In times where productivity and competitiveness are becoming more vital to sustaining economic prosperity, investing in technology for technology’s sake can be a very costly, if not fatal mistake. The over-hyped RFID technology is a prime example. RFID in the supply chain has been hailed as a replacement for bar-codes and the ultimate in item tracking. However, if you scratch the surface in most cases, you find an expensive solution looking for a problem.
Before I start, I would like to categorically state that I am a very big fan of RFID. Since 1995, I have been exposed to various methods of solving unique problems using RFID and I have been directly involved in RFID projects. My company, Heavey RF, has a large range of RFID products to offer and has deployed RFID solutions to a number of companies in Ireland. Unlike many RFID providers, we have actually made money doing it.
The problem is this – RFID simply cannot do what people expect it to do from the hype that has been generated over the last decade. It is not a magic wand that will tell you where all your products are in real time. It is not as reliable as bar-coding, and can never be as cost effective. While mankind frequently bends the laws of physics, we have never actually broken them which is what would have to be done if the technology were to be able to live up to the hype.
RFID describes a multitude of devices and components, but is generally understood as a technology that uses computer chips to store information. The beauty is that a lot of RFID chips or tags do not need power as they are charged by the emitted reading signal and respond according to the data programmed therein. The benefit in modern industry over conventional methods of tracking items, such as bar-coding, is that comparatively large volumes of data can be stored in a tag and line of sight is not necessarily required. The technology is being sold globally as a revolution that will eventually replace bar-codes. The hype is that if you are not on board, you will be left behind. Sound familiar? Remember the dot-com industry in the late 1990s?
I compare RFID to the dot-com industry because of the similarities that can be drawn between the two. RFID technology is around a long time, as was the internet before general adoption. Then, a huge perceived explosion in the dot-com industry was generated around speculation, hype and a fear of not being part of a ‘new economy’ – a phase that RFID is currently in. When the dust settled and reality played its part, the dot-com industry began a more sustainable and organic development – the next phase for RFID. I do not envisage that RFID will die a death – far from it, but I do argue that it will never replace the bar-code, and I also argue that it will never reach a level where all the products we buy in a ‘supermarket of the future’ are electronically tagged. It just isn’t viable, and never can be.
If you are a company which does not have an RFID strategy, you have absolutely nothing to worry about. If it is ever legislated or mandated to you that you must have RFID in place in your company, you are actually better off waiting as long as possible to reap the benefits of the ongoing developments.
Now is not the time to be developing strategies. Now is the time to learn about RFID, what it is, what it can do and more importantly what it can’t do. Only then can you make informed decisions.
There are two core reasons why RFID will not succeed in replacing barcode technology – technical restrictions and cost. As I type, I can almost hear the advocates saying – “cost is constantly coming down and will eventually be affordable” and “all technical difficulties can be overcome”. The old story about the Russians using a pencil in space springs to mind. Bar-codes are more reliable than RFID tags – a fact that if you do some basic research will turn up some surprising reading. (Some reports have read rates of UHF Gen II tags as low as 60 per cent success at case level).
RFID tags will never be as cost effective as bar-codes. Ever. I state this in the same way that a helicopter will never be as cost effective as a motor car. Sound bizarre? Think about it. The RFID advocates will tell you that bulk purchases will drive the cost of the tag down. That is like a helicopter manufacturer telling you that if everybody buys helicopters, the cost will come down to the cost of a car, and when that happens, you would want to have a helicopter because they have less boundaries, a better view and get you from A to B quicker.
The auto ID industry set a benchmark a number of years ago that when RFID tags reached 5 cent, general adoption would be possible. I believe that the 5 cent tag in a useable form will never be possible. The 5 cent tag has been predicted based on the massive volumes that would be involved should global adoption take place. However, the big problem here is that there is no ‘one size fits all’, a factor needed to drive the volumes. In reality, there are hundreds of different RFID tag types. From short range, medium range, long range, LF, HF, UHF, 2.4GHz, 5GHz – all with different physical attributes depending on the product they are to be applied to. Because of the physical size of products (from very small to very large), their contents (foodstuffs containing iron or viscous materials), and the properties of RF technology, a large number of different tag types need to be maintained – splitting volumes. In the supply chain, RFID could only ever be effective if 100 per cent readability was possible, which it isn’t. Anyone who tells you different doesn’t understand the technology. You cannot guarantee that all your current and future products will work with a particular type of tag.
In the USA, debates are still raging about which technology to use. Wal-Mart has stipulated a UHF tag, and other large pharmaceutical manufacturers have gone down a HF path, as it is better suited to their requirements. Now what happens if a company who was mandated by Wal-Mart to have a UHF tag suddenly receives a mandate from another company to have a HF tag? Everything has to be re-invented. Any barcode scanner worth its salt can read a whole range of barcode symbologies. Having two different tag frequencies from a reading perspective is like trying to listen to two radio stations at the same time – Try it and you will see that you will not be able to understand either.
RFID has many fantastic uses. I personally have two RFID tags on my key-ring and one in my wallet in the form of access control and the central locking for my car. They work, rarely let me down and I’m happy.
I have attended seminar after seminar over the last number of years, listening to the same lectures about how RFID is the future and that if you are not on board you will be left behind. I have not heard anything new in these seminars and most of them seem to focus on the biggest thing to happen to RFID in the last 10 years – Wal-Mart. When your biggest customer says ‘jump’, you say ‘how high’. When Wal-Mart issued a mandate in 2003 to their top 100 suppliers to have RFID tags in place on their cases and pallet deliveries by 1 January 2005, RFID was put in the spotlight because the suppliers had no real choice.
Speculation involves taking a risk against the possibility of dramatic, astounding success. The Wal-Mart story has made RFID look like a sure thing. However, speculation is at its riskiest when it looks like a sure thing. Scratch the surface of the Wal-Mart progress and a very different picture to the reported successes emerges. The “Wall Street Journal” wrote a piece about how RFID in Wal-Mart was failing, which was quickly disputed by Wal-Mart, but no real defence was produced in terms of facts or figures.
On paper, the numbers may add up for Wal-Mart (after all, they are not paying for most of it…), but suppliers are not seeing a return on investment. Some are more outspoken than others, but hey, are you going to criticise your biggest customer in public? To date, not one of the Wal-Mart suppliers uses RFID for any other customer. There is also the danger that other customers issue different mandates with non-compatible requirements and the RFID headache gets twice as bad for many suppliers.
Companies are being advised by systems integrators and standards bodies to implement RFID now to avoid being left behind. I would advise companies to hold off implementing RFID unless it can be demonstrated that it is fit for purpose and a return of investment can be obtained by the carefully planned change of processes. Why implement RFID for the sake of it? If a company is issued a mandate to have RFID on products, then this can be implemented at the back door without huge costs of implementing RFID throughout an operation.
I believe in RFID as part of my company’s future. But, given that bar-coding still hasn’t been fully deployed after 40 years in the supply chain, I find it hard to accept that this much more expensive, infinitely more complicated and not yet mature technology is going to be any different.
Given the last 15 years of what is effectively an RFID failure in the supply chain, insist on seeing a proven working solution before taking what is ultimately a big leap of faith. History is littered with large technical blunders – RFID in the supply chain could be one of the biggest…