Linking into the future

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We’ve all heard the hype: from those Massachusetts Institute of Technology demos back in the 1980s showing shoes communicating with business cards talking to PCs, to those futuristic fridges of a few years back which would compile your shopping list based by reading the bar code labels on the products you removed.

The idea of connecting product IDs with communications networks has been with us for quite a few years now. It is certainly a concept which preoccupies both the privacy watchers and the technically confused. As Richard Foggie, assistant director of the Electronics and IT Services Unit at the DTI admitted at the RFID-ROI event in London this January, he really has had letters from worried members of the public ‘wanting to know if RFID on baked bean cans will mean that Tesco will know in which room they eat their meals’.

Discovering whether or not you eat baked beans straight from the can in bed is hardly a high priority for Tesco — nor presumably is monitoring where an individual can happens to be in the supply chain: batch of cans, yes — single specific can, unlikely. Or at least it is unlikely with today’s technology and data handling systems.

RFID tags may have fallen substantially in price but adding even that cost to the wafer thin margins made on a can of baked beans is still not viable. Other technologies might, however, prove rather more cost effective. New small format reduced space symbology (RSS) bar codes, for example, are due to be introduced by GS1 from 1 January 2010. These are around half the size of current standard bar codes but will allow a great deal more information to be embedded within the code than current standard EAN-13 labels. Detailed source information could be included in labels for fresh produce, for example, providing information about the grower, pesticides used, variety and so on. They can additionally provide details of lot numbers, serial numbers and expiry dates which can be used for product authentication. According to GS1, Tesco is already testing the codes for tomatoes.

Much of the impetus for developing the new codes has come from the US where the consumer lobby is pushing for greater traceability. By bar coding individual produce item shoppers would, in theory at least, be able to use hand-held or kiosk scanners to display a wide variety of information about the product. While this sort of data is more usually associated with item-level RFID, low cost bar code tags could deliver similar level of generic information for fresh produce. ‘Obviously RSS cannot provide the item-specific information RFID,’ says John Pearce, GS1 consultant and expert on small bar code symbology, ‘but then I doubt if anyone will want to put RFID tags on apples.’

Technologies that work together
Since the RSS data structure is standard to GS1 it should also be compatible with RFID data structure allowing the two technologies ultimately to be used together. While these new RSS codes can provide a great deal more information at the same negligible cost as existing bar codes, in future print RFID tags, nanotechnologies and organic electronics will also extend the options.

Scientists at Philips Research have already developed a prototype printed RFID tag operating at 13.56MHz, although more work is needed before the product becomes commercially viable. By the end of 2007 a European consortium called PolyApply also expects to have a working prototype of a semi-printed polymer RFID tag. PolyApply has received €20million in backing from the EU and is focusing the use of plastic electronics for RFID.

Last September PolyIC — a German start-up and member of the PolyApply consortium — produced passive printed 13.56MHz ‘RF tags’ which emit an RF signal when interrogated but do not communicate an ID number. Since then consortium members have managed to print or semi-print various RFID components which they are now attempting to integrate. The tags are produced in a low cost toll-to-roll printing process with printed polymer electronic components applied to foil based antennae.

PolyIC is believed to be working with a number of companies on incorporating the tags into packaging as brand forgery protection in such sectors as the pharmaceuticals industry. Organic ID is another company working in this space: ‘If you look at the item-level market, what is needed is a simple RFID chip that is very inexpensive,’ Klaus Dimmler ceo of Organic ID told last year’s Organic Electronics Conference. ‘They don’t need a more complex tag. It needs to be very small and very cheap — something that can be attached to each item. This is not a world silicon can compete in.’

Organic electronics are devices based on conductive polymers or plastics containing carbon-based molecules (hence the name organic) and are seen by some as a low cost option for mass-produced electronics where silicon is too sophisticated and expensive. Companies like Organic ID expect ultimately to produce printable RFID tags costing around one cent — well below the widely discussed five cent price tag that pundits maintain will be necessary for mass take up of item-level RFID. US analyst, NanoMarkets, expects the market for printable electronics to grow from €270million in 2007 to €9.2billion in 2011 including sales of printable RFID tags expected worth more than €1.9billion.

Felix Helander, group director of business intelligence at packaging specialist Rexam also points to printed RFID — although his vision does not stop at simple RFID tags: ‘We have to put so much information on the labels so the print is tiny and — with an ageing population — it becomes harder for people to read what it says. An RFID tag could be used to convey all this information and in multiple languages.’ He suggests talking labels using RFID technology which could transmit to a mobile phone or PDA to display the information in a more easily readable format.

Rexam has already developed pill boxes for its pharmaceutical market which have a RFID tag welded into the base during manufacture. Not only does this enable track a trace through the life of the product, but also could help combat counterfeiting since only product with authentic ID would be genuine.

Tag cost is certainly a factor in any item-level RFID programme — which is perhaps why so few projects have stayed the course. Those that have continued beyond the pilot stage focus on high value items where stockouts can seriously impact sales. Marks & Spencer is an acknowledged leader here and James Stafford, head of the M&S RFID programme is bullish. ‘RFID is no longer on trial,’ he says, ‘there is a business case and very encouraging results.’

Marks & Spencer has not rushed into item-level roll-out. It’s first single store trial involving men’s suits was started back in 2002 at High Wycombe. Since then it has slowly expanded the programme until a major increase last spring added 42 stores and six product groups. The roll-out is now extending to 120 stores with additional product groups — including various lingerie types and men’s casual trousers being tagged from July this year.

RFID is about stock control
These tags carry nothing more complex than an ID number which translates at the central M&S database — safely behind the firewall — into product details. Tags are used purely for stocktaking and are not even scanned at point of sale — something which Stafford maintains is very unlikely to change. ‘RFID for us is about stock control,’ he says. ‘We know what our sales are but we have to deduce from that what the stock levels are so RFID is really giving our systems a dose of reality.’

Passive UHF tags are used in read only mode. ‘It is a simple system,’ says Stafford. ‘It’s cheap and there is a good level of privacy as we are not writing to the tags.’

Although M&S will not divulge metrics on reduced stock levels, the use of RFID has clearly impacted sales significantly otherwise James Stafford would not insist that the business case is proven nor would M&S be rolling out to so many stores and so many product groups.

Wal-Mart, too, had reducing stockouts as the prime target for its RFID programme. This project has progressed slowly since the first announcements back in 2002, but roll-out is now ramping out using Gen2 standard tags and readers.

Average stockouts at Wal-Mart have been cut by 16 per cent — although figures up to 62per cent have been recorded for lines with more erratic sales patterns, where staff have a irregular pattern of replenishment and empty shelves are easily missed. It has also improved promotional compliance with product now more likely to be on display when the campaign starts increasing sales by up by 19 – 35 per cent.

Currently around 300 suppliers are sending bar coded cartons to Wal-Mart’s distribution depots with RFID established in 500 stores. By mid-April the number of stores using the technology will be up to 900, with 1400 scheduled to use RFID by October.

Interestingly, Wal-Mart is also looking at putting RFID readers on forklift trucks instead of DC doors: with 150 doors but only 80 fork lift trucks in a typical DC the potential cost savings, as Ron Moser, head of RFID strategies at Wal-Mart points out, are obvious. ‘RFID is making a difference,’ he says, ‘it is changing the way we do business.’

Providing more data is, of course, something which the IT sector has been predicting for RFID for years — and an area where GS1 and EPCglobal have made major efforts to create standardised protocols and procedures. The vision for this data focus is global and based on the simple premise that if companies are going to track standard RFID tags containing product information on a worldwide scale, then it is clearly vital that the product information is consistent. Just as EAN bar codes are universally understood, so too must the EPCstandard RFID tags — although there is much more data to handle than in a simple bar code.

A wider range of industries
By the end of 2006 EPCglobal had signed up more than 1,000 subscribers across 12 major industries and 51 industry segments. ‘Although EPCglobal maintains strong ties to its first industry partner, CPG, today our subscriber companies represent a wide range of industries from healthcare and life sciences to transportation and logistics, footwear, apparel, aerospace, automotive and high technology,’ says Chris Adcock, president of EPCglobal.

The basic EPC naming scheme (standing for electronic product code) comprises 26 digits to uniquely identify the individual item; chips generally have 96bits allocated to EPC so this code could be expanded to longer character sets if need be. Additional standard protocols include: ONS (object name service) which specifies where the network database is located; PML — physical mark-up language, a subset of XML, used for defining products; and Savant — a system that monitors the item numbers and tracks when the products they define are removed from the system (sold).

When this model was unveiled a couple of years back forecasters predicted a massive upsurge in the computing power companies would need to handle such volumes of data with IT suppliers looking forward — no doubt gleefully — to the scale of systems investment that would be required. Handling item level data for every product a major CPG manufacturer offers — every individual product not simply generic SKU-level information — is a daunting prospect. In addition the model demands standardisation of terminology across all product attributes so that ‘pale blue’ means the same shade to everyone or ‘shipped’ means the same supply chain activity has been completed rather than various non-standard options from ‘left the factory’, through ‘reached the docks’ to ‘loaded on board’.

Global RFID, runs the argument, requires global data synchronisation (GDS) — and that is proving to be a current nightmare for many retailers and manufacturers. For a start much internal data is not yet synchronised so that product descriptors used for the website are not necessarily the same as those used in the purchasing department.

As Galina Gray, EMEA IT business partner at Cadbury Schweppes pointed out at the RFID ROI conference: ‘Retailers like Asda or Tesco may define around 150 product attributes for each item — but only perhaps 70 or so of those attributes are common to both data sets. Scale that up to all retailers and a manufacturer could have several hundred different attributes to track for each line.’ Gray has been working on GDS at Cadbury Schweppes for three years and still has much more work to do to complete the project.

Not surprisingly, third party product catalogue providers offering hosted or outsourced solutions are mushrooming. Encodex, for example, has built up a customer base of around 300 stores for its white goods product catalogue over the past two years. Like other catalogue providers Encodex maintains central database of product information which can be accessed by all trading partners to ensure consistency. ‘In the past retailers and manufacturers have been slow to capture EAN codes on white goods as a basis for product information files,’ says managing director, Brian Flower. ‘But if the codes were used more widely then it would be simple for price comparison sites to pick up stock details from retailers, for example.’

While many of these catalogue’s pre-date GS1’s standard model progress towards GS1’s vision of GDS with its global network of datapools all using standardised product information in a world of RFID tags continues. Wal-Mart has adopted the Gen2 global standard for its tags and certainly subscribes to this global view. As Ron Moser says: ‘Gen2 gives us a single global protocol with a tag that can be read in any geography regardless of the local operating frequencies. Only through global standards will we all reap the benefits of RFID.’

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