With all the attention focused on the technology, one area of radio frequency identification that is constantly overlooked is the essential infrastructure to make it all work says Integrated Product Intelligence chief executive Martin Swerdlow
The pending sea of change that RFID promises will require an infrastructure to support it – not only the tags and readers but also sophisticated back office systems designed to run innovative applications.
RFID offers enormous potential for improvement in the way we manage business operations and supply chains. Increased access to information, enhanced automation and improved visibility make RFID an attractive business proposition.
Systems design and engineering will continue to grow in prominence, while compatibility in open systems remains a critical issue yet to be overcome. As primary suppliers, packaging companies will have an important role to play. What will be the infrastructure required to generate truly smart packaging? Conservative estimates put the cost of this additional infrastructure somewhere around 10 times that of the tags and readers.
Building the business case for RFID will be critical in developing the global infrastructure. It is important that everyone looks at the bigger picture for all stakeholders, considering working capital, costs reduction, and the ability to share information.
RFID tagging makes it possible to track products through their life cycle, from manufacturing to the retail point of sale and beyond. It is hoped that, over time, this technology will enable businesses not only to reduce losses resulting from out-of-stock, stolen or lost products but also to automate processes and innovate in new and exciting ways.
Already in 2003 companies are both trialling and beginning to implement RFID systems to improve operations and transform their businesses. Woolworth’s and Argos have both recently conducted large evaluations and rollouts.
Marks & Spencer is putting tags on 3.5M plastics crates and investigating the business case for tags on their clothing lines. Tesco is conducting trials in its Cambridge and Sandhurst stores while, in the US, Gillette has already placed an order with Alien Technology for 500M RFID tags. To date most of these applications are operating in proprietary or closed-loop systems.
A single global platform for trade is due for release in late 2003 by EAN International and the Uniform Code Council. Known as the EPC Network, the standard will provide the foundation for a global infrastructure to develop.
Like bar coding, RFID will emerge as and where the business case allows. In the FMCG sector it is almost certain that the large retailers will drive developments. Retailers are renowned for their collaborative approach to driving the uptake of new technology and stimulating innovation.
Item level tagging will depend on tags being applied to products or packaging at source, which retailers will push through once tag costs are low enough and affordable. Intelligent receiving and despatch bays at fixed points in the supply chain and production lines will be automated and completely revamped retail stores will follow.
While RFID tags as the carrier are undoubtedly important, the key to all of this is data standards. You can put in all sorts of equipment for RFID but, if people can’t speak the same language, it just won’t work.
EAN and UCC have been fundamental in driving standards for 30 years and have been pioneers in the development of RFID standards for open systems. This standards work is critical because it provides compatibility with existing data structures that are globally recognised.
Nor is RFID a replacement for the bar code and probably won’t be for a very long time. The cost of an RFID device is likely always to be more than that of printed bar code symbols. There is, however, a good argument that it is the total transaction cost which matters, and bar codes and RFID should be judged on the basis of where they are able to offer best value. Both bar codes and RFID tags will co-exist symbiotically for some time and will be used within common supply chains.
One of the reasons for the involvement of EAN International and UCC in RFID standards is to ensure data standards developed for this technology are seamlessly compatible with those developed for EAN.UCC bar codes.
Ultimately, RFID is simply another data carrier. How it fits into the overall system will be key for the 1M companies already using the EAN.UCC system. Costs associated with developing RFID infrastructure will depend on the functionality required.
Companies looking to replace existing bar codes with non-line-of-sight technology will find infrastructure costs relative to data to be minimal since the same data can be obtained from an RF tag as from a bar code. That is important for all but critical for small companies who can only afford to make winning investments.
Companies looking to implement applications that use the automation advantages of RFID will face high physical data capture development and implementation costs. For companies starting from scratch the IT infrastructure costs will be exorbitant.
Big names in system design, hardware and software are beginning to add EPC compliant solutions to their product mix. Microsoft, Sun Micro-systems, IBM, Intel and SAP are all working in this area, which could mean your next upgrade might also contain much of the infrastructure necessary to access the RFID enabled EPC Network.
RFID offers a massive opportunity but, amid the frenzy over the future possibilities, no one should forget the infrastructure to make it work.