Has 2012 been the year of realisation for RFID?

For over a decade it has been described as the ‘next big thing’, but has not lived up to these expectations, partly due to its capabilities being wrongly communicated to the industry. This year has been the tipping point.

Why

RFID’s importance in the retail and apparel sector has grown significantly. While it is by no means new to the sector, having been used for the last two decades in security tagging, it is now enhancing the customer experience. Selected clothes in the new flagship London Burberry store are fitted with RFID tags which means as shoppers wearing such garments approach the so called “magic mirrors”, the mirror transforms into a screen which shows a film of how the garment was made and what it looked like on the catwalk.

The evolving use of RFID is not isolated to the retail sector, with its presence in the supply chain becoming a necessity for organisations who wish to gain better item traceability. In 2012 the growth of investment in RFID technologies, both passive and active within the supply chain sector has been constant, with visibility and enhanced service level performance being key to this uptake. Increasing visibility allows orders to be increased and shipping accuracy to be improved, allowing real-time reactions to potential delivery issues. It can also reduce costs through automation, minimising human errors and ensuring wasted stock is kept to a minimum.

As RFID uses radio waves to transmit data instead of optical scans of labels, it does not require the tag nor the label to be physically in view for the information to be readable. Early adopters of RFID have witnessed the significant improvements in day-to-day business operations, which become apparent almost immediately. Industry sectors including automotive and defence are now enjoying the increased visibility and tracking abilities that RFID is able to achieve in providing real time location monitoring of each asset as it moves through complex and varied manufacturing processes.

RFID myth broken

I mentioned earlier RFID being miscommunicated, which has been to its detriment for many years, but what exactly does this mean? The error in communication lies in many cases with its association with the barcode, as it had been believed some years ago that RFID’s emergence would lead to the elimination of the barcode. However as we are seeing, the two technologies are not enemies but allies. When working in tandem, they significantly increase item traceability in inventories while maximising the flexibility of complex operations and global supply chains. If we consider that a materials handling process, from manufacture to point of sale can span over 30 separate handlers or transactional stages, the need for a layered use of auto-ID technology becomes clearer. Not all handling operations will have the same level of infrastructure hence linear barcode becomes as important as the human readable elements on a label. Equally as bulk shipments are broken down for onward shipment or storage, the cost benefit of scanning each and every item becomes questionable when a single read can be made with an RFID deployment.

A further complication has been the additional cost to the enterprise of infrastructure and RFID embedded labels. As we have seen with other technology types however, a natural advance in technology development coupled with increased usage has led to RFID technology being well within the reach of the average SME. To look at a very recent example, On Pitch encoding eliminates dead space between RFID inlays, meaning that tags can be smaller, more discrete and as a consequence of better value thus changing the ROI.
Further the latest printer encoding technologies can detect the RFID inlay position within the label and automatically configure the printer/encoder without having to manually calibrate for the inlay, which ensures tag accuracy and saves significant amounts of time and money.

What is the benefit?

We hear more and more that increased visibility and serialisation/tracking within the supply chain is a fundamental in moving forward. Equally that improved access to meaningful data is a necessity in retail, manufacturing and healthcare. This is a natural progression given the changing dynamic of consumer behaviour, particularly the emergence of the ‘empowered’ customer. With an ease of access to information through multiple electronic as well as physical channels, the modern customer is no longer just informed, but has the ability to interact, interrogate and communicate with objects, people and organisations from distance. As consumer expectations on quality of service rise, industry and commerce has to respond.

RFID technologies are a means of achieving this. Not only is RFID a means of scaling and aggregating data to enhance process flow, supply chain fulfilment and inventory accuracy, it is a means of triggering activity and behaviour as demonstrated earlier with the ‘magic mirror’ technology. In addition, niche industries such as pharmaceuticals and hi-tech are under closer scrutiny due to the increasing emergence of counterfeit goods and as such keeping a near constant eye on item level goods as they work through the supply chain is of increasing importance.

RFID can help increase this level of visibility and tracking, particularly in industries with very high volume and value of inbound materials (such as automotive parts supply) as manual interventions in the form of item level or pallet level scanning is reduced. In high value manufacturing execution such as plant and machinery or automotive, active RFID technologies can be used to great effect to provide real time location monitoring of each asset as it works through the manufacturing process. And what all this means is a layer of aggregated data, specific to an item or group of items, that allows for enhanced business process intelligence – Exploring means of improving and expanding service and throughput in order to meet changing consumer requirements.

Optimising your manufacturing processes
An automated implementation at the Getrag Ford Transmissions plant in Cologne, Germany, is a prime example of how a wireless parts replenishment solution based on RFID can bring a sense of order to even the most complex manufacturing environments. The plant makes six varieties of transmissions for global automotive brands, including Ford, Mazda and Volvo. These transmissions must then be dispatched efficiently across the world to various assembly. Zebra’s Material Flow Wireless Parts Replenishment solution adopted by Getrag Ford Transmissions consists of 220 active RFID Zebra WhereCall buttons, each of which is associated with a specific part number and connected to a network of 12 wireless location sensors (antennas) for constant connection with the WhereCall buttons.

The company uses five ruggedized, mobile PCs mounted on forklifts for on-the-floor management. On the backend, the Material Flow Replenishment software application runs the entire application and gives the company the power to monitor operations in real time. Via the Supplier Portal, suppliers can be promptly notified when they should deliver more parts to the plant. When an assembly worker presses a WhereCall button to request parts, the exact time of the request is recorded and it is then prioritized according to the manufacturer’s established rules. When forklift drivers review requests, they are told exactly where to go to pick up the appropriate parts and exactly where to deliver them. Adopting this solution resulted in an improvement in labour productivity up to 20%, cutting a third of daily forklift trips while also decreasing on-hand inventory from local suppliers from seven days to two days. For Getrag Ford Transmissions, this represented $750,000 of savings in inventory carrying costs while nearly eliminating downtime due to parts shortages.

What does the future hold?

RFID’s use and presence will continue to grow strongly. ABI Research predicts that the market for RFID transponders, readers, software, and services will generate $44 billion from 2012 to the end of 2017. US department store, JC Penney, have announced that every item in store will carry an RFID tag, which could set a ground-breaking precedent for the retail sector and its adoption of RFID tags. Over the next two years the healthcare sector’s use of RFID technology could mean it becomes a lifesaver. With active RFID tags attached to all medical equipment, emergency staff could know exactly where that equipment is even when they have been moved around. If 2012 has laid the foundations for future growth then in the coming year RFID will surely proliferate into new sectors and innovation will allow the technology to be applied to previously unexplored applications.

bio

Matthew Parker is Head of Market Development for EMEA at Zebra Technologies – www.zebra.com – He can be reached at mparker@zebra.com