An honest look from *Greg Gilbert in FOOD Magazine at the untold truths behind the promise of RFID technology
WITH mass speculation and widespread news swirling around the evolution of RFID standards, it is little wonder that the topic has received a sensationalist spin akin to Y2K.
Frenzied companies, eager to adopt or comply, are scrambling for answers: instead, they find themselves mired deeper in confusion amid fast-breaking updates about EPC standards and various companies’ latest compliance requirements.
It’s time to set the record straight and offer executives some candid-talk about the reality of RFID. For all practical purposes, it is a ‘moving target’ – quite literally.
Debunking the myths, misconceptions and mysteries surrounding RFID will help put it in proper perspective and save wasted hours and dollars searching for misguided answers.
Myth #1: There are no set standards for RFID today.
Truth: GTAG? ISO 18006.A? ISO 18006.B? Gen 2 EPC?
The acronym soup has thickened into a murky and mind-boggling layer of complexity, further complicated by some vendors’ claims of ‘owning’ the standards.
The fact is that there are several RFID standards today.
The major reason that the prior standards were never adopted on a broad scale was that the technology companies were the main drivers of these standards. They had a solution and were seeking a problem to address.
EPC standards, however, were developed by end-user companies to ensure that the technology developed addressed a specific business need. Recent scuttlebutt regarding the Global Proposal verses the Freedom Proposal within the EPC Global community and company lawsuits have added to the uncertainty.
EPC Global is helping to define the standards for the next generation technology, but the big players, Wal-Mart, Metro, US Department of Defense (DoD) and select Fortune 500 companies, are aggressively moving forward on the RFID adoption curve, and many have already implemented current generation EPC technology.
Smaller businesses will likely take their cue from the industry leaders as RFID standards continue to evolve, emerge and ultimately become more entrenched.
Myth #2: Replacing bar code-based processes with RFID processes will achieve ROI.
Truth: Feeling the pressure to incorporate RFID into their manufacturing and Logistics operations, some companies will tend to implement technology for technology’s sake.
Buyer beware: Implementing RFID does not instantly guarantee a fast-path to ROI.
In order to impact the bottom line, the decision to implement RFID must be linked to a definitive business goal.
For most companies, it’s cost-prohibitive to convert to RFID on a broad scale. And, in some cases, it does not even make sense.
For example, if your warehouse is reliably scanning bar coded cartons on a conveyor as they are loaded onto a truck, switching this process to RFID doesn’t really buy you anything.
Because the labour savings resulting from replacing an automated bar code scan with RFID simply doesn’t amount to much. However, if every carton is currently scanned manually, changing the process to automate the data capture could reduce labour requirements and increase facility throughput.
Further, if there are areas in which data is lacking, adding RFID can increase visibility and accuracy.
The reality: RFID technology isn’t new. It has been around for the past decade, whereas bar code technology has surpassed three decades. The promise of achieving greater ROI with RFID is not time-sensitive; it is application-dependent.
Myth #3: RFID benefits only retailers, not suppliers.
Truth: While the RFID spotlight has clearly illuminated the major retailers (i.e. Wal-Mart, Tesco, Metro, Target, Albertson’s), several major Fortune 500 suppliers including Procter & Gamble, Gillette and others are blazing the trail toward RFID implementation across the supply chain.
Suppliers might not achieve incremental ROI, but there are benefits to be gained.
As the Wal-Marts and Metros of the world implement new RFID requirements, suppliers, in their efforts to comply, must be prepared to execute the right technology strategy to serve their own business.
Suppliers should view RFID compliance as a means to capture more detailed inventory information, increase visibility throughout the supply chain and reduce the number of claims.
For example, while retailers will use RFID to reduce stock outs and increase sales as cases are received into stores and brought out to the sales floor, suppliers can utilise this shared data, for the first time, to gain new insights, better source products to meet demand patterns, take pre-emptive corrective actions to avoid claims and better satisfy their customers’ needs.
More satisfied customers and increased store in stocks leads to more business.
Myth #4: RFID is the only way to automate manual warehouse receiving processes.
Truth: In certain cases RFID may be appropriate for warehouse automation, but it is not the only solution.
In fact, one of the biggest paybacks of evaluating potential RFID uses in the warehouse is that this investigation actually helps uncover big savings opportunities that don’t require RFID technology.
Savings can be significant for manufacturing companies that are looking to eliminate their labour-intensive, paper-based processes by automating the receiving function.
Tagging of cases can be done with bar code (versus RFID) technology and still yield tangible ROI because the company has eliminated the potential for manual intervention and thus human error. Another example is a manufacturer that bar codes pallets and scans these bar coded pallets onto containers.
If the company discovers that it never sends the advanced shipping notice (ASN) to the receiving warehouse, they’ve identified a gap that could be rectified and therefore lead to improved customer service. This scenario does not require RFID; rather, it involves the addition of a simple step to close the warehouse receiving process loop – an especially important link for capable-to-promise (CTP) manufacturers.
Myth #5: The EPC is an RFID replacement of the current bar codes (GTIN/UPC).
Truth: Electronic Product Code (EPC) used in RFID tags and bar coding are considered complementary data capture technologies.
Even with large-scale adoption of RFID, there will be a continued need for bar coding to co-exist with RFID into the foreseeable future. While current bar coding offers the same number for every case of a given SKU, EPC is a standard way to serialise all inventory.
The unique attributes of RFID enable improved visibility into supply chain movements and history.
With RFID technology, the level of information is deeper, allowing inventory to be tracked and data more freely shared between suppliers and retailers.
While RFID has the potential to offer a closer technical fit and operational benefits in certain applications, it will not serve as a replacement for bar codes. Both types of technology have a place in today’s business environment.
Myth #6: Adoption of RFID won’t require facility, equipment and process changes.
Truth: Incorporation of RFID will necessitate a new look at existing business processes.
As emerging requirements and technological evolutions arise, companies will be forced to revisit their standard practices if they expect to gain new efficiencies from RFID implementation.
They will need to ensure that there is a high level of compatibility in the integration of RFID within the facility – how the physical layout is organised, how labour is deployed and even how the equipment itself is constructed.
Take the example of a fork-lift truck. If it is blocking the RFID signal at the reader level, something must change in order to get the best point of read and trigger dock door verification onto trucks.
The good news is that this level of change can prompt even better practices that otherwise would not have occurred without the company’s consideration of RFID.
Myth #7: Readability challenges are only for companies with metal and liquid products.
Truth: While early use of RFID poses obstacles when used with metal and liquids, the technology is continuing to evolve and undergo more rigorous testing, both in the lab and in the field.
Companies are carrying forward lessons learned and best practices by continuously applying the science of physics to the art of RFID implementation.
There’s no substitute for testing RFID with your own products in your own environment.
You need to make sure that you get a consistent, reliable read rate that meets the needs of your use-case, when RFID tags are applied to your products, packaging and pallets.
Experiment up front to thoroughly test these applications before making a large investment in an RFID solution.
Myth #8: Consistently reading every EPC on a pallet is easy.
Truth: While using EPC tags beats scanning, it is not foolproof.
So many variables can interfere with accurate and reliable read rates.
These might include the sizes of boxes, the number of cases, travel speed, types of tags, tag placement, reader/antenna placement and even the product mix itself (i.e. different substances). Where the actual tags get read is a key consideration.
Avoid the need to physically break apart boxes to reveal the EPC label.
The goal is to eliminate any inconsistencies and increase read rates, not drop-out rates!
Myth #9: All RFID tags are the same.
Truth: All RFID tags are not created equally.
There are different types of tags for different applications, depending on the environment and business processes where RFID will be applied.
Pharmaceutical, food and hospital emergency room RFID applications, for example, require pristine and sanitary conditions that are vastly different than uses for RFID in an automotive factory or steel plant.
Use the following checklist to determine which types of RFID tags are most compatible with your unique business environment:
• Read distance required
• Frequency at which RFID tags operate/clarity of signal
• Price (RFID tags range in cost from 15 Eurocents to 60 Eurocents.) Which type can you afford and still yield an ROI?
• Compatibility with temperature/humidity (plant, storage, shipping facilities)
• Type of product to which RFID tags are applied – wood, liquid, plastic, metal.
• Orientation of building lay-out to maximise tag readability
Other considerations will also affect your selection of appropriate RFID technology, as this list is not all-inclusive.
Myth #10: EPC technology can only be used for consumer goods.
Truth: While early use of the EPC technology by the Auto-ID centre is focused on the consumer goods value chain, the technology was designed to allow for easy expansion into other industries.
The EPC code, as designed today, includes a header section that instructs other systems on how to interpret the remainder of the data on the tag.
There are 256 possible schemas with the current eight bit header.
Currently, only five are in use. This leaves significant room for the addition of different encoding schemas, from NDC codes in pharmacy applications to automotive parts.
Your unique business environment will inherently dictate your RFID requirements.
Do not be fooled by the existing hype about RFID. Remember that RFID does not have to be an ‘all or nothing’ proposition. It can be implemented in phases and applied to specific projects to accurately gauge ROI benefits.
Learn from the early pioneers who are testing the waters and charting the course toward universal RFID standards.
Now is the time to research the possibilities, understand the challenges before you and earmark funds for forthcoming RFID hardware and software investments.
Starting conservatively will enable you to progress at a comfortable pace that is right for your business.
* Greg is director of RFID Solutions and Strategy for Manhattan Associates .