Friday 28th Oct 2016 - Logistics Manager

The fear factor

Love it or loathe it RFID is here to stay. The automotive sector has been using it succesfully for years, but as the retail giants grapple with widespread adoption, the dangers of an increasing cost-base and the terror of becoming uncompetitive still lurk in the RFID waters. With an expected fall in tag prices looming and the number of adoptions increasing, why do questions over employee privacy, high implementation costs and uncertain ROI times linger on?

Nigel Woodland, RFID director for Oracle, says customers’ concerns have changed in recent years. “If you go back a year or two, the main challenge people perceived was the hardware.” Getting adequate percentage reads and experimenting with the correct positioning of readers and tags, were the key concerns companies faced but, today, global standards and business problems are a much higher concern. “People ask what business problem am I going to be solving, by introducing RFID into my business?”

Larry Klimczyk, managing director of Blackbay says: “There is all this hype and talk about RFID but there is not very many real live implementations going on.”

Omron has recently invested $20m in entering the US RFID market. UK marketing manager Paul Downey says: “We need to be in position for when the supply chain takes off. You can’t just join the market after it takes off because it’s too late.

“When people look at the subject, they don’t take it far enough to understand exactly what’s entailed, because they hit the fear factor too early. People think it’s going to turn their business upside down.” He says that some people think RFID is too big a step to take and ask “if we put in RFID, it’s a revolutionary step not an evolutionary one.”

Some do not examine implementation properly and wrongly assume it is difficult and expensive to work into operations, he says.

Julie England, vice president general manager RFID business for Texas Instruments, says: “Some of the most common concerns or challenges [are] really, how does this benefit my customers and how do I get return on investment.”

Companies get over that when they discover certain “pain points” in their business processes that can be remedied with the technology.

“In open applications the main barrier is getting the standards in place, getting multiple suppliers in the market so there’s choices, getting the infrastructure in place so the data is exchanged between the retailer and suppliers”

The hallmarks of a good system integrator were experience for implementing systems in the warehouse environment, training, and reliability including high quality equipment, she says..

Razat Guarav, vice president of global transport & distribution industry group, for i2, says there has been a lot of expectation and question over the value of RFID.

“At the end of the day, it’s useful technology but it’s not a silver bullet to solve every supply chain problem. In business there have always been early adopters and people who are technology averseā€¦I don’t buy the fact that it is being rejected by business and is not progressing.”

He says that, looking back at technology innovations, desktop computers in the early eighties were expensive and not standardised. It took ten years to get the technology to a stage where everyone understood it and it could begin to be “digested” by the public. In the future, RFID technology will become more ubiquitous right throughout people’s lives.

However, says Klimczyk: “Like most things a lot of people get caught up on one or two issues, then they get only focused on those issues.”

The way to dispel these problems was to allow companies to get their hands on the equipment and find out which concerns were real ones and which were myths.

“A lot of the rhetoric you hear is not applicable to many of the sectors who would benefit from it,” says Downey, arguing that the automotive sector has been using the technology for the past sixteen years and gained almost immediate benefits in efficiency. Supply chain issues are complicated, surrounding legislation, frequencies and pricing.

England says: “The reality didn’t live up to the hype, but in 2006 what is perceived as a slowdown is in fact a transition [from gen1 to gen2 ].”

Although “there is a fear factor on the adoption side, the innovation rate is increasing at a higher pace than ever before.

“I don’t see the hockey stick adoption rates that the analysts talk about. It’s not just a barcode substitute, if it was you could get some really rapid adoption rates,” she says.

Big returns

Vincent Menvielle, RFID manager, EMEA for Manhattan Associates, says: “While nay-sayers claim that RFID adoption is not keeping pace with predictions, many of those predictions were based on overly optimistic forecasts. When the Wal-Mart project first began, it was predicted that RFID adoption would immediately go into overdrive with full-scale, industry-wide implementations. The reality is that full adoption of any new technology requires time to reach mass adoption.”

Klimczyk says: “Certainly it has been [adopted] slower than the hype. We’re finding that the big returns on investment are being obtained in a closed-loop supply chain environment.”

For companies that control their own distribution and have a vertical supply chain, the whole issue of tag price goes away.

Guarav says adoption rates will improve, but it is companies being pragmatic rather than phobic. “RFID, a year or two ago was at the peak of the hype-curve, where there was a lot of need for education but now it is coming into a plateau.”

It is only now that RFID can really start to add value as an emerging technology.

Woodland does not think RFID needs re-branding or a new lease of life. There have been concerns over privacy with RFID, but he argues that it is all around us already. In the near future, patients in hospital wards could be tagged with more accurate data and faster ‘processing’. In the end, you can imagine hospital patients complaining if they weren’t tagged with RFID, he says.

“I’m not sure that people will perceive it as RFID in the end.” It will be seen as a way of delivering a service or managing a process. People using Oyster cards don’t necessarily know what RFID is, but use it every day regardless.

“I think it’s only natural that something which has to change what we do, is always going to have a degree of scepticism.”

It is only a matter of education.

Guarav points out that, at the end of the day, it is a enabling technology. “The fact that it is RFID technology is sort of irrelevant. The key things is: what is the value that companies are getting from it?”


When tag and chip prices come down far enough, there is a risk that the floodgates will open and everyone will want to buy it at once.

However, says Klimczyk, in reality that won’t happen. “The potential information that can be gathered is tremendous, it’s huge and cuts across virtually every part of an organisation and if suddenly all this information was there, what are we going to do with it?”

Whether tagging pallets or individual items, the amount of data transferred that needs to be stored and managed is enormous.”

Guarav reckons that companies in retail supply chains are playing a waiting game. Adopting something which adds to your cost base can make you uncompetitive and the benefits will only flow through when everyone adopts it, he says.

Using Marks and Spencer’s textiles as an example, Woodland says that, in a closed loop supply chain, control is much easier. With an in-house operation, you do not need to compete with others and be concerned about remaining competitive.

“Retail raised the hype-cycle. Wal-Mart saying that their suppliers had to tag goods, Metro doing things like the Metro Future Store, with a lot of publicity. But actually, I think that the implementations have been going on quietly in the background.”

Guarav says data synchronisation and good data management is becoming extremely important for RFID users. Data can be interdependent and data relationships can occur across multiple systems. “RFID technology itself does not address data issues but can help reduce data latency or lag-time.” If data is inaccurate, it will still be inaccurate, which is why you need a data synchronisation layer.”

Klimcyzk says the retail sector has been driving it simply because of the volumes that the multiples are looking to move through their systems. “In the short term, I think that they are going to continue to drive the adoption until the people on the other end, in manufacturing, learn the value of the open-ended system – maybe it’s in the area of quality control, maybe the area of verification of stock.”

According to Woodland, RFID has grown in closed-loop supply chains, more than in open-loop ones. “If your supply chain adopts something and adds to your cost base, then you become uncompetitive.

“If it’s a cost to you, then the benefit will not flow through to you, so who goes first?”

In closed-loop supply chains that do not have to compete in quite the same way, they can get the early benefit from the technology, he says. Companies need to work out what their business benefit would be. RFID will reduce in cost while the level of benefits go up, but companies have to wait until the scales are balanced in their favour.

“At the end of the day,” says Guarav, “RFID is an enabling technology, but it is no silver bullet to solve all your problems.”

To sustain itself as an enabling technology, it will have to provide value not just to the retail organisations, but to other participants within the supply chain as well. In conclusion he says that a company needs to ask of RFID: “How does this add value to my operations.”

Downey says: “You need somebody with a vision in an organisation to look beyond implementation issues. It needs to be backed strategically within an organisation.

“Once you establish a competitive edge and show that it can be implemented and achieved, that’s what really makes the things happen. If companies are being followers and are sitting back while their competitors put in place the infrastructure to make it happen, they could be two or three years behind.”

Kitting out for a journey of discovery Texas develops new silicon designISO takes up Gen 2 standard

In an effort to help people dip their toes in the RFID water, Blackbay has launched the U1000 RFID Discovery Kit. The kit allows businesses to trial RFID at a minimal cost and includes a comprehensive set of tools to enable firms to explore the benefits of the technology without the risk.

The pack contains: U1000 13.56MHz Handheld RFID Reader; RFID Connect Software Development Kit; 5×3 RFID Tags with different Geometry and Form-Factors; 1.5m USB / USB MiniB Cable; User Manual; Blackbay 24/6 support available.

The handheld reader is equipped to handle parcel track and trace, asset management and parts identification and allows for simple integration of RFID into existing systems via Bluetooth for wireless connectivity to PDAs or USB for PCs. The kit also comes with software development tools and provides three methods of integrating into the company’s applications. It allows access via ActiveX controls for web-based or windows applications or Pocket PC platforms. Software development tools include a DLL library for application development and RFID Wedge – similar to barcode/keyboard wedge interface.Texas Instruments has developed an advanced ultra high frequency silicon, ratified with EPCglobal which, it says, improves tag performance.

Offered in wafer and strap form factors, TI has developed its Gen 2 silicon on the most advanced analogue process node at 130 nanometres and with a built-in Schottky diode for more efficient conversion of radio frequency signal energy. The result is silicon chips with low power consumption and increased chip-to-reader sensitivity.

TI is providing its Gen 2 silicon to inlay, label and packaging manufacturers in three convenient forms: bare wafers to support various assembly processes; processed wafers that are suitable for immediate use with commercially available inlay equipment; and silicon chip on straps for label and packaging manufacturers who are printing their own antennas. TI is also offering antenna designs enabling customers to develop labels and tags which optimise its Gen 2 silicon.The ISO has amended its RFID standard to include the Gen2 technology. Chris Adcock, president of EPCglobal, says: “This is a significant milestone because it provides recognition of the work that the EPCglobal community is doing to build user-driven technical standards to advance the adoption of EPC/RFID technologies in supply chains throughout the world,”

Steve Halliday, chairman of the ISO sub-group responsible for the standard, says: “The publication of this Amendment to ISO/IEC 18000-6 gives the EPCglobal UHF Gen 2 specification global approval and makes it available to an even wider range of applications. This is the first of hopefully many opportunities for EPCglobal and ISO to co-operate.”

Dealing with liquidsSize mattersWho saves wins

In March 2005 sixteen of Tesco’s suppliers began working together in the “Tesco Supplier Working Group”. The group began working to better its understanding of Radio Barcode technology and in collaboration with Tesco, worked to develop and deliver customer orientated products.

Robert Wiseman Dairies, a member of the group, began working on a trial at its distribution plant and two Tesco stores. Tags are permanently applied to a number of milk cages, which are destined for the two trial stores. The tags are read at key points in the manufacturing, distribution and store supply chain, including reads as the trolleys leave Wiseman, arrive at a store and as they move onto the shop floor.

Tesco says that the information learned from the trial “will enable us to have better visibility of the supply chain ultimately ensuring a better service for the customer.”

Hardware is provided by ADT/Tyco, software by OATSystems and tags by Integrated Product Intelligence.To prove that the bar code is not dead, standards organisation GS1 is releasing the Reduced Space Symbology (RSS). The new bar code, which will be released on 1 January 2010, will be over 50 per cent smaller than the commonly used GS1 bar code, seen on most products today. GS1 says that unlike the common GS1 bar code, RSS can carry serial numbers, lot numbers, and expiry dates. This level of information supports product authentication and traceability initiatives, product quality assurance, variable measure product identification, and the handling of coupons.

Andrew Osborne, chief technical officer of GS1 UK, said: “RSS is a simple system for trading partners looking for advanced information sharing, who cannot justify the investment in RFID yet. It provides a good migration path for those companies. GS1 UK will provide support and guidance to end-users over the next three years to help prepare for the transition.”If cost is such a big issue for adopting RFID, where are the biggest savings made and who benefits most? UPM Raflatac, a manufacturer of inlay and RFID tags, has launched a campaign web site for the retail and FMCG industries. The site provides detailed information about EPC Gen2 RFID technology and features a Hall of fame of case studies and information about the Rafsec Gen2 tags and inlays by UPM Raflatac. The web site can be accessed at