Market Trends: Material Control, RFID and the Mainstream Supply Chain

Excitement abounds about the "new thing" in radio frequency identification (RFID) -- long-range passive RFID tags that might actually achieve the type of pricing and performance needed to greatly impact the supply chain. Numerous articles have been written about a not too distant future where RFID tags costing five cents or less will be placed on everything from machine parts to boxes of cereal, achieving read ranges from 10 to 30 feet, thus automating the supply chain process.

The uncomfortable reality that many early adopters have learned, though, is that this Holy Grail of item-level traceability is still some ways away. This realization has led many to abandon their RFID testing and implementation efforts altogether. Better to wait until these systems are "good enough," they reason, before wading into the still murky waters.

Yet, there are many firms quietly finding value in implementing RFID systems today, especially when they apply them to solve more down to earth supply chain problems. For them, "good enough" need only be defined as "better than what we're doing right now." The key factor, as with any new technology, is to understand its capabilities and evaluate how it can be useful to your operations today.

RFID is progressing

In recent years, expensive battery-driven "active" tags (100-foot read range, at $10 to $150) and short-range passive (proximity systems, one-two foot range, $1) tags have been successful in niche market applications. Both of these technologies have demonstrated the value of providing enhanced visibility of items such as ocean containers, beer kegs, library books and more. Applications to date are tolerant of the active tag's expense, and the limited performance of short range passive tags. Even with these limitations, successful ROIs have been found. The new frontier associated with long-range passive RFID gives users the best of both worlds -- long read ranges (10-30 feet) and low prices. Hence the excitement.

Opportunities are endless for the supply chain. Pallets stacked with RFID labeled items can be easily read and re-read as they pass from location to location. Multiple read points feed item and location data to various WMS and ERP systems, providing an up-to-the-second picture of a product's location. Goods can be received in seconds and exceptions noted before the truck leaves the dock door. Routing instructions, even for mixed goods loads, can be seamlessly implemented and routinely checked to verify accuracy.

Unfortunately, the excitement starts to dim when users ask about details. How many tags can be read at once? At what distance? Is asset orientation important? What about standards? Despite much of the hype about five-cent tags, these prices are generally unavailable unless the order quantity is in the billions. More realistic quantities generally price out from 20 cents to $1.00, largely depending upon the durability requirements for tag packaging.

Despite these obstacles, RFID continues to gain converts each year. This is, in part, because many firms have set more realistic expectations on what the technology can do for them. Also because the technology continues to evolve. Advancements in UHF RFID tags in the past year have closed the gap between what supply chain firms require, and what is technologically feasible. End users now have technology that offers an optimal mix of price and performance -- increasingly affordable tag prices and superior performance required to achieve comprehensive visibility of pallets, totes, cases, parcels and individual unit items.

Most large supply chain players see RFID playing an important part in their overall data collection strategies. A key to a successful implementation is to determine the most appropriate places to adopt the technology.

Today's applications

Even if the lofty goal of tagging and identifying every widget that passes through your facility remains unrealistic, it does not mean RFID cannot solve many of your current logistics problems.

Technology is currently available to track product at the pallet and case level. To many manufacturers, this level of detail is clearly satisfactory. Lift trucks can carry pallet loads of product through RFID enabled portals (at receiving/shipping, at internal check points, etc.) that can verify all movements of those items. The cost savings over manual or even bar coded inspections become real.

Returnable container tracking, often thought too complex to implement, now becomes a reality as pallets and totes can be easily identified as they pass in and out of the door. And since the RFID tag identifying these containers can be read time after time, the cost-of-use becomes amazingly low. Crossdocking, work-in-process tracking, pallet building, quality control -- all are good candidates for justifying RFID today.

The value you receive from the system should be what counts the most. The question should not be: How long until tag prices fall? They should be: What improvements can I gain for my money today? And: How can RFID streamline my operations?

An over-fixation on the price of tags or readers has harmful consequences. Value needs to be defined not just by the tag price. It includes the overall system performance costs. The real questions are: Does the performance of the RFID technology satisfy your basic visibility needs? Does it provide the speed, range and reliability needed to track your product better than you can right now? If adopting RFID answers these questions, you can move ahead. Value is clearly the ultimate measure.

Implementation issues

When you investigate using RFID for a supply chain application, make sure you have looked at all the factors needed to pull off a successful implementation. If you are not careful, you may end up buying a system that:

Is expensive to integrate into your enterprise system;

Requires excessive coding and data management;

Is hostile to current business processes -- requiring significant re-engineering;

Interrupts, not streamlines, your physical operations;

Requires you to act as a general contractor for RFID solutions, taking your focus away from your core business needs.

Before you start, make sure you clearly understand what you are trying to accomplish, what problem you are trying to fix and how you will determine if the project is a success. Too many RFID trials fail because users are told to pilot RFID without direction on how it should be implemented.

Once you have identified how and where you can integrate RFID into your operation, you now need to start evaluating the technology. New users to RFID often make the fundamental mistake of hearing performance claims from one vendor and assuming this performance is standard across the industry. This assumption is dangerous. Not all RFID tags are created equal. Different RFID technologies, even tags operating on the same frequency, yield widely varying levels of performance.

Among the factors that dictate performance are:

Tag sensitivity: The ability of a chip to be "energized" and to maximize the signal strength to send its identifier back to the reader. The greater the chip sensitivity, the longer the read range.

Tag size: Larger generally means longer range.

Tag shape: Different tag antenna shapes provide remarkably different levels of performance.

Number of tag antennas attached to the chip: Two dipole antennas attached to a single chip results in tag performance that less sensitive to orientation -- important for random reading environments.

Speed: The rate at which a reader collects tag identifiers. Rapid read rates increase the reliability of tag reads, and are less likely to impose burdens on business processes. RFID tags available today have read rates varying from as low as 20 tags/second to more than 1000 tags/second.

Tight tag stacking: When stacked closely together, tags may interfere with one another. There is a wide variation in tag performance in high-density environments. The best tags available today work effectively when even when situated within one-half inch of one another.

Interference: Well-designed tags and readers perform effectively in "noisy" RF environments.

Packaging: How tags are packaged and attached to assets influences read range and durability.

Material the tags are attached to: Metal- and water-based material are generally hostile to RFID, negatively effecting read range. However, this can be overcome. If even a short buffer can be made between the tag and the asset, the performance (range) improves dramatically. The friendliest material appears to be cardboard, clothing and plastic.

Because of negative effects of harsh environments and material on RF technologies, it is important that your system be designed with "extra margin" that maximizes read range and collection speed. Some material, for example water-based products such as shampoo or beverages, can compromise the tag's performance. This cuts collection ranges as much as 50 percent. RFID systems designed with "extra" read range and speed, result in the ability to achieve adequate performance in this harsh environment.

And don't stop with the tags. The tag readers, antennas and middleware are just as important to the overall system performance as the tags. Unfortunately, many RFID vendors have placed little effort in developing these important pieces of the puzzle. Some vendors do not even offer a tag reader, and most offer little if any middleware to monitor the health of the reader network and provide easily interfaceable and intelligent data (as opposed to just streams of continuous tag IDs) to your host application. As part of your RFID investigation, make sure you ask the following questions:

Can the reader read all the tags in my pallet, tote, etc., regardless of orientation?

What are my antenna options?

Are handheld readers available and what are their capabilities?

How will the reader interface with my existing system?

How do I manage multiple read points? What networking tools are provided?

What is the total cost of ownership -- tags, readers and integration to enterprise systems?

Ask yourself how important it is to have a "standard" tag for your application. If no one outside your organization needs to read the tag, your requirement for a standard tag reduces greatly. In many cases, standards are important, and much progress has been made to achieve consensus for standards in RFID.

Don't be fooled by RFID systems that have been declared "standard" by technical committees, yet fall short of meeting your business requirements. Test systems yourself. Seek feedback from other end users who have tested the technology in similar applications. Look for traction in the marketplace. RFID standards will be self-sorting only once real-world adoption has occurred.

Seven steps to RFID sanity

So, where to start? RFID clarity is best achieved through action. Once you have completed the analysis phase the only way to learn RFID's true value is to start testing the technology in your desired application. Some basic steps:

Understand your visibility requirements: What items do you want to read? Where? How often? From what distance?

Query other end users about recommendations for trials: What to do? How to do it? Recommended technologies? There are many experienced end users willing to share learning experiences.

Move into the action phase in a real world setting. Put tags on things and set up readers at points where you seek enhanced visibility outside of the lab environment.

Evaluate technical performance. Do you get reliable reads? Does it properly update your application?

Assess the economic benefits. Is it better than what you currently do?

Understand the impact of the technologies on business processes, and integration issues within enterprise systems.

Make a decision to move forward with a larger scale implementation. Refine the trial with different processes, technologies, items and read points. Then, cease activities.

A dedicated staff, with the appropriate budgetary authority, is paramount to speedy and successful progression through the steps listed above.

The adoption of RFID into the mainstream of the supply chain is inevitable. A key to the success achieved with RFID is clever implementation -- knowing the capabilities and limitations of the technology, and making the best fit of these capabilities within your operation. Getting early experience with this new technology is critically important. Only end users with first-hand knowledge of this powerful wireless technology will be able to maximize its impact on their supply chains. -- Tom Coyle, vice president, supply chain solutions, Matrics.

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