The future of RFID
August 1st 2008

As the dust settles on open loop RFID systems, closed loop applications are garnering ever more interest and widespread deployment. Ray Cronin, vice president and general manager of RFID at Intermec looks at the latest developments and growth areas in the market

For over 30 years radio frequency identification (RFID) has been an effective method of tracking assets, products or components through the course of any given process. RFID tags work by emitting a low-powered radio frequency transmission when passed within range of a scanner. The electronic chips inside RFID tags are being produced in ever smaller dimensions - and for rapidly falling costs - making the much-hyped "Internet of Things" a theoretical possibility. Although the traditional barcode will be present and valuable for many years ahead, the benefits offered by RFID means it is fast becoming a real alternative for companies that need to know where their assets are within a production or distribution system.

Automatically tracking individual items without requiring a line-of-sight and from a relatively long range are the clear and measurable benefits that can be implemented across a multitude of industries and processes. The technology has been successfully implemented in industries ranging as diverse as retail, manufacturing, public transport and even in personal banking.

The return of the closed loop In recent years, open loop RFID systems have received a great deal of press attention and financial investment, but as the dust has settled, closed loop applications are garnering ever more interest and widespread deployment.

An early catalyst for Passive UHF RFID was the 'open loop' RFID system, where an RFID tagged item passes from manufacturer to distributor to retailer in an omnipresent, integrated network with a desirable byproduct of information sharing between cooperating companies. Some early notable mandates were generated by big names such as the US Department of Defence and retailer Wal-Mart to use open loop systems throughout their supply chain. While these open loop networks will eventually come to pass, the attitudes of the RFID industry and (its potential customers) are currently undergoing a paradigm shift in the direction of closed loop systems. Of the large number of RFID deployments that Intermec is involved in, most are closed loop, as this method allows the client to gain the benefit through streamlining their own supply chain, asset management or manufacturing processes. Closed loop directly and exclusively serves the interests of the individual corporation and leaves the deployment and MIS (management information systems) integration issues within the corporation's control, and within the safety of their own four walls. While any RFID deployment takes time and money, a case can be made for the 'simplicity' of closed loop deployments due to their reduced scale and increased control. The administrative and logistical difficulties of information sharing (incompatibility of data, processing power, and man-hours) are largely minimised in closed loop systems.

The primary areas of growth for closed loop (and therefore RFID in general) will be in transport & logistics, retail, and industrial manufacturing. As previously mentioned, the steadily decreasing deployment costs are allowing more organisations to approach RFID as a viable and cost effective tracking method.

The early bird catches the worm RFID does have its critics: some commentators maintain that RFID fails to provide a clear cost-benefit margin, especially as many see existing non-RFID methods as being 'sufficient'. This 'if it ain't broke, don't fix it' attitude is short sighted, and is often based on experiences of outdated RFID technologies (in particular the less successful short ranged devices of the early 1990's). However, the new impetus for closed loop could provide a sea-change in opinions, especially since most close to the RFID industry realise that there are few companies that would not significantly benefit from an RFID implementation, both financially and operationally. In general terms, the full potential for closed loop is still to be realised. We are still to see the true impact of closed loop defining market segments successfully, but clear signs are being shown in automotive manufacturing, mobile MRO (maintenance, repair and overhaul), speciality hauling, logistics and postal distribution segments, warehouse operations.

It is surely fair to say that closed loop RFID remains a relatively untapped resource. Only those that act fast and stay informed will be striking 'RFID oil'!

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