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RFID settles in

With suppliers jumping on the RFID bandwagon and more deployments looming on the horizon, the future of RFID remains promising. Here are the market drivers that continue to push ADC/RFID adoption and examples of facilities that are putting it to work.
By Maida Napolitano, Contributing Editor
April 01, 2013

From keyless ignitions to moisture-sensing diapers, RFID technology continues to permeate everyday living. In today’s supply chains, the technology relies on readers and passive UHF tags to automatically and wirelessly capture and leverage electronic product codes (EPC) encoded with product information and serialization. 

Unlike a bar code, these tags do not need to be within line of sight of the reader, resulting in increased operational efficiencies. Unloading an inbound container, for instance, which may take about two and a half hours to individually scan, sort and count cartons, may now take less than half an hour with RFID-tagged cartons.

Despite these proven benefits, however, RFID’s adoption in the supply chain has been wrought with twists and turns. Wal-Mart’s initial focus of tagging pallets and cartons of consumer goods has for the most part “languished on the vine,” according to some experts. Instead, in 2010, the retail giant decided to shift its focus and began tagging at the item level. Other U.S. retailers, including Macy’s, Bloomingdales and American Apparel followed suit, launching their own successful item-level RFID pilots of mostly apparel and footwear—reporting much-improved visibility and higher sales at their stores.

Today, item-level tagging remains one of the biggest drivers of RFID adoption. “Those with pilot projects last year are now in full deployment, and that represents big progress for the industry,” reports Mike Liard, vice president of auto ID and data capture for VDC Research. “We’ve got some new retailers on board who are international players and who are significantly enhancing the volume.”

In fact, these early item-level adopters are now busy fine-tuning the process. “They want to know how to deploy RFID faster and more efficiently,” says Patrick Javick, vice president of retail apparel and general merchandise for the standards-setting group GS1 US. “The question now is: ‘How do I get my vendors on board?’” According to Javick, the number of suppliers tagging products with RFID has increased from approximately 200 to as many as 600, and these suppliers now want to know how they can get the extra benefits from the technology.
With suppliers jumping on the RFID bandwagon and more deployments looming in the horizon, the future of RFID remains promising. Being able to automatically capture data by simply passing tagged items through portals and readers—without opening or sorting through cartons—has improved efficiencies in the DC while increasing visibility throughout the chain.

Push toward source tagging
For years, it took a retailer’s mandate to trigger a supplier to move forward with RFID adoption. According to experts, however, this is beginning to change as an increasing number of retail partners are looking at item-level RFID tagging at the point of manufacture.

“The majority of EPC tagging efforts takes place in the DC where it is just not as cost effective,” says Javick. “The last 12 months has seen a significant increase in the number of brand owners (suppliers) in the apparel and general merchandise industry starting to move EPC-enabled RFID deployments back to the source—and industry leaders are expecting to see this trend continue.”

As suppliers start to deploy and tag products at the source of manufacture, the goal is for them to also enjoy the benefits with more accurate inbound and outbound audits in their own DCs as well as more efficient receiving and shipping processes. 

Managing assets
Increased asset management continues to be another leading reason for growing RFID adoption. In this application, passive and/or active tags are affixed to products, containers equipment—and even people. 

Using handheld computers integrated with RFID readers, organizations can acquire, in real time, proof of identification and monitor an asset’s location and its current status.

Adding a Web-based solution allows users to transfer this information online so that upper managers and other interested third parties can also access the most up-to-date data and make timely decisions regarding these assets from any location in the world, as long as there is Internet access. 

For years, supply chains have been using RFID to track and manage returnable product containers, especially in closed-loop systems. The same technology has also been applied to yard management and even warehouse workers on the floor. Depending on the asset, a range of unique specialty tags have been developed to solve specific business challenges.

This year, in support of its vision to improve healthcare efficiency, the Department of Veterans Affairs (VA) announced that it was funding $543 million in a project to establish real-time location systems (RTLS) at all 152 of its hospitals and seven outpatient pharmacies. This deployment would involve attaching millions of RFID tags to medical equipment, surgical instruments and supplies, further driving RFID adoption in the healthcare industry to unprecedented levels. 

This project would begin with simple asset management and the management of supplies in laboratories, but is slated to expand to tracking patients and controlling patient wandering. In RTLS, tags attached to objects or people emit wireless signals that determine an asset’s location usually within a building or other contained area.

Better tags and readers
Another big driver for RFID adoption is the continued improvement of all components of RFID technology. Kurt Mensch, principal product manager for RFID for Intermec, says that their new 70-series readers have become highly portable, mobile and multi-modal—not only reading tags, but still able to scan bar codes and use voice technology for warehouse tasks. The mobility provider has also solved the issue of reading peripheral tags through software “so we can detect tags that are in motion and those that are stationary.” 

Reader throughput has also made significant strides. “In 2009 we were reading 5,000 items in an hour,” adds Javick, “Today we are capable of reading 20,000 items in an hour.” Longer read ranges and the ability to read labels on metals and liquids are other more notable developments. In fact, GS1 Italy just completed successful item-level pilots of consumer electronics involving the tagging of products with high metallic content.

The tags themselves also continue to improve. Some tag providers are manufacturing tags so thin that they can be placed within banknotes. Some are embedding them into an item’s clothing care label and combining them with Electronic Article Surveillance (EAS) systems. “It’s not only an inventory control solution, but it’s also a security or loss prevention system attributed to RFID,” says VDC’s Liard.

With increased adoption, tag price points continue on their downward spiral, hovering between 10 cents to 15 cents depending on quantity, how elaborate you need them to be (graphics, print, card stock), and the amount of memory it needs to carry. “That’s much improved from 25 cents just three years ago,” says Javick.

He also adds that software systems related to RFID solutions are becoming more turnkey. “This allows for greater integration into the core legacy systems and these store systems are able to better manage the serialized data that comes with EPC reads.”

Product tracking and traceability
Another driver for RFID adoption has been the continued pressure from government agencies to protect America’s food supply by ensuring product traceability. Mike Maris, senior director for transportation, distribution and logistics for Motorola Solutions, describes traceability as the ability to track the flow of each food item in its cold chain “from farm to fork.” Because it involves thereal-time recording of a considerable amount of information, traceability becomes a natural candidate for item-level RFID tagging. 

With traceability, product-related data—including proper storage and transport temperatures, manufacture dates, shelf life, expiration dates, lots, batch and serial numbers—are stored directly on RFID tags that are attached either directly to the product or on pallets and returnable plastic containers. 

At each stage of the cold chain, product data can be recorded and updated wirelessly and automatically as products move through RFID portals from the farms through warehouses to stores. The information on the tags can also be used to quickly trace product back through the cold chain in the event of a recall.

With RFID, an electronic record of a product’s journey through the supply chain—or its pedigree—can be created and maintained to verify authenticity, combat counterfeiting, and ensure consumer safety. Liard reports how South Korea is currently tagging millions of units of pharmaceuticals at the item-level in response to government mandates and to stem the illicit trade of counterfeit drugs.

What’s holding RFID back?
Despite these drivers that are spurring adoption, many remain unsure about RFID. Education and awareness continues to be a big challenge. “Many executives believe that it’s still about tagging cases and pallets; it’s moved well beyond that,” says Javick. “They have not looked at it recently. GS1 US offers an educational program to brands and retailers as part of deployment support.” This program provides the training, tools and community support to incorporate EPC item-level tagging into day-to-day operations.

Liard points to industry collaboration—such as those pilots spearheaded by the retail community—as what helps drive the market. “Retail came together as a community to share their learning,” adds Liard. “They demonstrated the business case and the return on investment. We don’t have that collaboration outside of retail quite yet, and that’s a big challenge. That’s what’s keeping us back.”

RFID Pilot Project: Tagging high-value consumer electronics

As part of GS1 Italy’s i.Trace initiative, Mediamarket, a leading European electronics retailer, in partnership with DHL, Sony and Samsung, recently completed a successful pilot of EPC-enabled RFID technology for high-value consumer electronics. The project aimed to study the benefits of tagging a range of valuable consumer electronic products—some of which were small and particularly susceptible to theft and loss. 
At the start of the pilot, 55 SKUs from Sony and 34 SKUs from Samsung were selected. In total, more than 10,000 units were tagged, including notebooks, digital cameras, video games and mobile phones. Linda Vezzani, EPC specialist for GS1 Italy, noted how these products are more difficult to process from an RFID perspective. “They are small and contain a higher quantity of metal parts,” says Vezzani. “All of this makes the traceability of these products particularly complicated all the way through the chain.”

The operation begins with Mediamarket’s logistics provider, DHL, receiving products from Samsung and Sony at two high-value warehouse locations. Upon receipt, products are inspected, wrapped, and put away into storage. 

For this pilot, products bound for Mediamarket’s Saturn store in the Le Due Torri di Stezzano shopping mall are tagged at the warehouse. In a process known as “thermo-retraction,” the tag is activated, read and associated with a product’s serial number. Multiple smaller units are associated with the EPC code attached to a larger carton, and reading the tag on that carton will automatically identify the SKUs and units inside it. Cartons bound for the same store are put on a pallet that also has its own tag that identifies the cartons on that pallet.

A lift truck driver transports completed pallets through a dock door portal equipped with an RFID reader. By moving through the portal, the system automatically reads the tags and records the quantities and serial numbers of each SKU that is being loaded into the truck. 

At the store’s receiving dock, inbound pallets are again transported through another gateway portal and are automatically received. A second gateway portal between the store’s backroom and the sales floor automatically traces and records the individual serial numbers that are being moved to the store floor.

In the warehouse, this RFID pilot resulted in a 30% reduction in the time it took to process store shipments. Shipping accuracy improved while enhancing the security of the supply chain leading to fewer losses, while inventory managers now have better visibility to potential “stock-out” events. In addition, the shorter cycle time to stores meant that products make it to the store’s shelves quicker.

At the Saturn store, receiving operations are automatic and much more efficient. Inventory visibility into backroom stock and the stock on store shelves is also improved, and store employees who used to scan and manually count inventory are now focused on making sales. Considering the effects not only in terms of efficiency, but also effectiveness, the payback period for the RFID investment could be achieved within a few months.

About the Author

Maida Napolitano
Contributing Editor

Maida Napolitano has worked as a Senior Engineer for various consulting companies specializing in supply chain, logistics, and physical distribution since 1990. She’s is the principal author for the following publications: Using Modeling to Solve Warehousing Problems (WERC); Making the Move to Cross Docking (WERC); The Time, Space & Cost Guide to Better Warehouse Design (Distribution Group); and Pick This! A Compendium of Piece-Pick Process Alternatives (WERC). She has worked for clients in the food, health care, retail, chemical, manufacturing and cosmetics industries, primarily in the field of facility layout and planning, simulation, ergonomics, and statistic analysis. She holds BS and MS degrees in Industrial Engineering from the University of the Philippines and the New Jersey Institute of Technology, respectively. She can be reached at .(JavaScript must be enabled to view this email address).

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