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RFID Takes New Directions, Different Approaches

RFID technology continues to evolve.

RFID chip graphicThis year is definitely the year for radio frequency identification (RFID). Or is 2008 RFID’s year? No matter what year people predict to be the “breakthrough year” for RFID, the number of RFID implementations continues to increase. The major forces driving RFID adoption are still the open-loop mandates from giants like Wal-Mart and the Department of Defense. However, over the last few quarters there seems to have been a shift of RFID’s momentum taking place as internal, closed-loop implementations that provide shorter ROI periods start to catch on.

Within the Walls…Sort Of
As more and more information becomes available about RFID and its capabilities, people start to look within their own business and ask the question, “How can RFID improve my operation?” They begin to identify what processes could take advantage of RFID technology. After selecting the best candidate, a small pilot is conducted to test feasibility and collect data. Looking at the data, analysts can extrapolate a likely ROI. If things look good, the pilot can be rolled into production or expanded to other operations.

Items such as parts racks are becoming a popular item to tag and track, as replacing these often robust items can be quite expensive. Along with better visibility and records of where these racks have been, the tags also facilitate fast and accurate receiving, shipping and billing, as the transit records are recorded automatically, without need for human intervention. Totes and reusable pallets are often tagged and tracked between a company’s discrete facilities to log automatically when each shipment leaves and arrives at respective warehouses. This can prove especially useful when a DC is fed by multiple manufacturing sites to ensure proper lot control.

Other internal applications take advantage of the robustness of RFID tags when compared to a barcode or other form of auto-identification. When needing to identify material boards in a cold-storage automated storage and retrieval system (AS/RS), frost forming on a barcode may prevent it from being read. The proper RFID hardware, even though it could be a potentially water-rich environment, can consistently produce accurate identification of material, without any human intervention.

More and more companies are looking within and finding applications that not only provide value, but provide it in months instead of years. The importance of a speedy payback for businesses and their customers alike is not limited to internal, closed-loop applications, however.

Wal-Mart Changes Focus
One of the first companies to release real-world results from using RFID, Wal-Mart continues to push forward to get its next 300 suppliers RFID-compliant. This will effectively double the number of RFID-enabled suppliers to the retailer and dramatically increase tag volume into its stores and distribution centers. But as more benefits from Wal-Mart’s adoption of RFID are proclaimed, such as 30 percent reduction in out-of-stocks and 60 percent efficiency improvement in restocking product to the shelves, a change in direction has been made at the company’s headquarters to focus more on getting RFID in the store, rather than in the distribution center. Wal-Mart currently has five RFID-enabled DCs (short of the company’s goal of 12 DCs by the end of 2006) and around 1,000 RFID-enabled stores. At the 2007 RFID Journal Live! conference, Wal-Mart CIO Rollin Ford promised to add RFID to 400 more stores by the end of January 2008. Ford points out that focusing their efforts on the stores will provide more value to customers, and suppliers can do it faster than from inside the distribution centers.

In April 2007, EPCGlobal announced what could be the biggest development in the RFID industry since the EPC Passive Gen 2 standard was ratified in 2004: the Electronic Product Code Information Service standard (EPCIS). The EPCIS allows for the seamless, secure exchange of data at every point in the life cycle of goods and services. This common platform for information collection can support both vast, end-to-end solutions as well as business-specific applications. The standard set of interfaces control both the method of information sharing (authentication) and the type of information that can be shared (authorization). The interfaces are software-neutral, and it is possible that the EPCIS will continue to be built upon to further encourage information sharing among the inhabitants of the RFID supply chain world.

The Revolution’s Evolution
To say that the momentum of RFID adoption is shifting is significant, but not revolutionary. There are still many hurdles to clear in the race to cost-effective implementation. AMR Research notes that many companies are too focused on the cost of mandate compliance and implementation and are not trying to evaluate potential ROI.

Another point worth mentioning is the current lack of skilled professionals well-versed in the ways of RFID. As the industry evolves and expands, the demand for skilled RFID integrators increases rapidly. So far, the rate of education has not kept pace. This gap is one of the factors keeping implementation costs high, and, therefore, negatively impacts ROI. CompTIA’s RFID+ certification pro- gram provides a vendor-neutral certification, and the industry needs more programs like this to address this issue.

It now seems apparent what direction RFID is going in. Moving away from “Slap ‘n Ship” and towards internal projects that provide faster and more tangible ROI is a natural progression for RFID adoption. It may not be as groundbreaking as end-to-end supply chain visibility, but the returns on RFID are real and they are happening right now.

Material Handling Equipment Distributors Association

Chris Bratten Meet the Author
Chris Bratten is a sales consultant at ASAP Automation, located in Louisville, Kentucky, and on the Web at www.asapauto.com.

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