Many have lauded RFID (radio frequency identification) as the hottest thing in automatic identification. Ultimately, the technology is supposed to track products through every stage
in the supply chain-but has it been delivering on its promise? The answer is not yet, but an affirmative response may loom in the future. RFID is already inching closer to widespread adoption in real-time product and asset tracking.

First, the bad news. RFID still comes with a high price tag and no real standards in place yet, says Edward Rerisi, senior analyst at New York-based Allied Business Intelligence (ABI). In addition, he says, economic issues remain a stumbling block for the technology. RFID is a speculative endeavor, and companies are reluctant to spend money on it, especially when spending is now being cut for even essential technology. But there's good news for this labor cost-cutting technology that, unlike bar code technology, allows labels to be read without a direct line of sight. Because of its capabilities, its role in the supply chain is growing.

The percentage of RFID tran-sponder shipments for supply chain management applications is projected to rise dramatically from 1% today to 46% by 2007, says ABI, with asset management expected to corner a 24% share of the market. The many advantages that the technology provides cannot be ignored. RFID tags may be more expensive than bar code labels, but they can do so much more. Embedded or attached RFID tags can endure severe conditions and contain large amounts of data that can be changed, updated and read in bulk by radio waves. Combined with item-level bar code tracking and geo-spatial technologies, RFID can give you real-time, accurate information about your products' whereabouts and provide enhanced security. With RFID, warehouse workers will no longer need to create and scan bar code labels during receiving and putaway-allowing for sharp reductions in keypunch errors, paperwork and labor cost.

RFID may not have taken over the supply chain yet, but it's proving its worth in closed-loop systems, tracking reusable materials such as pallets, totes, roll cages, shipping containers, rail cars and trucks. In such systems, RFID, along with its companion technology, the real-time locating system (RTLS), is proving to be cost-effective. The RFID tag is only a fraction of the container or pallet's cost, and if you're using those pallets over and over again, you can amortize the cost of that one tag for months or even a decade or more, says Rerisi. If you're spending $2 for an RFID tag today and you use it for 20 years, you only pay 10 cents per year.

Several companies are already conducting trials of the technology. Coca-Cola, Johnson and Johnson, Target, UPS, and Unilever, among others, are trying out RFID in their supply chain, through the Auto-ID Center, a consortium dedicated to establishing open industry standards and developing "smart object" technologies. Through the center, Wal-Mart Stores Inc. of Arkansas, the USA's largest retailer, is testing the use of RFID on pallets carrying products purchased from Cincinnati, Ohio-based Procter & Gamble Co. It has already tagged pallets of P&G products at several of its distribution centers and retail outlets. Such RFID tests are already yielding positive results.

In the biggest RFID trial so far, conducted by Florida-based CHEP International Inc., provider of pallets and containers to 38 countries, the technology's deployment has already brought benefits. By tagging a portion of its products, the company has been able to deliver better value-added product tracking services to its customers and to monitor actual pallet losses more accurately.

Meanwhile, U.K. retailer Marks & Spencer says the use of RFID has improved scanning speed. The company tried out Dallas, Texas-based Texas Instruments Inc.'s RFID systems on its refrigerated food supply chain and found that compared to bar codes, RFID could read a stack of multiple food trays 80% faster-an important gain in perishable goods. The retailer will soon tag 3.5 million reusable trays, dollies and roll cages. RFID also holds a lot of potential in supply chain security. California-based Savi Technology Inc. is spearheading an initiative to ensure the safety of cargo containers around the world. Already gaining much government and industry support, the plan involves using the cargo container tracking infrastructure that Savi already built for the Department of Defense's Total Asset Visibility (TAV) network. Savi plans to tag each cargo container with an RFID seal, which will store the container's list of contents and allow for its accurate tracking and faster movement through ports. In addition, the seal will supply the container's chain of custody, possibly deterring smuggling or sabotage.

Aside from increasing security, smart seal technologies can also reduce inventory, says Vikram Verma, Savi president and CEO. The system was tested in ports in Seattle, Hong Kong and Singapore last fall. Also, Woolworths UK is testing the technology, tracking dollies, roll cages and totes. RFID can also be used in combination with other more established technologies. Even though it's often considered a likely replacement for bar codes, it can incorporate the older technology. For example, U.K.-based Allied Domecq PLC utilizes both technologies to monitor whiskey shipments-marking bottles and cases with bar codes and pallets with RFID tags. Conventional electronic article surveillance (EAS) systems, which guard against shoplifting in retail stores, also work well with RFID. In fact, RFID can help retail stores with both security and inventory management. "With RFID, we wouldn't have to physically check product in the store, and it would improve the accuracy of piece counts," says Jeffrey Johnson, inventory director, supply chain and e-business, at Best Buy Co. Inc., Minnesota.

Indeed, RFID is not only for high-value assets but individual items as well. It's already being used in work-in-process (WIP) tracking with automakers tagging vehicles through the assembly process and Dell Computer Corp. using the technology to monitor trays of parts and components during production. However, its use in item-level and even case-level tracking still requires engineering expertise. Companies have to determine how the packaging material, be it paper or metal, will affect the system. In addition, the technology requires a large infrastructure of RFID readers and application software. Still, there are big players such as Wal-Mart and Target that could push the technology into the supply chain. But for now, RFID is consigned to trial runs and high-level tracking, and remains on the verge of widespread use.

Source: "Eye" Spy Brian Albright Frontline Solutions, Oct. 1, 2002. Copyright © 2002 Thomas Regional Directory Co. 5 Penn Plaza, New York, NY 10001