Thursday 8th Dec 2016 - Logistics Manager

The jury’s still out

The use of Radio Frequency Identification (RFID) technology within companies’ supply chains is expected to culminate in a multibillion pound industry within the next two years. In the US, the technology has been around for some time and has major fans in the shape of Wal-Mart, GAP, IBM and FedEx who have been leading the way in using RFID within their supply chains.

However, implementation of the technology in the UK appears to be much slower as companies express concerns over the cost of the RFID tags as well as uncertainty over the best way to use the technology. Also, businesses are questioning whether RFID equipment will replace existing barcode technology. And, if that was not enough, there is the ongoing debate about whether RFID tagging is an invasion of privacy and human rights laws.

A few companies, including Marks & Spencer, Exel and Tibbett & Britten, are leading the way in the UK in terms of implementing RFID equipment but even these companies remain cautious, preferring to carry out trials instead.

Third-party logistics provider Exel is embarking on a project with department store group House of Fraser which will test the application of RFID across international supply chains and which encompasses individual products from House of Fraser’s own-brand manufacturers in China. About 60,000 recyclable tags will be used. Exel wants to apply the “passive” tag to the garment’s security tag.

RFID tags will be attached directly to garments giving the scope for shipment movements to be tracked at item level, providing automatic, real-time product visibility at any point in the supply chain. When containers reach House of Fraser’s national distribution centre (NDC) at Milton Keynes – the centre is managed by Exel – the cost benefits associated with automated receiving, inventory counting, distribution centre despatching and store receiving will be measured.

Commenting on the trial, House of Fraser supply chain director Colin Porter says: “It is an important initiative for us as we focus on improving efficiency, product availability and cost-effectiveness to achieve business growth. The supply chain is a crucial aspect in this process and we are confident in Exel’s capabilities to deliver proactive developments based on its solid industry understanding, innovation and expertise.”

Paul Richardson, business director at Exel’s Retail division, says: “We have positive backing from House of Fraser to develop the concept of tracking products at both item and container level. We are working closely with the customer and its suppliers to write RFID software and unlock greater value in the international supply chain.”

The trial comes on the back of another RFID project that Exel has been undertaking for Selfridges based at its Hams Hall NDC. The scheme entails the use of RFID to track inbound and outbound movements of 120 food temperature-controlled containers. The test has also been exploring future opportunities offered by RFID, including product tracking to and from the stores.

Each transit media and vehicle contains a RFID tag for tracking purposes. When the containers and vehicles are close to the loading bays, RFID readers and antennae read the tags and update Exel’s in-house software automatically.

For Selfridges’ buying and merchandise director, David Riddiford, the reason for trialling RFID is simple. He says: “We hope that these trials will unlock the real value of RFID for customers, suppliers and the industry at large.”

Explaining the reasons for the trials, Stewart Oades, Exel chief executive, Retail Worldwide, and chief executive, Contract Logistics, UK and Ireland, says that while RFID is not new businesses are now taking it seriously. “We see this [RFID] as significant, enabling much more efficiency. We are looking to see how we can make it work from a commercial point of view.”

Stock availability

High street retailer Marks & Spencer (M&S) has also been carrying out a series of trials over the past few months to establish the effects of RFID on stock control and stock availability as well as cost and speed advantages throughout some of its operations, including clothing and food.

The RFID trials are part of M&S’ plan to have a significant cost and speed advantage in tracking and managing its fast growing chilled food business. M&S logistics controller Keith Mahoney explains: “Electronic tagging will give us a leading edge supply chain model for all our chilled produce all the way along the chain, from producer to the store end.”

The business trials, the latest of which ends in June, have been designed to test the technology and customer acceptance.

The business trial monitors the improvements to stock availability in the supply chain from supplier to store. Suppliers of men’s suits attach the RFID tags to the garments delivered to one designated distribution centre – Neasden. Since mid-March, the tagged suits have been delivered to all stores served by Neasden and that sell suits. Mobile scanners with the capacity to read the tags have now been supplied to six M&S stores – Aylesbury, Camberley, Ealing Broadway, High Wycombe, Kingston and Marble Arch – with scanning only starting once they are fully stocked with tagged goods.

M&S wants to compare the levels of product availability and sales in these stores, and expects to make the findings of customer research, conducted during the trials, available by late summer.

In response to customer concerns over the effects of RFID technology and on privacy and human rights, M&S has produced an explanatory leaflet in all the stores that the tagged suits are being sold. The leaflet will also state that the Intelligent Label:

lDoes not contain a battery, is completely harmless and can be thrown away after purchase.

lWill not be scanned at the checkout, so no link will be made between the garment information held by the tag and the customer’s details.

lWill not need to be retained by the customer to obtain a refund or to return the garment.

lThe name of the throwaway label will be amended to say ‘Intelligent Label for Stock Control’ to avoid any confusion with the other garment labels provided for the customer’s information.

For the first trial two scanners were developed: a mobile scanner and a portal. During the business trial, only the mobile scanner is being used.

M&S has been supplied with some three million RFID tags by Texas Instruments and further substantial orders from the retailer have been placed. The original contract was for three million tags to be delivered over three years, which was completed ahead of schedule, and the latest orders cover a million-plus tags for tagging additional food trays, dollies, flower boxes and other containers as the project is expanded. The new tags have now also been delivered bringing the total number of tags shipped to M&S by Texas Instruments RFID Systems and the system’s integrator, Intellident, to more than four million tags – all delivered over a short two-year period – making this by far the largest shipment of RFID tags into a supply chain application anywhere in the world.

In this major retail rollout, high frequency smart label tags featuring Texas Instruments Tag-it RFID inlays are permanently embedded in more than four million trays and containers of fresh food produce and flowers, allowing the crates to be easily tracked from supplier right through the supply chain to the supermarket as part of a major project by Intellident. Many of M&S’s suppliers have also adopted the RFID system as part of their own supply chain operations.

“Tag wars”

According to Texas Instruments, in the M&S application multiple RFID tags can be read or written to simultaneously and instantaneously as they move through the reader portals enabling much faster data capture and writing. RFID tags on the crates allows data to be captured and processed some 83% faster than traditional barcode scanning, making M&S’ warehouses much more cost-effective and efficient.

However, auto-ID specialist Zebra Technologies claims that there will be no “tag wars” as RFID becomes a mainstream technology, saying that standard one- and two-dimensional barcodes will exist alongside the new technologies for many years to come.

Paul Vogt, marketing director for Zebra Technologies, says: “Many people in the industry are talking about RFID as the technology that will supersede printed barcodes in the same way that compact discs have taken over from audio cassettes. But manufacturers like us, who have made, and will continue to make, considerable investments in both technologies, recognise that industry is likely to accommodate them together for many years to come.”

Vogt continues: “RFID is, undoubtedly, the more flexible and functional technology, but barcoding will remain the dominant technology in many areas, such as low-price FMCG products.”

In the past 12 months RFID technology has gone from a future promise to a present reality with industry heavyweights, including several of the world’s leading retailers, have unveiled their plans for RFID adoption and, along with other first-movers, have brought RFID to the fore.

Zebra, which manufactures printers and programming tools both for barcode labels and for RFID tags, is encouraging its reseller partners and customers to develop processes that will allow parallel deployment of both barcodes and RFID technology. The company feels that RFID tags are particularly suited to situations:

lWhere it is difficult to get a scanner close to, and in clear view of, the items that are being monitored.

lWhere many items need to be scanned simultaneously.

lWhere tags need to read very rapidly (at rates of up to 1,000 tags per second).

lFor monitoring of items in harsh environments.

lFor storing a large volume of information on each tag.

lFor updating the tags during their lifecycle.

Vogt continues: “The supply chain is a particularly good example of RFID tags being fit for purpose. GAP stores in the US use RFID to track denim jeans through its supply chain to the in-store display stand. The variety of fit, colour and size means that conventional bar code tagging makes tracking a very labour-intensive process. RFID tagging the jeans allows stock managers to understand volumes and varieties quickly and efficiently. Similarly, in the post and parcel delivery sector, RFID tagging helps delivery operatives to locate and monitor the huge number of individually marked goods that they deliver.”

But he says barcoding will remain the dominant technology in situations where high volumes of low-price goods are moving quickly through a process, for example, retail sales of everyday food items like tins of beans.

Vogt says: “Currently, RFID is too expensive to use instead of barcodes for every application as tags currently cost around 50p each. Of course, as RFID adoption spreads, tag prices will fall – but we don’t predict that barcodes will just disappear. People will consider whether their labelling requires RFID technology and not all of them will need the functionality. Barcodes are easy to use, easy to compress and easily understood. In time, we foresee a mighty shift in the ratio of RFID tags to barcodes – but they will be here for many years to come.”

And Exel’s Stewart Oades says barcode scanning “will be emulated by RFID in the future”. But he stresses that while the new technology is improving, it will be difficult to get stock accuracy until 100% scans can be achieved.

The company’s Paul Richardson agrees: “A lot of testing still needs to be done. Product coming from suppliers has to be absolutely accurate. RFID offers the opportunity to automate.” n