Awaiting trail
October 1st 2005

Writing about RFID with any real authority is a tough ask, given the technology has yet to prove itself commercially. According to some, the only people turning a profit from RFID are those holding seminars on it. But when the world’s major IT companies spend to make something happen, it generally does. Brendan Coyne reports

Depending on who you listen to, mass-market deployment of RFID is either just around the corner or mere speck on the horizon. IBM is already spending millions advertising its ability to deliver RFID logistics tracking and tracing solutions; Unisys says it expects 2006 to be ‘an inflection point (in the USA at least) for RFID services businesses in general’; Microsoft and 3M say reaching the ‘nirvana of automated tracking of goods and assets from "cradle to grave" is likely to take many years’.

Activity in the UK?

Activity in the US is driven by mandates, but the UK market only really has Marks & Spencers to watch and learn from in terms of ‘real’ rollouts. So while automated tracking and tracing of assets and fulfilment of goods seems a genuinely useful business tool, there’s a lot of people talking about it but hardly anyone doing it.

According to Allibert Buckhorn UK Business Development manager, Nick Clements, the company has several RFID applications running in its native France. The best example is RFID tagged containers pooled by the fishing industry which allow auctioneers to sell a vessel’s catch while it is still at sea, enabling the fish to be unloaded directly to the buyer without wasting any time in the dock or at auction. The containers are scanned while at sea, again when being unloaded to the customer, and finally scanned once returned so that the customer isn’t charged for the container(s).

But Clements admits Allibert has no RFID projects running in the UK – despite the fact its customers buy valuable plastic containers and pallets that have a tendency to go missing if any element of the supply chain is slack returning them. However, Allibert, through its partnership with DataScan Systems, can and does offer RFID solutions. "We’re a logistic solutions provider and this is a logistics solution," says Clements. "But we aren’t going to be much help to a customer requiring IT support for his RFID solution. So while we can provide the container and fit the tag in the right place, DataScan handles the IT side." Naturally, the cost of acquiring, designing, fitting and monitoring the system must be outweighed by the potential savings. And there lies the rub.

Cost

In principal, the benefit of all-round supply chain tightening is easy to grasp. In practise it is harder to achieve: Cost is the major barrier. When the press first jumped onto RFID, much was made of the five cent tag being slapped onto every item in the supermarket, spawning a glut of ‘Big Brother knows you like baked beans’ type articles. This created a level of hype which could only result in the kind of hangover that plagued 3G mobile communications for about 5 years.

According to analyst firm Forrester, ‘complex manufacturing techniques, a costly assembly process and a lack of demand means the price of RFID tags won’t drop to 5c in the next eight years’.

Inotec MD David Drinnan says the most basic tags cost a minimum of 30 cents and that cheaper tags, although in experimental stages, won’t be available for many years. While that fact alone explodes the ‘Big Brother/baked beans’ myth, the physical properties of RFID means tags are rendered redundant when attached or placed next to liquids or metals. "So a tin of beans is the worst example," says Drinnan.

The RFID Centre in Bracknell concurs with Drinnan. Set up to demonstrate, educate and promote RFID, its marketing manager, Kevin Kelly, says the technology will "never fully replace bar codes, will not feature much in the home and so will remain largely a business to business application with the most valuable items and vulnerable supply chains being first in line at the shipper/container level." Kelly thinks most business will be enabled in this way by 2010, but that single items worth less than £10 will probably never be tagged. However, he says there are "definitely cost effective applications within the supply chain and that the value and cost to any business is likely to be of the magnitude of deployment and usage of GSM technology".

Barcoding & RFID

In the warehousing/logistics sector, Kelly says it makes "perfect sense" for pallets and shippers to be tagged and monitored through the supply chain - including 3PLs.

"Tagging at this level means better customer service and faster stock reconciliation - and real savings are achieved when mixed item shipping units can be read in one hit. However, we see item level and above barcoding working in tandem with RFID." Kelly says a simple example is in a retail clothing RDC where the bays are tagged and the stock pickers have RFID readers, used as a handheld or palm top.

"The reader receives information from a database to pick or replenish an item, the reader counts a ‘hit’ when the picker visits the right bay. However, the item is not tagged and a bar code pass would be required to ensure the item was actually in the system. If this is done only as a spot check then the whole process is speeded up with less opportunity to go wrong."

In warehousing and logistics, Inotec’s Drinnan agrees with Kelly on both timescale and use in conjunction with barcodes: "The physical limitations render RFID impractical in some applications." He says equipment costs will also inhibit growth in the shorter term. However in the retail sector, Drinnan thinks the inability to read in the vicinity of metals and liquids and the added costs means that, for most items RFID will never replace barcodes - "even if the tags were only one cent each".

AIM (the national trade association for the automatic identification and data capture industry) has said RFID will only replace 10% of barcodes by 2015.

Matter of time

At present, many of the larger companies in the UK are experimenting with RFID projects - the RFID Centre’s website (www.rfidcentre.com) lists hundreds of representatives from major organisations.

But the majority of firms in this sector - and many others - are biding their time, waiting for equipment costs to deflate. That will only happen when RFID equipment manufacturers go into mass production: hence the current stalemate. However, the meantime provides an opportunity to acquire applicable knowledge about the technology for later use.

Education

Inotec has given several uncommercially biased presentations on RFID, the most recent of which were held at Logistics Link (both North and South), and Drinnan says the work by AIM, which is building a National RFID Centre (entirely separate from the RFID Centre at Bracknell), is also helping to provide consistent, balanced education.

In terms of technical training the RFID Centre at Bracknell can also provide bespoke packages, and plans to introduce a series of standard technical training modules to help companies gain their own expertise and rely less on external consultants. In the meantime, Kelly says the centre is happy to demonstrate the technology to any company considering it – or simply aiming to gain a clearer understanding of what it can and can’t do.

Drinnan says Inotec (which is announcing a major RFID logistics project in mid-November) is also happy to sit down and discuss what can and can’t be done with any potential clients. But he says the golden rules when implementing a system are the same as with any new technology: fully specify the system and expected benefits; visit and discuss with others using the technology; ensure the system supplier demonstrates a system in your location and environment; obtain firm quotes for all equipment before completing a financial justification, and where possible use tags approved to the new ISO standards.

Once all that has been achieved, Drinnan says if an RFID trial is not to become an expensive waste of time, the final but fundamental element is to get equipment that actually does what it says it does.

Want to find out more? Useful links: www.aimuk.org www.rfidcentre.com www.forrester.com www.highjumpsoftware.com

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