Everybody is talking about RFID, especially in logistics. Some industry experts see the popularity of the technology reflecting the early days of the barcode or internet.
Steve Stine, Director of Life Sciences/Medical, TNT Asia, has years of experience in online procurement for hospitals and manufacturers. “There’s a buzz around RFID - you only have to utter the acronym and everybody comes running.”
Global update
The USA is leading the way in the uptake of RFID technology, with retailers such as Walmart and Target creating a domino effect. Along with that of Walmart, a mandate from the US Department of Defence has also contributed to the growth in RFID usage. Increased demand is driving down the cost of producing RFID, making it more attractive to logistics companies. Advances in the technology and the completion of global standards add to its appeal.
GS1 Australia’s general manager of standards development Fiona Wilson says the global transport and logistics industries are very active in RFID and Electronic Product Code (EPC) uptake. An international business action group created last year is currently looking at the use of RFID and the EPC network within its supply chains. “A few years ago RFID interest was concentrated with Fast Moving Consumer Goods. But now we also have health and life sciences companies looking at RFID as a means to track counterfeit drugs.”
“There is also a very good business case for RFID in the textile and footwear industries.
Sortation of apparel using RFID tags is far less laborious than scanning individual barcodes. Similarly, in the retail environment, stocktakers can wave a reader to obtain information efficiently.”
EPCglobal, a subsidiary of GS1, has just announced an international working group investigating a new frequency for RFID, which will be used for individual tagging of pharmaceutical products. “At the moment EPCglobal is looking at RFID standards for UHF (ultra high frequency), which is great for longer distance logistics applications and the supply chain,” says Wilson.
Global standards mean RFID is being used on a wider scale. “In the past, there were no RFID standards, which meant there was no interoperability,” Wilson says. “If you purchased a system or a certain type of reader then you could only purchase tags that matched that reader. With the advent of global standards that determine how the reader and tag should talk to each other, you can purchase EPC compliant tags from any manufacturer.”
Steve Stine agrees that the declining cost of RFID is driving the technology’s development. Compared with just a year ago, costs associated with the technology, platform and tags have plummeted. “For the first time it’s commercially viable to use RFID on a bigger scale,” he says. “And multinationals have been leading the way.”
RFID in Australia
Fiona Wilson says there has been great interest in RFID in Australia despite no equivalent to the mandates of the USA, Europe and parts of Asia. “The Australian market has been very interested in this technology. There’s a hive of activity including educational interest. The Walmart study has shown that there are real benefits to RFID,” Wilson says.
“Australia has also had the luxury of hindsight, unlike other regions. Industry has been able to look at the technology and think about it.”
Fiona Wilson states that there were initially two major hurdles to RFID development in Australia: the first being cost and the second being standards. “RFID was previously quite expensive, so it was hard to make its business case,” she says. “With wider adoption of the technology, it’s becoming cheaper. Instead of being a specialised, once-off application, RFID is now a mainstream commodity item.”
Australian RFID pilot
The National Demonstrator Project for RFID/EPC technology, systems and standards is a pilot involving thirteen companies including Metcash, Proctor & Gamble, Sun Microsystems, Visy Industries and Linfox. GS1 and CSIRO are jointly managing the government funded project, which began in August 2005.
By tracking their entire supply chain, consortium members achieved visibility for the movement of their goods. “We wanted to show how we can actually use the RFID facility to see right into the supply chain instantly,” says Fiona Wilson. “GS1 is pleased with the project and results. While there’s a lot of RFID activity in Australia, not a lot of information is being shared.”
“We’ve received positive feedback, as industry is keen to see the outcome. The pilot has also received international interest as it’s one of very few being undertaken in this way.”
The results of the pilot will be released at the GS1 Impetus 2006 conference in July.
Asian perspective
TNT Asia has been applying RFID in the supply chain on behalf of some of its medical technology clients. The company has also just completed an RFID pilot based around the management of its cold chain. Another pilot will start in August.
TNT Asia’s challenge is to move its client’s healthcare products from point of manufacture to point of sale while maintaining temperatures between 2-8°C. TNT uses RFID (battery activated passive chips) to tag medical products at its Singapore regional distribution centre. Tags are placed into the client’s insulated gel packs sent to two primary Asian lanes. This takes three days and is approximately half the price of sending products by air. “This is serious business,” says Stine. “It’s providing great savings. For a medical company, it’s crucial that TNT can maintain products between 2-8°C. There’s a growing desire to regulate and to ensure the quality and integrity of those products wherever possible.”
In recognition of these growing requirements and the regulatory component in Asia, TNT sees the use of RFID in the supply chain as a pioneering opportunity, however Steve Stine concludes with a word of warning. He believes RFID should still be applied carefully. “It’s like any technology - you need to talk about the needs of the business first.”
“TNT looks not only at the technology driving the development, but more at the supply chain requirements of its clients, allowing for the new application of RFID,” Stine says. “We really take this from a business perspective - we don’t look at technology for its own sake.”
Steve Stine will be speaking at the 3rd Annual RFID World Australasia 2006 conference, August 8-10, Sydney Convention and Exhibition Centre, Sydney. Fiona Wilson will talk about the National Demonstrator Project: RFID/EPC project at Impetus 2006 - The GS1 Australia Conference - July 25-26, 2006, Melbourne.