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PROS AND CONS OF RFID

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RFID potentially promises to revolutionise the entire supply chain, by improving its efficiencies and overall business intelligence and thereby reducing cost, according to Mark Dingley, Identification Systems (IDS) manager for coding, labelling and automatic data-capture specialist Matthews Intelligent Identification.

“However, just as is currently the case with bar coding for the grocery supply chain, it is a common perception with RFID that such a system only benefits the retailers,” Dingley told FOOD Magazine.

“If you only apply a bar code and/or RFID tag to a product to service a customer, then that customer - in this instance, the retailer - indeed is the only one to benefit. Thus it follows that those burdened with a system’s implementation costs don’t receive much of the value, so processors and manufacturers need to find ways to benefit from RFID technology other than forced compliance.

“For example, if the processor utilises these technologies for internal, as well as external, traceability requirements, then both the supplier and customer can benefit enormously from improved tracking and stock-management processes. It’s here we see how systems, such as RFID, come into their own in improving the overall business intelligence.”

insignia product manager - variable information printing Andy Hecke says ways in which data captured by RFID can be used to reduce costs and introduce efficiencies could be recognised in speedier data capture; better timing of production lines; better handling of raw materials being fed into the manufacturing process; better control of first-in-first-out (FIFO) and last-in-last-out (LILO) of goods particularly in large multi-bay storage facilities. However, it all depends on the manufacturers’ ability to be forward thinking and to explore.

“Some of the benefits are very similar to those gained from the implementation of barcoding such as better stock control, process flow control, or even simply knowing where items are around large sites,” Hecke said.

“RFID, however, can capture data faster and more easily than barcodes; it is not dependent on the position of its label; contents do not have to be in line of sight to be scanned.”

The manufacturer gains the benefits mainly through the logistics channel, according to Data Capture Innovative Group managing director Leanne Kemp.

“RFID can be used for tracking goods through the manufacturing process, within the warehouse and the dispatch of goods,” she said.

“RFID technology can also be used for tracking key data through the transportation process e.g. temperature tracking of the consignment using systems like Thermatrack.”

Essentials

Before investing in RFID solutions, says Hecke, manufacturers need to understand what is it they are trying to achieve.

“If you don’t know about the technology and what it can or can’t do the best thing is to learn about it or engage somebody who does,” Hecke said.

There’s plenty to be aware of, says Kemp, and most of it relates to proper planning of the implementation to ensure that the benefits can be realized and the right RFID technology is used.

“A business case needs to be built and then used as an ultimate goal,” she said.

“Many suppliers of RFID products are happy to sell the components based on a limited knowledge of the requirement, but it can fall over if the project hasn’t been properly scoped, so that all the components work together.”

Perhaps one of the major points food and beverage processors should be aware of before investing in RFID solutions, says Dingley, is that EPC Global standards for the grocery supply-chain are in the final development phase. Those standards will be released by the end of the year.

“RFID is a huge field, with so many different sectors, and each with its own niche and frequencies,” Dingley said.

“While it is too early to say which frequency will get the official global nod, it is looking more like it will be UHF for logistics units through the grocery supply-chain, but UHF has its own limitations, so this is where smart labels will play an important role.

“Smart labels are a ‘hybrid’; they will allow you to print information, say on a pallet, with Serial Shipping Container Codes (SSCC), then write to the embedded RFID chip, so those entities in the supply chain still requiring linear bar codes can scan the SSCC, but those with more advanced capabilities of reading smart labels can read the RFID chip. I think we will see a combination as RFID progresses.”

US chain store Wal-Mart, according to Dingley, will be regarded as one of the main global retail leaders in grocery supply-chain implementation requirements for both carton and pallet courtesy of its ambitious decree that its top 100 suppliers will be RFID compliant by January 2005.

RFID standards will be developed and then fine-tuned once much of the theory goes into practice. Therefore, the outcomes achieved by Wal-Mart--and other global retail leaders--in the next 12 to 18 months will be of significance in how and when EPC/RFID solutions are rolled out worldwide.

“During the next 18 months or so, we’ll see an evolution of RFID in the supply chain, with, I believe - based on the success of overseas retailers - rapid adoption of smart labels following in the next three to five years for logistics units through the supply chain within Australasia,” Dingley said.

Limitations

The biggest limitation in RFID technology, says Hecke, is cost - especially for small dollar value item manufacturers, and particularly in the near term.

“Hardware and consumable costs currently can be very prohibitive for a lot of manufacturers particularly due to leaner margins. This is not to say that in the short term that these firms are not able to take advantage of existing solutions. It comes back to knowing what you want to do and how RFID will be a benefit,” Hecke said.

“When the cost of RFID is reduced it will be a more inviting environment for most companies to take advantage of this data capture technology.”

Many factors affect the roll out of RFID, says Kemp, but the biggest limitations are read range and interference.

“Read range of the tags in the working environment is often well below the actual specifications of the tags and readers, which are usually generated from tests conducted in ideal conditions. This reduction in read range is due to many environmental factors in the workplace that affect the signal.

“Interference in the reading of tags comes from metal objects either obstructing or contact the tag itself. It is possible to use specialised tags for attaching to metal objects however it is always best to evaluate the work environment prior to finalising tag type.”

The main limitation that organisations will encounter, says Kemp, is the project budget.

“The best way to overcome many of these issues is to go through a ‘proof of concept’ phase where the environment can be simulated to ensure the components achieve the results required. It means a relatively small cost initially for the organisation prior to committing to the project fully,” Kemp said.

Key messages

The key message from Hecke is to learn how RFID works: “It is not that different a concept to barcoding,” he said.

“Be creative about how information can be used to your advantage. Once you understand this you can set about implementing a system that delivers that advantage.”

Establish exactly what you want to achieve from the use of RFID technology, says Kemp, and do a thorough analysis of the requirements to build a business case and project budget.

“Use independent advice to source and implement; much of what comes from the suppliers of components will be geared towards getting an order for their equipment and not achieving your goals,” Kemp said.

Bear several important points in mind, says Dingley: “Firstly, RFID is not a panacea, nor a salvation for the failings of bar codes, nor without its own problems - including tag verification and yields, tag placement, tag application, tag data confirmation and no-read recovery.

“Several potential limitations will affect a mass roll-out of the technology to food and beverage manufacturers. These will need to be overcome in the next few years via technology improvements being introduced in tag manufacture, as well as other hardware and software developments. For instance, the food and beverage industries must consider issues such as tag mortality through the cold chain.

“Secondly, also keep in the back of your head that a global frequency standard is yet to be agreed upon - although this may get a push along from Wal-Mart’s ambitious January pallet compliance-deadline for suppliers.

“Thirdly, and linked to point two, talk with your entire supply chain. By approaching the technology from the same angle, and with the same desired outcomes, each member can gain greater efficiencies and derive more benefits. Implementation hurdles may, in some instances, be significant, and - as with existing bar code technology - manufacturers need to develop internal infrastructure to obtain benefits from any technology enhancements that are introduced to improve the overall supply chain. Basically, this means that those burdened with the implementation costs need to find ways beyond just forced compliance to benefit from - any - technology. Talk with an automatic data-capture specialist - they’ll have a host of suggestions.

“Fourthly, if you need to invest in a printer now, consider one to which an RFID module can be fitted; so in the future all you need to do is simply attach an RFID module in the field, rather than buy a whole new printer.

More information on the pros and cons of RFID is available from GS1 Australia .

 

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