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Article
RFID in the Supply Chain

This month we have a contribution by Dr. Peter Harrop, Chairman of IDTechEX out of the UK. Peter has shared with us some different perspectives on RFID and its evolution and growth in the Supply Chain.


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RFID has been around for over sixty years. Like the laser and the smart card, it spent 20 years in the wilderness as a solution looking for a problem. For the last twenty years it has been used in the supply chain but not much – until one year ago. Cost was a problem, particularly with large schemes where the tag cost – nowadays that usually means a label – is the largest part of cost of ownership.

In 1999, Massachusetts Institute of Technology came up with the idea of having the tag as a very basic read only label with all the security and data handling in the computer system. Its concept of open standards to support this has been achieved. The reduction in complexity – it talked of reducing the number of transistors in the chip to a few thousand – has not. While the ISO 18000 Gen 2 EPC standard is a huge leap forward, the leading companies in consumer goods, retailing, aircraft manufacture, air baggage handling etc. all want to use it in its full password protected, read-write, high security, and enhanced functionality form. So the number of transistors in the chip has rocketed to 35,000 – 70,000. The leading chip from Impinj has 42,000 transistors, double that of the first microprocessors, although it is only a memory chip. Do not blame EPCglobal. It is governed by users and strongly backed by RFID suppliers; and they are getting what they want.

Basically, the world’s telecommunication and computer companies still cannot figure out how to have data instantly available on the network worldwide. The result is that four times as many read-write as read-only RFID tags are sold and data synchronisation is still a worry. Read-only is only used in closed systems such as non-stop road tolling and in those retail supply chains where everything is their own brand. Which is strange, because read-only barcodes seem to be rather popular: ten trillion are printed yearly, most being for supply chains.

There are many myths about RFID. In East Asia, it is commonly believed that EPCglobal is a US controlled vehicle of American foreign policy, and many in Japan and China are struggling to dream up alternatives. Although the US, to its credit, got the ball rolling, EPCglobal has always had global membership, and EPC codes are even being used in Colombia and Brazil. Following the wishes of its members, EPCglobal first addressed standards for the little used UHF set of license-free frequencies. UHF has been portrayed by many as globally available, and it has recently been enshrined as the sole option, in the standards for products as varied as car tires and air baggage. Wal-Mart is committed to it for pallet, case and item level. The largest bookseller in the Netherlands is rapidly fitting UHF EPC tags to all books. Best Buy in the US is using EPC UHF at item level. However, it is far from being globally approved in radio regulations. It is either illegal or impracticable for most applications within regulations of European and key East Asian countries, for example. It will never be a single frequency, unlike HF (13.56MHz), the World’s most popular RFID frequency, where EPCglobal is now preparing a Gen2-type standard.

With anti-theft tags there are three incompatible types fitted to the same items. When products are rerouted, one type has to be ripped off and another put on. Sadly, the RFID users are not learning from this, and we now have three incompatible RFID tags and systems on high volume items – potentially the largest market for RFID. They are tags optimised for Far Field UHF, supported by Wal-Mart, some drug companies, bookstores etc., tags optimised for Near Field RFID supported by Wal-Mart (for future item level tagging)) and many suppliers and HF tags supported by GlaxoSmithKline, Pfizer, AstraZeneca, the world’s libraries, laundries, and so on.

Boys and girls: you are losing the plot. Decisions need to be made!

Let us end on a high note. RFID is already ubiquitous and there are many new technologies and applications to benefit users and suppliers. Look at the global picture. First mandatory tagging of all cattle included Botswana and Uruguay. Contrast the US National Livestock Identification Scheme NLIS for 2009. It does not mandate RFID, and backtracking is the order of the day.  Best practice in RFID in milk shipment is New Zealand. The leader in RFID in libraries, with lessons for tracking the 50 billion books shipped yearly in the world, is Singapore. Leadership on RFID for poultry is Thailand; and Saudi Arabia promises to be first to tag everything in a supermarket. It is already first in tagging post boxes for the public. There are many reasons for these applications, the favourites being improved customer service and cost reduction, but multiple paybacks and unquantifiable benefits such as security and safety are common.

However, the US has risen to 32% of all case studies of RFID in action, and it saw the world’s largest RFID order this year – from the US Military, for $425 million. In addition, it is the US that has been first to issue 20 million RFID credit cards last year. These enable faster payments, and there are 4.5 billion credit and debit cards still to convert to RFID in the world. The Food and Drug Administration FDA in the US is ahead of anywhere in pushing RFID for item level drugs for anti-counterfeiting. These types of RFID business are both profitable and large for RFID hardware, software and systems suppliers.

Other RFID applications rapidly coming along include parasitic WiFi location of assets, other Real Time Location Systems (RTLS) such as the precision WhereNet RFID systems locating freight at 300 meters in dockyards, and Smart Active Labels (SAL) and Ubiquitous Sensor Systems that combine RFID with sensing. Ultimately, supply chains will not rely on sensing items at entrances, exits and so on, and then making heroic assumptions about where they go. Supply chain tracking will be entirely based on RTLS. It is certainly a fabulous market for acronyms, but there is more.

The bottom line is that there will be many huge markets for RFID in supply chains, for reasons from managing the reverse supply chain to reducing crime. Much of it is starting already. Ignore it at your peril.




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