RFID: The Next Generation
"Gen 2" RFID standards have been ratified. But there are still many standards-related questions to be answered and issues to be settled.
Industry pundits like to say that radio frequency identification (RFID) is still in its infancy. But the fast-growing technology is already set to enter its second generation: In December, the long-anticipated "Generation 2" technical standards for RFID were ratified. The new specifications were developed through a collaborative process involving more than 60 companies that subscribe to EPCglobal Inc., a not-for-profit standards organization.
With the UHF (ultra-high frequency) "Gen 2" standards in place, vendors can now develop the standardized equipment needed to satisfy pent-up demand for products that are compliant with electronic product code (EPC) requirements, says Jack Grasso, director of corporate communications for EPCglobal U.S. in Lawrenceville, N.J. Electronic product codes, trademarked by EPCglobal, are unique identifiers that provide detailed information about the contents of a tagged item.
"It's the first royalty-free, global standard that will allow companies to harness the power of RFID to provide greater product visibility in their supply chains worldwide," says Grasso. "The ratification of UHF Generation 2 as a standard is an important step in the drive toward commercialization and mass adoption of EPC technology."
Despite that upbeat forecast, it's uncertain how well the new standards will fulfill their promise of promoting high-volume production of low-cost RFID tags. For one thing, not everyone is on board: The World Trade Organization (WTO), for one, doesn't recognize EPCglobal as the official RFID standards body. The standards themselves, moreover, aren't set in stone and are likely to remain in a dynamic state for years to come.
Finally, a lawsuit between two key equipment makers over patent infringements is casting another shadow over future RFID developments.
In spite of those challenges, groups like EPCglobal are making progress toward their goal of ensuring global RFID interoperability, international vendor support, and multiple read/write capabilities. Once those elements are in place, companies should see a quicker return on their RFID investments, says RFID Practice Director Michael Liard of research firm Venture Development Corp. in Natick, Mass.
Bumps in the Road
EPCglobal says the new standards offer several improvements over Gen 1's performance. For example, Gen 2 allows for frequencies and power levels that comply with regional regulations while maintaining global readability. (See "An RFID Glossary" in the online version of this article at www.logisticsmgmt.com.) Security has also been improved, thanks to the new ability to "lock," or require a password to change, the ID fields on a tag. Another advantage of Gen 2 is that it allows users to automatically erase data from tags as they pass a reader.
The standards should also make RFID more affordable. Adoption will encourage manufacturers to mass-produce standardized products, which should bring prices down, says Grasso. Some analysts, he points out, believe the Gen 2 standards could reduce chip prices by as much as 80 percent.
Some observers expect that Gen 2 will also reduce overall system costs. "If we can agree on the data standards, it makes the enterprise applications cheaper to run," says Ann Grackin, CEO of Cambridge, Mass.-based ChainLink Research. "And if companies are complying with those standards, it also makes all the integration inside the enterprise cheaper to run."
By some estimates, cheaper, more reliable RFID solutions will boost the overall market to more than $4 billion by 2008. But before that can happen, a few bumps in the road to adoption must be smoothed out.
One concern is that demand for RFID technologies is outpacing the rate of standards development. "Industry is eager to start implementing the technology, and while tremendous progress has been made, the standards development process takes time," Grasso says. "[We're] committed to doing it correctly the first time, rather than rushing the process."
Getting international consensus on a common standard has also proved to be a major obstacle to wider adoption, says Gene Alvarez, vice president of technology services for Meta Group, the Stamford, Conn.-based research firm. "While everyone would like a fully acceptable international standard for RFID tags, EPCglobal has to get certain countries on board before that can happen," he observes.
Some of the holdup can be attributed to China's reluctance to recognize EPCglobal's standards. "China must abide by the WTO's international trade regulations, but the WTO does not recognize EPCglobal as an international standards body," says Liard. "Instead, the WTO observes ISO standards, which means China may support the current ISO 18000-6 standard for item management rather than EPCglobal."
Given that Wal-Mart—one of the prime movers behind RFID adoption—imports some 70 percent of its merchandise from China, that possibility has disconcerted some of the retailer's customers and supply chain partners, Liard says. Should China take that step, the implications could be enormous. "Think about the sheer volume of goods that come to the U.S. from China for Wal-Mart alone," Alvarez says. "If China opts to use a non-EPCglobal standard, who wins?"
Another development that threatens to undermine the universal appeal of the Gen 2 standards is a legal tussle between Intermec and Symbol Technologies. In an exchange of suits, Intermec is contending that Symbol has infringed on some of its passive RFID patents, while Symbol asserts similar claims against Intermec regarding patents for its wireless technology.
That situation could impact RFID users because Gen 2 standards may be "royalty free," but they don't cover all of the technologies that typically are required in an RFID system. "EPCglobal announced ratification of the Gen 2 standard as a 'royalty free' deliverable, but this status was achieved by stripping out components where supplier Intermec claimed intellectual property rights," explains Chantal Polsonetti, a vice president with ARC Research in Dedham, Mass.
According to Polsonetti, Intermec has already "donated" five of its patents to the EPCglobal standardization process, including one that covers the tag-numbering scheme. But because the Gen 2 standards furnish only a base "platform" for RFID tags, a supplier would either have to add its own technology to that base—raising concerns that the changes could decrease interoperability—or risk patent infringement, she notes. Polsonetti advises logistics managers to protect themselves until the patent issue has been resolved by requiring RFID suppliers to indemnify them in all agreements.
Although logistics managers may be able to sidestep the issue through indemnification agreements with their suppliers, Steve Geary, partner with consultants Supply Chain Visions in Bellevue, Wash., worries that the battle over what's "royalty free" might cause shippers to hesitate about RFID deployment. "The public exchange of lawsuits casts a cloud over the adoption of the technology, and that doesn't help the users or the vendors," he says. time to get on board
Although there are still questions surrounding the Gen 2 standards, they offer logistics managers facing a Wal-Mart or Department of Defense RFID mandate some sense of security and a motive for moving on to the next stages of implementation. What shippers are likely to get is a sense of comfort in knowing that the technology will work, and that it's backed by an industry-recognized organization, hopefully on an international level.
Generation 2, moreover, isn't the end of the story. Standards development is continuing for various elements of the EPCglobal Network, a secure system that connects servers containing information about items identified by electronic product codes. Software specifications are set for ratification within the next few months, Grasso says.
Those developments can't come soon enough for many in industry. The Wal-Mart mandate and the increasing "buzz" about RFID has encouraged a competitive atmosphere among equipment vendors that are eager to get their products out first, says Tim Harrington, vice president of product strategy at Santa Clara, Calif.-based WhereNet, a provider of wireless asset- tracking and management solutions. "Those involved are looking out for the best interest of the market as a whole, but they also want to be in the best position when a standard is ratified … to bring their products to market very quickly," he says.
Whether or not the Gen 2 standards spur high-volume production of lower-cost tags and equipment, logistics managers shouldn't wait to get on board the RFID movement, Geary advises. "As with any rapidly evolving space, waiting for the next release may condemn you to waiting forever, because there is always something [better] on the horizon."
The more important consideration, Geary adds, is for users to learn how to use new RFID technology to achieve a return on their investments. He urges shippers to get moving now: "Early adopters have already done it, late adopters are getting going, and laggards are going to wake up one morning at a huge disadvantage."
An RFID GlossaryBridget McCreaAuto-ID Center: An academic project at the Massachusetts Institute of Technology (MIT) that defined initial RFID standards. The Auto-ID Center in 2003 transferred its intellectual property to EPCglobal, which is charged with further developing and commercializing RFID standards. Air Interface Protocol: The authorization for use ("protocol") of RFID transmission frequencies is governed by local law. A tag ideally should be readable worldwide, but local laws mandate regional variations in reader configurations.Edgeware: Hardware that runs applications or middleware close to the "edge" of the network, managing and filtering data from readers and other devices.EPCglobal: A not-for-profit industry group that developed the electronic product code (EPC), which provides a unique identifier for items in the supply chain, as the basis for global RFID standards. EPCglobal released EPC Generation 1 in 2003 and Generation 2, the next iteration of the standards, in December 2004.Middleware: Software that resides on a server, regulating and integrating communication between readers and enterprise applications. RFID reader: A device that sends signals to and receives signals from RFID tags. A reader is connected to an antenna and a network, which links captured data back to an enterprise system.RFID tag: Consists of a chip that stores data and is attached to an antenna. There are two types of tags: Passive tags have no on-board power supply; the tag's antenna captures energy from RF signals to turn on the chip. Active tags have a battery that acts as an on-board power supply, enabling the tags to continually transmit signals.Tag Class: Two tag types are defined in Generation 1 standards. Class 0 tags are programmed with identifying numbers at the point of manufacture; Class 1 tags can be programmed in the field.Source: Steve Geary, Supply Chain Visions
Bridget McCrea is a freelance writer who frequently covers supply chain technologies and distribution strategies.
13-Jan-2006