For a technology that promises to change the world, things had been a bit quiet in the RFID business over the past few months. Then, in July, came the announcement from Germany’s Metro Group that it was rolling out the system to a number of hypermarkets and cash and carrys.
By late 2007, it expects to have equipped all Metro Cash & Carry wholesale stores in Germany and more than 100 Real hypermarkets with RFID-based incoming goods portals.
Also, Metro Group Logistics, the logistic services and competence centre, will provide all nine food distribution warehouses with RFID portals. In future, MGL will only ship pallets tagged with a smart chip to the Metro cash & carry wholesale stores. The precondition for this roll-out of RFID was the changeover to EPC Class 1/Generation 2 which enables smart chips to be read much faster and more reliably than before.
Metro says that this establishes the technical basis for deploying RFID along the complete supply chain. Metro rolled out RFID technology to the goods receipt in individual test stores and distribution centres in 2004.
It says the positive results from these tests and the development of the new chip standard have now created the preconditions for a group-wide roll-out. “We will forcefully drive the area-wide deployment of RFID this year to systematically tap the large potential of this technology”, said Frans Muller, member of the management board of Metro. External partners from the consumer goods industry are also participating in the RFID rollout. So far, 40 companies have adapted their processes to the radio technology, with more to follow in the further course of the year.
Standards have been the biggest problem in adoption of RFID but David Lyon, EPCglobal business manager at GS1 UK, points out that these have now been agreed for UHF “Gen 2”.
Ensuring that information can be shared between partners (data synchronisation) is a critical issue. Poor data will give poor operational results, Lyon points out.
He also points to the importance of being able to combine product data from the RFID tag with dynamic data relating to whether the product has been subject to vibration, temperature variations, moisture and so on which could affect its condition.
Unless data is standardised, the benefits go out of the window,” says Lyon pointing out that GS1 has a key role to play in developing structured data standards to enable sharing of data. For example, GS1 has just complete a pilot project with the World Customs Organisation which proved that the GS1 Serial Shipping Container Code (SSCC) can be used as the Unique Consignment Reference (UCR) for the wine and spirits supply chain between Australia and the UK. The SSCC can provide companies with enhanced traceability and security over international supply chains and reduced compliance costs.
With major players moving to adopt RFID, other companies will find it important to define their own strategies. Intellident has been responsible for some of the biggest implementations in the UK, including M&S and Honda, having deployed over 150 million tags to-date. It sees three key areas where clients receive the most return on investment from implementing RFID systems.
The first is the area of dispatch. Using RFID to ensure that the correct quantity, product variation and date life (if food) is achieved.
The second area is intake. Reversing the process, RFID can allow 3PLs and distribution partners to receive items quickly and determine if they are correct before onwards movement. Equally, other parties in the supply chain such as stores can also benefit from secure and accurate receipt.
On-shelf availability is the third area, says Intellident. Using RFID to automatically receipt at back-of-store allows items to be fast-tracked direct to shelf.
Duncan Smillie, managing director of Psion Teklogix, says: “There has been a lot of discussion recently about who is leading the charge to RFID. Historically, those retailers that have embraced the technology – Wal-Mart, House of Fraser and Marks and Spencer are perhaps the most widely publicised long term advocates – have pushed their suppliers to adopt tagging.
“This, it would appear, is changing and in many cases it is now the suppliers who – having woken up to the fact that putting RFID tags on pallets and cases can bring dramatic improvements to the on-the-shelf availability of fast moving consumer goods – are pushing their retailer clients to speed up the roll-out of RFID within their supply chain.
“So what will become of barcodes? It will be several years – perhaps decades – before barcodes are eliminated from the supply chain, if, indeed, they ever fully disappear,” he says.
Alex Mills of Chess Logistics Technology, says: “It is clear that RFID will complement rather than replace existing warehouse enabling technologies such as RF, barcoding and voice directed task management. The potential gains may be significant but once the costs of new equipment, infrastructure and processes are taken into account the justification may be more difficult and it may be better to stick with existing technologies.”
However, says Smillie, “It seems inevitable that RFID will eventually bring about a paradigm shift in global industries in which automatic data collection is a key component. This is because the efficiency gains will drive huge savings.”
Jonathan Jackman of 3M Supply Chain Solutions, says: “The market is now looking at more sophisticated track and trace solutions rather than the ‘passive’ information traditionally held in RFID solutions. Track and trace solutions today are more than just recording information on a RFID tag. They can collect information on the what the product is, determine where the product is in terms of location, how the product is in terms of its overall condition and can then use this information to provide an optimised supply chain for improved fulfilment of a customers order.
“These track and trace solutions require a convergence of technologies in hardware (RFID tags and barcodes), location based services such as GPS, wireless network, RTLS, sensor networks for temperature, humidity and vibration and finally software, which ties all these processes together to provide the information needed to run the process.”
Craig Backham, EMEA business development manager for retail and RFID at Intermec, says: “We never expected a big bang but progress as been steady as expected. Standards needed to sorted out and that slowed early adoption. “We are now seeing a lot of activity, particularly in closed-loop systems to track assets as well as bag tracking for airlines.”
In retail, he points to the work being done by Metro. This, he says, will help accelerate adoption in other consumer goods sectors, though other retailers are being cautious. One of the areas that has slowed adoption has been the technical problems associated with reading tags under certain conditions – notably the problems of metals and liquids. “You can’t do away with physics,” says Backham, “but you can plan around it to ensure that systems work.”
Now that the required software and hardware is available from several suppliers the only parameter that is missing is finding implementation specialists with the right experience, says Eddy van Herbruggen, group RFID specialist at Zetes. Only large integrators like Zetes are able to deploy RFID systems because they have sufficient experience of working with the technology and applications, smaller integrators lack this ability. Zetes believes business consultants should be trained to recognise the business cases where RFID can improve the return on investment above the traditional identification technologies like voice recognition or barcode.
Andrew Kinder, director, product marketing, supply chain management, Infor, says: “When planning their own Auto-ID technology, supply chain managers need first to focus on how the RFID technology will enhance business operations. Secondly, organisations need to understand and define why they need to use RFID as opposed to barcode or voice technology. “Thirdly and most importantly, there are multiple ways to implement RFID technology. It is vital that supply chain managers educate themselves on the best methods so that existing investments in enterprise systems are preserved.
“The most important thing for supply chain managers is to have a clear grasp on how RFID can help them meet their business goals. Organisations need to work with a single source enterprise RFID provider who can work to find the right hardware, tags and software to help meet business needs.”
Edwin Kalischnig, Oracle director of business development for RFID & sensor-based services EMEA, points out that retailers currently have to throw away between eight and ten per cent of their fresh produce so there are big benefits to be had if you can identify where there are problems in the supply chain. “If you can tag it and get a temperature history you can verify how the product has been treated,” he says.
There are also opportunities to put more intelligence into the tags. Retailers want to know the impact of environmental changes on shelf life of the product.
He points out that it is possible to create tables that show what effect an one degree rise in temperature will have on the shelf life of a product. If you have the logic in software then capturing temperature information will enable the retailer to ensure that produce that is due to expire earliest will be put on the shelves first.
One of the most exciting areas of development, according to Gerrit Wassink, RFID general manager at ADT Europe, is in linking RFID and CCTV. For example, he says, as a pallet is received and goes into the warehouse, the RFID tag is read and it is also picked up by a CCTV camera and this information is linked so if there is found to be damage, the CCTV footage can be reviewed to see if the damage was there before it went into the warehouse.
Gerrit Wassink agrees that the next couple of years are likely to see large scale adoption of RFID. “Pricing is coming down on both equipment and tags,” he says.
Toshiba has launched RFID@Toshiba – an end-to-end RFID infrastructure system providing customers with the main components of an RFID implementation from consultancy through to after sales service.
Rob McGregor, business development manager at Toshiba TEC, says experience had shown that customers didn’t have the technical knowledge of what was really needed to integrate RFID successfully into their existing business processes. “It also became apparent that when customers worked with a variety of RFID providers there was a lack of cohesion which led to incompatibility and ultimately made the whole process expensive and time consuming.”