a version of its AR 400 RFID reader that can be upgraded to EPCglobal's Generation-2 standards via software. Currently, the Gen-2 specifications are still in the process of being ratified by the EPC-Global standards organization. The AR 400 reader already operates in a multi-protocol mode, which includes EPC Class 0, Class 0+, and Class 1 protocols.

In a separate development, Symbol Technologies recently reached an agreement to acquire Matrics.

Report cites RFID's asset management potential

The Aberdeen Group has released an RFID report entitled, "RFID-Enabled Logistics Asset Management: Improving Capital Utilization, Increasing Availability and Lowering Total Operational Costs." The report demonstrates that by tagging assets with RFID tags, companies can improve asset availability and protect those assets from theft, damage, and misplacement. Get the report at www.aberdeen.com.

Airbus launches parts-management initiative

RFID system producer, LogicaCMG of London, is working with Airbus S.A.S. in Europe to create an integrated RFID system to track and trace spare parts, tools, and instruments. The system is designed to help mechanics become more efficient. Airline mechanics can spend up to 70 percent of their time locating parts, according to AMR Research. Using RFID-tagged parts to improve inventory management and parts identification, Airbus hopes to significantly reduce this figure.

Designed for aircraft manufacturers, the new system includes a RFID tag that can withstand the wide range of rapidly changing temperatures that aircraft experience on a daily basis. The chip has read/write capability so that new data can be added to the chip as a part progresses through the Airbus inventory system. The parts-management system is designed to integrate RFID data into the Web-based SAP supply chain event management solution used by Airbus.