Although RTLS has utility, and the projects have been interesting, much has to happen to make this market grow.
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Real-time locating inside facilities1 is an idea that has been sustained through belief in the value of the solution. We have seen great projects that do have value. But yet, the market growth for the past ten years is still small.
RTLS is target-rich—and in the early days there was a lot of ‘spray and pray,’ chasing a lot of use cases and accounts, hoping that once a good case study emerged from a particular industry, it would lead to growth. And since most of the RTLS projects are industry-specific—Auto, Manufacturing, Aerospace, Defense, Healthcare, Mining, etc.—there were large investment efforts to develop industry-based solutions. But it has been hard to get a meaningful return from them, and one account did not lead to another. Clouding the issue are complementary technologies—‘semi-active’ (that’s active, right?), longer range passive with extra memory, cellular, etc.
Where is WhereNet? The acquisition by Zebra looked like a great idea—giving end-users the broadest choice possible in Auto-ID—but RTLS seems to have disappeared within that company. AreoScout? We haven’t heard much lately. Ekahau seems to be hanging in there, with sheer persistence and focus.
An Idea That Won’t Quit.
There are a number of challenges and issues that might be inhibitors to growth.
Product Life Time
Where is the Value?
One issue that we think has not been explored well, is who we are selling to. We are embedding knowledge in devices, but who needs that knowledge? Not only end-users, but also product design, manufacturing, the service provider (may be a manufacturer or third party) and the end-user.
Buyers are expecting value from their equipment, and in this economy they want to extend that value. So, the product life cycle from the customers’ view may last much longer. The longer that cycle continues, the more likely it is that the supplier will have to institute and manage a so-called service business to support it. There are many industries, from Defense to toy manufacturers, where equipment is not replaced for decades. So, focusing on the life cycle value of the equipment and embedding RTLS earlier in the process may be the way to go.
The Life Cycle of Stuff
Extracting value and the metrics used—focusing on performance is the key metric, in the customer's eyes. Gone is the concept of response time and fill rates, but rather Availability or uptimes. It's not about fixing broken things. But more important, it's about having a separate line item for inventory/parts that a customer pays for. Customers expect and will pay for the performance, and leave the rest to the service provider. We have several profound examples of firms attempting to create these business models: Lockheed and Boeing working with the DoD on Performance Based Logistics.
Integration across the life cycle of the product—the total lifecycle integration for end-to-end knowledge sharing. Service data or returns data holds many keys to product innovation design, yet many firms' supply chains are highly outsourced, or pay little attention to returns, and therefore never mine this knowledge. RFID can serve as a data collection device for many other applications besides locating, as the product goes through its ‘life’ from install, service, and upgrade to retirement.
True ownership—a large percentage of the equipment market is leased equipment. And these types of equipment are continuous money makers for the owners: vending machines, copying machines, and repair equipment, for example. Owners of this equipment need to assure they have location control. Much of this type of equipment is also regulated, since the owners need to report income to the IRS. Controlling and monitoring the equipment is a huge concern because of tampering and relocation.
Study after study has shown that customers will pay for extra service, for higher value in equipment—reducing the Total Cost of Ownership over the longer life of the equipment (the shift from US cars to foreign cars is such an example).
In addition, much equipment is monitoring equipment: meters and sensors, for example. Already, we are seeing RFID being put into ‘smart meters’ for the utilities industry. This trend should continue as accuracy in measures is beneficial for end-users as well as service providers and the manufacturers of the equipment.
Today sales focus more on end-users who are trying to get more value out of equipment and make the process more effective. But is it possible that the entry point should be earlier in the supply chain? As we discussed, there are many value recipients across the chain. It is easier to embed earlier, improving product design, as well as then having all the supply chain partners gain some value thru the process. The cost can be distributed across the chain. Pennies mount up, value accrues, and markets can grow.
The one-two punch in all this is the software. Where are the apps? The reality is that really great applications in ‘wealthy industries’ such as Healthcare are helping RTLS to grow (read 2 Feature articles in the brief.)
Embedded technology may be the way forward for RTLS if it is sold within the equipment, which other industries have done (for example in manufacturing process equipment and other equipment with embedded performance monitoring capabilities). End-users are often willing to pay a small incremental cost for substantially increased value.