RFID: Tagging industry opportunity
RFID: Tagging industry opportunity
March/April Edition, 2008: While RFID (Radio frequency identification) technology is becoming more commonplace in our everyday lives, Australian industry is yet to embrace its potential to transform the management of the supply chain and end-to-end logistics.
The technology behind RFID is deceptively simple: the use of miniature electronic devices with a small amount of memory and an antenna able to transmit information contained on the chip. We use RFID "tags" to keep track of our pets, and many credit cards are now being issued with an embedded chip, ready for the day when RFID scanning becomes commonplace in retail outlets.
A tag of simplicity
The public face of RFID is the everyday e-tag, used by motorists to pay their way on the ever-multiplying number of toll roads bisecting our capital cities.Each time your e-tag beeps with the news that a couple of dollars has been deducted from your bank account, you have taken part in an example of a "closed-loop" RFID application environment, as defined by industry analysts ABI Research in a recent report looking at the growth prospects for RFID technology.
ABI Research director Michael Liard believes the increase in available RFID technology and applications is reflective of a market moving beyond traditional closed-loop application environments to asset management and open-loop supply chain applications.
It is believed that it is here that RFID offers a major opportunity for business process improvement – enabling a more visible and effective supply chain, better tracking of corporate assets, and so forth.
“RFID has the potential to transform business operations and to offer significant business advantages, but more pilots and trials have been made public than full-scale implementations,” says Laird.
Craig Lennard, managing director, Industry, Distribution and Transportation at Australian consulting firm Logica, has been working closely with a number of major Australian companies to help them asses RFID technology.
Lennard acknowledges there are presently only a limited number of niche applications of RFID technology in Australia, with widespread uptake awaiting its adoption by a major retail or transport company in Australia. This impetus has been provided in the US by Wal-Mart's long -running program to require all its suppliers comply with its RFID requirements.
"Until a retailing giant adopts the technology in Australia, and requires its suppliers to comply, the business case does not exist for Australian industry to take the leap yet," says Lennard.
Logica has established real world implementations of RFID at a dedicated Sydney warehouse used to demonstrate the promise of the technology. It is currently working with some of Australia's biggest transport and logistics companies seeking to explore ways of using RFID technology to keep track of assets through the supply chain, and Lennard expects to begin making some serious implementations this year.
Adoption of RFID technology presents a series of challenges, not the least being the integration with existing business applications and IT infrastructure. There is also the challenge of choosing a range of competing and incompatible standards for the "tag" devices themselves.
Roadblocks to the future
One early roadblock to the widespread use of RFID in Australian business comes from our restricted ability to employ the same UHF spectrum for RFID tagging that has been adopted successfully by Wal-Mart and others in the US.The spectrum allocated for RFID in Australia is adjacent to that utilised by Vodafone for its GSM phone network. Concerns over the potential for interference mean that RFID systems must operate at a reduced power level, reducing their effectiveness and halving the distance at which a scanner can successfully read a tag.
GS1 Australia, the local arm of the organisation responsible for global RFID standards, is leading an industry effort seeking to end this restriction. It is working to prove to Vodafone and the Australian Communications and Media Authority (ACMA) that increased power levels are viable and will not threaten GSM phone communications.
Logica Managing Consultant Kevin Larnach believes the restrictions could be lifted by mid-2008, solving what has been a major issue of concern to large Australian logistics companies and retailers "There's been a huge ongoing effort by certain government departments, industry groups and industry itself," he says.
"We hope to undo the effects of past decisions on spectrum allocation that have left Australia out of step with global trends for RFID."
Although a vital link in the chain, tagging and scanning technology is only one aspect of the revolution to business processes enabled by RFID.But there’s still a massive challenge presented by the potentially huge volumes of data generated by RFID applications in the real world.
"It presents a major change in business processes," says Larnach, "because you now have much more data available in real-time and coming from points where you did not previously collect data.
Larnach believes companies are daunted by the implications of looking at all this data when a lot of the systems they have in place are all about looking in the rear-view mirror. “For instance, your SAPs and Oracles are all about reporting on transactions at the end of the week or the end of the month. If you are using RFID technology for the same thing then you may not realise the full benefit,” he says.
"We find that a lot of the companies that have been forced into doing this, as part of the Wal-mart example for instance, once they sit down and looked at it in a lot more detail, and done more implementation in supply chain or their own warehouse or manufacturing facility, that's when they've started to derive the benefits."
Tyrekicking RFID standards
A major international trial of RFID was recently undertaken by the Transportation and Logistics Services Industry Action Group of EPCglobal, the global RFID standards organisation.
The pilot was supported by numerous international logistics companies, solutions providers, hardware vendors, and others.
Specifically, the pilot targeted processes related to the transportation of tires from China to the US. The pallets and containers used for loading the tires were equipped with RFID tags conforming to EPCglobal standards. Information based on the RFID tags read by RFID reader/writers installed at various checkpoints, including factories, warehouses and port terminals, was shared in real time among the companies involved, in order to track and trace the cargo throughout the transportation process.
The results of the pilot confirmed that it was possible to share and visualise, in real time, the time, date, location, and status of the cargo at every step throughout the transportation process, including handover of cargo by shippers and logistics companies and the arrival of containers at port terminals.
A number of functions to fulfill the requirements from real-world operations were evaluated in the pilot. For example, based on standard transport times between checkpoints and time limits set by the shipper, an alarm sounds if the specified time limit has expired and the cargo has not reached the next checkpoint. In this way, the pilot confirmed that a distribution model using EPCIS was effective in resolving issues faced by the international logistics industry, such as creating more accurate distribution plans and enabling a rapid response to changes in these plans.
The trial employed WebOTX RFID Manager, middleware developed by NEC which makes it possible to build supply chain management systems utilising RFID on a global scale by absorbing the differences in the many reader/ writer tag specifications of the mainly Japanese vendors.
This allows application developers to develop systems efficiently by using the common API (web service) independently and without device constraints. When this development environment is integrated with the WebOTX Application Server, it is possible to support the entire application-related process from the development to the debugging stage.
NEC also contributed to the testing of the international distribution system model’s effectiveness by designing and developing an EPCIS-based logistics management application system that was suited to real-world logistics processes.
“There are many parties involved in international transportation and logistics industry, including shippers, forwarders, carriers, trucking companies, and port terminal operators, in fields such as settlement (banks for international settlement) and official procedures (customs and quarantine),” says Shin-ichi Ishii, Senior Consultant, Business Transformation Consulting Department, Nomura Research Institute (one of the trial participants).
"As a result, it is considered that standardisation in this industry is difficult. In this global pilot project, it is not only shown directions for improvements in the practical aspects of international standards developed by EPCglobal, but also taken a significant first step toward applying these standards in a more complex field of door-to-door (international multimodal) transport.”