RECENT announcements that European retailers Ahold, Carrefour, Metro Group and Tesco are committed to EPCglobal UHF Generation 2 (Gen 2) standards show retailers are willing to work together to decrease supply chain costs.
The adoption of standards will encourage competition, as it will allow adopters of RFID (radio frequency identification) to pick and mix the best products and services from providers, thereby reducing technology prices. It means manufacturers supplying to different retailers will not have to cover the cost of accommodating various systems.
Fiona Wilson, e-technology and standards manager at GS1 Australia (formerly EAN Australia ) describes the European agreement as a major development and a strong statement with significance for Australia. “European retailers have quite clearly said EPC network standards are one area they won’t compete on because it would incur costs on everyone,” she told Manufacturers’ Monthly.
“I envisage this unified approach will be shared by other retailers around the globe,” Wilson said.
Jonathan Loretto, supply chain and RFID general manager for KAZ , says uniformity is critical for the sake of accuracy.
“The standards drive the frequencies, the power and the tag type. Most European retailers will want to go with an open global standard which is what EPCglobal is delivering.
“Now they’ve agreed to use the EPC standard, which currently uses UHF, a general series of frequencies (these change from region to region) from 868MHz to the 920Mhz. Basically supply chain RFID only works if everybody agrees to use the same technology, same standards and the same bands,” Loretto said.
More power needed
An increase in the allocation from one watt to four watts will also be crucial to the accuracy of RFID. Wilson says a decision, following EAN’s negotiations with the ACA (Australian Communications Authority) to increase Australia’s allocation, is fast approaching.
Loretto and Wilson both agree without four watts 100% reliability will be very difficult. One watt will provide only a one to two metre zone for a RFID reader. Meaning there will be large gaps in the reader’s pick-up zone of a typical dock door, unless multiple antennae are provided for the area. Loretto says this could triple costs.
Loretto is confident the Australian Government will allow the increase in power. He says once it is determined if it can be allocated without impacting on the spectrum’s other users, such as Vodafone, allocation will enable Australian businesses to reap the rewards of RFID technology across the supply chain, without the need for extra antennae, readers and costs. “My feeling is the Australian Government will permit the use of four watts at some point during this year,” he says.
The next issue for GS1 will be data synchronisation, allowing information to be shared on a common base catalogue and described to other parties on a supply chain.
Loretto stresses these are initial steps on a long journey and those currently running pilot programs will have a head start on competitors when the power is eventually increased.
“Companies testing this at the moment, such as Woolworths, Coles Myer, Amcor and Visy, now understand what the technology can do – whether we’re talking about one watt or four watts.
“They also understand more importantly the true impact to their businesses of new process and information, and can start putting tactical plans in place.”
According to Loretto this is critical, “because in two to three years time there will be a lot of work around process alignment and process articulation - the ability to provide contextualisation about the information you are moving backwards and forwards in your supply chain.”
Loretto describes the pilot programs as a low-risk, low-cost way of gauging how a new way of thinking will impact on business. For example, he says, “RFID users will be asked to consider how minimal error checking changes the way the store operations or logistics network is structured.
“Also, if business information is both 100% accurate and accessible in a timely fashion from customers and suppliers, this will change business planning and execution. And that will impact businesses by reducing inventory, costs and by increasing operational efficiency.”
Loretto describes these programs as a low-risk opportunity for Australian manufacturers to test the waters of RFID. “Low cost pilots mean they don’t have to go out and spend $1-2 million. They get a good understanding of how RFID will fit into their business. Whether it is for them, a short term proposition, a medium-term proposition or a long-term proposition. Because each business, depending on nature of its products, environment, processes and its position on the supply chain, might fall into any one of those areas,” Loretto said.
The message from both Loretto and Wilson is clear. RFID is here to stay, and now is the time to find out the best way to exploit the technology before your competitor does.