Activity in the European RFID market stepped up a gear in March when Metro Group, Germany’s biggest retailer, set out its plans for extending the use of the technology.
“The extension of the use of RFID at Real and Metro Cash & Carry demonstrates how the potential of RFID in retail logistics can be leveraged,” said Gerd Wolfram, managing director of MGI Metro Group Information Technology, presenting the company’s plans at the CeBIT exhibition in Hanover.
Metro started to roll out RFID to its suppliers last October. In this next phase some 200 locations operated by the Real sales brand will be equipped with RFID readers at their loading doors for incoming goods. At the sales brand Metro Cash & Carry Germany, an average of 40 per cent of all merchandise sold is already supplied on pallets tagged with RFID. Metro Cash & Carry is now also preparing the roll-out of the radio technology at its locations in France.
The retailer offers its suppliers customised starter kits to help them make their first steps in deploying the technology enabling them to draw on the experience of Metro.
Under the plan from mid-2008, companies participating in the roll-out of RFID at Metro will be able to monitor their goods flow online using a web portal to show exactly when and where a shipment has been registered within Metro. Metro has led the way among European retailers in developing RFID and has been working on innovative solutions, such as equipping forklifts with RFID readers. This is being developed further for deployment under operational conditions. And, with the fitting of a high-rack warehouse, Metro is moving toward the integrated use of RFID along the complete supply chain: from the manufacturer right through to the store shelf.
The Metro initiative has kick started the roll-out of the technology among the suppliers to the retail sector in Europe just as the Wal-Mart initiative has done in the United States, but equipment suppliers are reporting growing demand across a range of industry sectors.
“The technology costs have tumbled over recent years and as long as companies consider the benefit case available and not just the costs they will be able to justify the expense,” says Andy Chadbourne of Intellident, while Eddy van Herbruggen, group RFID specialist for Zetes, says: “I would say widespread adoption started in earnest late last year and as a result, we are involved with a lot of implementations today – but mainly on the pallet level and for the tracking of returnable assets.”
Keith Ulrich, head of technology and information management at Deutsche Post World Net, says RFID needs to be a stable solution to be effective. DPWN sees RFID as a way of facilitating the links between its freight operation and its supply chain management. However, says Ulrich, one of the problems at the moment is that there is still not the infrastructure available in the market if you want a lot of readers and gates.
Paul Corbin of 3M’s Systems Engineering Laboratory points out that as printed electronics get more commercialised and become accepted as standard then “RFID will become cheaper. In around five years, passive RFID tags will be printed onto packages at relatively low cost”.
In fact, says Rob McGregor of Toshiba: “The only issue now is for companies to understand what RFID can do for the business, choose the correct technology/application and finally implement.”
However, he points out that any RFID is only as good as the data it provides. Using RFID to purely replace barcodes will not give real benefit. Adopters need to understand the technology and the additional business benefits it offers.
“It is imperative to understand the business case and to assess costs – until this happens it is impossible to calculate the return on investment.’
David Lyon of GS1 says the critical thing is to step back and look first at the process – not the technology. “The answer for every problem won’t be RFID.”
GS1 is responsible for setting standards but, says Lyon, it can also help in the decision-making process with the test centre that it opened in Cheshire last November. For example, he says, it can mock up the back of truck or replicate a cold chain to test what reader and tag combination works the best. Lyon says the EPCGlobal standard provides a standardised way to exchange date. This, in turn, provides a “chain of custody” making it easy to pinpoint where a problem has occurred and who is responsible.
A lot of people are under the impression that the technology is immature, says Lyon. But all the standards are now in place for UHF and by the first quarter of next year the global standard should have been ratified for high frequency systems. HF will be used for systems that need a read range in the region of two centimetres.
Andy Chadbourne of Intellident agrees that the key is to understand not where RFID can add value, but where their problems exist currently and “can RFID be applied to help solve these problems?”
“Our experience has shown that the most successful adopters of the technology have been those that have approached Intellident with a problem and asked our advice on the right technology for the problem. Often we have helped implement a solution that hasn’t used RFID where, for example, barcode has been the right technology. Trying to find a home for RFID in your business is not going to yield the desired return on investment.
Eddy van Herbruggen, group RFID specialist for Zetes, points out that, basically, RFID is just another auto ID technology – “but one with very specific benefits in that the systems involved can operate fully automatically without human intervention. So very often this removal of the need for human intervention becomes an advantage for logisticians because they can eliminate the inevitable human error. So it would no longer be a problem if an operator forgot to scan barcodes. Also, they no longer need to spend time reading barcodes, because the RFID process can track and trace products throughout their facilities without human intervention.”
Lyon points out that the practical problems of using RFID have largely been solved. Work-arounds are available for such problems as the Faraday cage effect (shielding by metal) and the deadening effect of liquids.
While Metro in Europe is rolling out RFID on a large scale, in the United States, Wal-Mart is extending its RFID operation to its Sams Club operation.
Lyon accepts that retailers in the UK have been slower in taking up the technology saying that so far they don’t appear to have been convinced of the business case. However, he says, Metro has made it clear that on-shelf availability has gone up.
Both metal and water can still present problems to RFID systems with regards to potential loss in performance, says Andy Chadbourne. However, he points to two examples from Intellident’s portfolio of clients, Marks & Spencer Foods and Honda UK Manufacturing, which both have challenging environments, but both have solutions implemented across their operations that deliver above and beyond the project KPIs.
Rob McGregor believes RFID can now be adopted in virtually any logistics environment by using complimentary technologies to overcome any potential issues. “Standards have now evolved and the current standards allow for much more flexibility. There are no real technical reasons for logisticians not to adopt RFID. The main issue is to choose the correct technology for the business application.
“Broadly speaking RFID can be adopted in pretty much all areas where barcodes are used and many areas where barcodes could not be used due to the line of sight issue,” says McGregor.
Clive Fearn of Zebra Technologies points out that RFID is making an impact in the motor industry. Ford, for example. is using RFID tags to identify where a car is on the production line and in the holding yard.
Motor manufacturers used to work on the basis of building cars for stock and then customising them once they were sold. However, they are moving away from this toward a build to order system. This makes it much more important to be able to identify quickly an individual vehicle among the thousands coming off the line.
Zebra has just introduced its RZ400 and RZ600 UHF RFID Gen 2 mid range printer/encoders which are designed for lower duty cycle EPC Gen 2 RFID compliance and closed-loop RFID applications.
Zebra developed its RZ Series to enable smaller suppliers to retailers such as Wal-Mart, Sam’s Club, Target, Metro, and Tesco, and companies just getting started with RFID implementation, to comply more readily with RFID tagging mandates. The range will be available towards the end of this year and are designed to complement Zebra’s existing line of high-speed, high-performance R110/R170Xi UHF Gen 2 printer/encoders.
Andy Chadbourne of Intellident says: “Logistics can obviously extend as far as into store, where RFID is really finding significant benefits around use in-store at item-level. OK, so we’re not at the unit tag price where we can tag all of the items in our grocery basket, but for key high-value stock lines we absolutely can. These certainly include clothing lines, but also other high-margin lines such as DVDs, computer games and cosmetic lines where the additional investment in RFID is rewarding the retailer with as much as double-digit improvement in sales.”
A lot of companies are looking at closed loop systems to handle asset tracking, he says. The costs of the system can be justified because the tags are constantly being re-used. However, says Ulrich, there is currently less interest in RFID for open logistics network operations – although he highlights the work being done in the retail sector on pallet tracking. Ulrich agrees that many of the technical problems have been solved with EPC Gen2 – the problems now, he says, are cost and availability alongside network stability.
Ulrich points to pharmaceuticals and electronics as two sectors where RFID can have an impact on logistics operations now. “A lot of customers can see the benefit and we are working with customers to implement systems in these areas,” he says.
The pilot phase is now over – people will see implementations this year, Ulrich says. As well as these two sectors, there are also solutions available for the fashion industry. RFID will not replace barcodes but be used alongside them, says Ulrich.
And Eddy van Herbruggen points out that one area where RFID is proving a hugely worthwhile investment for grocery retailers is in the identification of pallets and “special returnable cases” such as roller cages or refrigerated boxes. Here RFID can be implemented today, providing a huge return on investment.
“In these applications, the RoI for RFID works because it reduces human error thereby improving stock management accuracy levels and also improving goods tracking and traceability. For example RFID pallet reading is being used within automated warehouse facilities and offers benefits over barcode scanning in that it is faster and eliminates the risk of human errors when pallets are missed from a shipment. For the retailer, the additional cost (about 10p) for an RFID tag vs a barcode outweighs the loss of stock.
“If one considers the case for RFID at the box or individual item level, this is not viable from an RoI perspective because it is impossible currently to read all cases on the pallet simultaneously and corresponding extra costs are much higher at the item level. There are a number of successful applications European retailers are currently using RFID for, including: improving the traceability of meats and fish produce; tracking of valuable reusable containers.”
However, van Herbruggen says: “The cost of RFID will need to drop considerably before we see it being used for tracking low cost goods, that is, in retail for newspapers or a carton of milk. For these applications it just doesn’t make sense. It is as easy to scan barcodes on a point of sale as to scan RFID so there is no clear advantage.
“It is clear that RFID will complement rather than replace existing warehouse enabling technologies such as RF, bar-coding and voice directed task management,” says Alex Mills of Chess Logistics Technology.
Andy Chadbourne of Intellident says: “If an operation requires a single identification of an item then use a barcode. RFID offers absolutely no benefit when it comes to reading a single item.”