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RFID- Beyond the Buzz

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					RFID- Beyond the Buzz
Explaining some of the key issues relating to Radio Frequency Identification



Prepared by SkyWire (Australia) Pty Limited
September 2004
RFID – Beyond the Buzz



Table of Contents


           What is RFID? .................................................................................3

           Why isn’t RFID more widely implemented? ................................4

           What the Pilot Programs have told us .........................................8

           Beyond Pilots to Full Scale Deployment .....................................9

           Conclusion ..................................................................................11




Prepared by SkyWire (Australia) Pty Limited                                                              2
RFID – Beyond the Buzz



What is RFID?


                 RFID – Radio Frequency Identification, within the terms of this
                 discussion paper, refers to the technology used to mark, identify
                 and track individual objects as they move from the manufacturing
                 floor through the supply chain and into the hands of the buyer or
                 consumer. As the objects move through the supply chain, wireless
                 RFID readers can communicate with an RFID tag on the object,
                 collect information about the object (eg a unique number) and
                 match that number in a database to access a complete record
                 about the object.

                 Major retailers and end users are beginning to adopt this
                 technology, with many requiring their top 100 suppliers to provide
                 RFID tagged materials by anywhere from the end of 2004 to the
                 middle of 2005.

                 At present, RFID tagging is emerging in the retail sector and is being
                 focused on the pallet and case level (not the individual item level).
                 This means tags are applied to pallets and the individual cases
                 within those pallets.

                 At a simple level, an RFID tag can be thought of as an extremely
                 long bar code that can be read without a line of sight requirement,
                 due to the fact it is being read using radio waves instead of the
                 optical waves (light) used to read bar codes.

                 The longer code allows a great degree of unique identification. For
                 example, the UPC (Uniform Product Code) seen in a typical bar
                 code today contains just enough information to identify the class of
                 a product eg size, brand, type – “a 125ml carton of brand X milk”.
                 The RFID equivalent, the EPC (Electronic Product Code) is able to
                 define the class as well as a unique identifier eg “a 125ml carton of
                 brand X milk serial number 54323454”. RFID, therefore, enables
                 every item in the supply chain to be individually tracked throughout
                 the supply chain.




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RFID – Beyond the Buzz



Why isn’t RFID more widely implemented?


                 Problems and Solutions
                 RFID is a hot topic, particularly with major retailers such as Wal-mart
                 and Target adopting pilot initiatives. Analysts anticipate that RFID is
                 going to be a significant IT investment over the next five years and it
                 has already been demonstrated to improve supply chain visibility,
                 lower operating expenses and lift sales – so, why hasn’t it been more
                 widely adopted already?

                 Some of the main factors inhibiting the growth of RFID to date have
                 been:

                 Standards

                 Problem - The lack of a definitive, globally accepted standard for
                 the RFID data format, communications technology, data
                 interchange and other interoperability elements has made it
                 difficult for a seamless integration between key players in the supply
                 chain – manufacturers, distributors and retailers.

                 Solution – EPC (Electronic Product Code) is the emerging standard
                 for RFID applications in the retail supply chain. It represents an
                 industry consensus on the best technological approach to
                 successful implementation of RFID. The overall EPC concept is
                 designed to work in a range of retail supply chain applications –
                 from “backroom” applications such as pallet and carton tracking to
                 “selling floor” applications such as item level tagging.

                 At its most basic level, EPC is a coding scheme for RFID data that will
                 identify an individual item’s manufacturer, product category and
                 unique serial number. Beyond that, EPC is a complete network of
                 integrated technologies, software and systems combined to take
                 full advantage of RFID technology.

                 EPC emerged from the Auto-ID Centre, a partnership between
                 almost 100 companies and five of the world’s leading research
                 initiatives including MIT (Massachusetts Institute of Technology).




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RFID – Beyond the Buzz


                 EPC is a foundation on which real-world solutions can be built.
                 Already several major retailers intend to pilot the technology as we
                 move closer to achieving the ROI promised by EPC implementation.

                 Functionality

                 Problem – There are many different kinds of RFID technologies and
                 tags, each of which has significantly different functional
                 characteristics. Some tags have batteries, some don’t. Some tags
                 have short-read ranges, others long. Popular tags operate on at
                 least six different frequencies, often with competing protocols at
                 each frequency. This offers too many choices/complexities for
                 buyers.

                 Solution – The development of one universally supported standard
                 will overcome many of these issues, particularly as the EPC has
                 been developed by retail users for retail users.

                 Importantly, end users recognised that in order for EPC to be
                 successful it needed to be developed and managed on an
                 ongoing basis by an entity with strong credentials in developing and
                 implementing real-world retail automatic identification standards.
                 For this reason, responsibility for the ongoing management of EPC
                 has been transferred to the Auto-ID U.S., LLC a wholly owned
                 subsidiary of the UCC (Uniform Code Council) and EAN
                 International. UCC and EAN are well known for their track record of
                 management UPC (Universal Product Code) – the predominant
                 retail bar coding standard used today.

                 Cost

                 Problem – A side effect of the lack of a definitive standard is that no
                 single RFID technology benefits from economies of scale. Often
                 buyers cannot cost justify implementation at current tag prices.
                 Without confidence that usage for that particular tag type will
                 increase, thereby bringing prices down, users have hesitated to
                 undertake large scale operations.

                 Solution – Standardising on EPC means that as the standard
                 becomes more widely accepted, it is likely that literally tens of
                 billions of tags will be needed for the pallets and cases that move
                 throughout the global supply chain. Given this volume there is a




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RFID – Beyond the Buzz


                 strong incentive to keep tag costs low and to seek continuing
                 reductions in price. In 2004, passive UHF tags utilised by the EPC
                 initiative typically cost about 43 cents ($AUD) when purchased in
                 quantities of millions. It is possible that this cost can be reduced to
                 as low as 7 cents ($AUD) over the next few years if tag requirements
                 rise to the billions, as is predicted.

                 Performance

                 Problem – Retail supply chains have demanding requirements of
                 RFID, for example, reliable reads in varied environments such as
                 outdoor fast paced loading docks. A question mark over the
                 reliability of low cost tags has been an inhibitor.

                 Solution – In the past, RFID standardisation efforts have been driven
                 primarily by technology vendors. However, with the development of
                 EPC, the standard was driven by retail supply chain users (globally
                 recognised names such as Wal-mart, Target Corporation, Home
                 Depot, Unilever and Tesco were partners in the Auto-ID Centre – the
                 body responsible for the development of EPC). Users identified
                 early in the EPC process that tags needed to be low cost and high
                 performance and vendors responded with innovative technologies
                 that significantly increased performance and streamlined
                 complexities.

                 Similarly, new tag and reader protocol standards were developed,
                 not only to increase performance, but also to provide a clear focus
                 for the industry’s product and market development.

                 Systems and Software

                 Problem – Without end-to-end integration of RFID in the IT systems of
                 the supply chain, the hoped-for efficiency benefits cannot be
                 achieved. In the past, the emphasis was almost exclusively on tags
                 and readers, with almost no emphasis on the software and systems
                 needed to managed and integrate the RFID data once captured.




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RFID – Beyond the Buzz




                 Solution – Early in the development of EPC, end users identified the
                 challenge of integration of RFID data into their IT systems. As a
                 result, EPC was developed not just as a tag technology, but rather
                 as a system, which includes software elements to make EPC data
                 more manageable. The system includes components developed
                 by the Auto-ID Centre, including ONS (Object Name Service) for tag
                 identification and Savant, the “nervous system” of the EPC network,
                 for intelligent data filtering management.




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RFID – Beyond the Buzz



What the Pilot Programs have told us


                 High-level ROI opportunities have emerged as the main benefits of
                 RFID pilot programs.

                 Because RFID tags can be read without line of sight, they can be
                 read without human intervention via a network of fixed readers
                 installed at key choke points such as dock doors, conveyors, fork lifts
                 etc, thereby lowering the cost to acquire the data.

                 The mains sources of ROI for RFID are:

                     •   Near real-time nature and increased granularity of data
                         greatly increased information velocity

                     •   Data acquisition costs decline due to a reduced need for
                         human data gathering

                     •   Quality and timeliness of information translate into supply
                         chain efficiencies that reduce cost.

                 The pilot programs are also demonstrating that the technology
                 works. While difficulties have been encountered, the basics of the
                 technology are proving sound. Pallet tags can be read reliably
                 when passing through a dock door portal; case tags can be read
                 reliably – as long as they are singulated on a material handling
                 system first. Reading many cases simultaneously whilst on a pallet
                 remains technically challenging and this is the area where most
                 improvement is possible.




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RFID – Beyond the Buzz



Beyond Pilots to Full Scale Deployment


                 So, what are the challenges that must be addressed as we change
                 our focus and begin to look beyond pilots to full enterprise
                 deployments?

                     •   Integration with other data sources and devices such as bar
                         code, wireless networks, and portable data terminals is
                         critical. There will be no RFID islands in the warehouse of
                         tomorrow. RFID data and devices must interact seamlessly
                         with data gathered through other means, including bar
                         code, wireless data networks, and portable data terminals.
                         RFID need to work with and be a part of the overall
                         environment.



                     •   Solution suppliers with a proven track record will be
                         preferred. One thing that is clear is that when RFID is
                         deployed at scale, that scale will be quite large in scope.
                         Imagine the need to deploy a national or international
                         network of hundreds – or thousands - of RFID readers.
                         Clearly, companies will only be comfortable with providers
                         who have significant experience installing and deploying
                         infrastructure at scale, as opposed to smaller single
                         technology providers.

                     •   Manageable and scaleable readers and software
                         infrastructure is key. Once the reading infrastructure is
                         installed, the challenge becomes keeping it running
                         smoothly and efficiently. How do you know whether an RFID
                         reader is working? Is it functioning at full capacity or is it
                         impaired in some fashion? What happens when an RFID
                         reader fails? How often will this happen? All of these
                         questions, and their answers, argue that preferred solutions
                         will be those with industrial levels of ruggedness, and inbuilt
                         management capabilities that lower the labour cost of
                         keeping the network running.




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RFID – Beyond the Buzz




                     •   Expansion of existing solutions to include EPC will be
                         preferred. IT and operational managers already have a
                         plethora of software, hardware, and technology to
                         manage. Most would argue that they already have far too
                         much complexity on their plates. If RFID is another new
                         "thing" to be managed, it can be viewed as a burden. To
                         the extent that RFID can be implemented as an extension of
                         existing systems – using familiar tools and interfaces – this can
                         go a long way to reducing the operational cost.




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RFID – Beyond the Buzz



Conclusion


                 RFID in general and EPC in particular are going to become a
                 central part of the supply chain technology infrastructure – there is
                 little disagreement.

                 “Widespread RFID adoption in inevitable and will have a
                 transformational impact on supply chain execution”

                 Business Integration Journal, January 2004.

                 RFID is now evolving from pilot programs to full scale deployments
                 and companies need to be asking themselves now how they can
                 best prepare themselves to ride this next significant technology
                 wave.

                 For more information on how your organisation can capitalise on
                 the significant benefits offered by RFID technologies, contact
                 SkyWire Australia 02 89236500 or email info@skywire.com.au.




                 Disclaimer: SkyWire does not give any warranty or make any representation as to the
                 accuracy, reliability, or completeness of the information contained in this document and as
                 to changes in circumstances after the date of publication that may impact on the accuracy
                 of the information.




Prepared by SkyWire (Australia) Pty Limited                                                               11

				
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