RFID TECHNOLOGY
2.1 PRIMARY DRIVERS
2.1.1 RFID Technology Deployment
When Wal-Mart and the U.S. DoD announced their mandates in 2004 or earlier, they required all their top suppliers, regardless of their size and revenues, to undertake expensive investments in the deployment of the RFID technology infrastructure with a promise of ROIs in a few years. In some pilot studies the quality of RFID labels, readers, and the software arose, and have led some suppliers to customize technologies to suit their
40 RFID in the Supply Chain: A Guide to Selection and Implementation
environments. Whether the technology infrastructure had to be customized, some suppliers were ahead of the schedule in meeting the mandated dead- line. Most other suppliers were ready to meet the deadline by the first day of January in 2005 whereas the remaining suppliers were still in the pilot stage, and needed further testing and guidance before they would begin deployment later on.
For Wal-Mart, the deployment appeared to slow down when the com- pany announced it was deluged with data. This occurred because the company did not take the incremental approach the German retailer, METRO Group, did. In contrast with the Wal-Mart mandate for its top 100 suppliers on the same day, the METRO Group started with 20 suppliers in the initial rollout in November 2004 and continued to take in additional suppliers. The METRO Group would expand the rollout to include 300 suppliers in 2006.
The success of METRO group is attributed not only to their incremental approach but also their focus on the initial deployment of pallets and cases.
Another success factor is some suppliers’ use of automatic pallet-labeling device for Ultra High Frequency (UHF) RFID tags for shipments to the METRO Group. Nestlé worked with Sato and UPM Rafsec, an RFID tag headquartered in Tampere, Finland, to develop this device. The METRO Group’s early deployment success in the initial rollout in November 2004 does not mean the deployment has been flawless. Rather it means it started the deployment earlier than originally anticipated or planned.
The METRO Group has taken not only the incremental approach to deployment but also the top-down approach in a hierarchy of tag objects with the pallets at the peak of a pyramid (see Figure 2.1). In the pyramid, the pallet level is followed by the case level and then the item level. This means each pallet consists of cases, each of which in turn consists of items.
Rather than requiring all major suppliers to use RFID tags on the same day as mandated by Wal-Mart, Albertsons, a large supermarket chain in the United States took an incremental collaborative approach, not just the METRO Group’s incremental approach. The company wanted to learn as the tech- nology matures, meaning that it strived to prepare for initial rollout of
Figure 2.1 Object Hierarchy
Case Case Case Case
Pallet Pallet
Item Item Item Item Item Item Item Item
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deployment with no or little problems. It needed to collaborate with suppliers to consider, for example, what unanticipated factors could affect tag reads.
Albertsons aimed to have all of its suppliers tag shipments by October 2005.
Target Corp., the fourth largest retailer in the United States targeted June 1, 2005 for RFID compliance. Its top suppliers have been required to apply RFID tags on pallets and cases. The company wants all suppliers to tag pallets and cases by the spring of 2007.
Whatever the deployment dates and issues are, one goal of many execu- tives is to generate higher ROIs and favorable profit margins with less capital by improving inventory management control, replenishing shelved items, tak- ing stock orders in real-time, and better utilizing space. Although the demand for RFID technology has resulted in cheaper tag prices, some large retailers selling their merchandise at bargain prices may find current tag costs high.
As the demand for RFID technology increases, more and more off-the- shelf software packages will become available at cheaper prices. Automat- ing the production of RFID hardware (readers and tags) will become more widespread for less money. New middleware standards and strategies will emerge allowing vendors to work together on leveraging and integrating tag data from diverse sources in a common format.
While waiting for the RFID item technology to mature, you should consider a model monitoring the maturity of your organization to gauge the effectiveness of your investments in an RFID technology infrastructure.
For instance, the Capability Maturity Model has five levels of organizational maturity [1]. It starts with ad hoc, the initial level of maturity, and then proceeds to higher levels in respective order: repeatable, defined, man- aged, and optimizing. We discuss them each in a supply chain model later on in this book.
Another area to gauge the effectiveness of your investments is better inventory management and control. It, as a matter of fact, got the highest number of scores as the most important benefit from RFID technology from the survey participants who responded to an online survey conducted by Computing Technology Industry Association (Comp TIA) in September 2004 [2]. More important than easier tracking and recalls that took fourth place were reduced product tampering, theft, and counterfeiting, and improved collaborative planning with supply chain partners, respectively. This makes sense as better inventory management and control aims at reducing the risks of tampering, theft, and counterfeiting. It also means it requires better planning of collaboration among trading partners.
The third area to gauge is the effectiveness of the automated process of manufacturing passive tags. One example is Alien Technology’s “fluidic self- assembly” techniques of integrating all tag production steps into one auto- mated manufacturing process. This technique already has dramatically increased Alien’s capacity to two billion tags per year.
42 RFID in the Supply Chain: A Guide to Selection and Implementation
In addition to Alien Technology, Gillette, a key player in the Massachusetts Institute of Technology’s Auto-ID Center, used OAT’s RFID middleware in a pilot study to connect and integrate with various readers, to filter and route data, and, of course, to track and trace goods from one point to another in the supply chain. Once the middleware transforms the data into a common format, it sends them to Provia warehouse management soft- ware, the core of its Supply Chain Execution (SCE) applications.
In view of high costs of RFID technology investment, Gillette cautiously moved from pilot studies to limited scope reality as of November 2004, the same time when METRO Group announced Gillette is one of the suppliers in the initial deployment. Gillette’s scope of RFID implementation will be broader when the company is able to scale consumer its item-level products to a mass production environment and produce an extremely high accuracy of product tracking.
Even if RFID technology eventually takes a major share of the market of automated data collection at the pallet, case, and item levels, bar-code tech- nology may still be used in certain situations where passive RFID tags (with a frequency of 13.56 MHz) cannot easily read through metal or foil packaging or at great distances. As radio waves bounce off metal (and are absorbed by water), RFID tags may not be embedded within metal objects (with high water content). Those tags have been adapted to read through metal but at a distance far shorter than the distance at which most tags can be read. One recommendation is to use lower-frequency tags that have better penetration capabilities but have other drawbacks not inherent in the 13.56 MHz tags.
The U.S. DoD, however, has a different reason for issuing RFID mandates for passive RFID technology in its attempt to close some information gaps to expedite faster turnaround times. It has found that active RFID technology better tracks and manages the shipment of assets in real-time from supply chains to the battlefields overseas, down to the soldier level, although it has met with some logistics problems due to fast-moving battlefields.
The U.S. DoD has been using active RFID tags in Operation Iraqi Free- dom (OIF) on an ad hoc basis to manage shipments in transit. It has implemented the use of active RFID across the board to be integrated into the supply information systems.
Over the past decade, the military has spent millions of dollars in imple- menting the RFID technology as a way of reducing the loss or misplacement of supplies (such as those items that were never used during the 1991 Gulf War) and the shortages of ammunition, fuel, and water that plagued American troops during and after the invasion of Iraq a year ago. One implementation goal is to maintain a smoother flow of supplies to the front lines given transportation constraints. Another goal is to allow a rapidly moving force to continuously replenish its supplies through better inventory management control. The military must know what they have, where the supplies are, and how they are used.
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In 2003, the U.S. DoD began to implement passive RFID program while asking suppliers to start attaching passive tags to their supply items for a better control of inventory systems at the soldier level, so that the inventory systems of record could be automatically updated while under fire. The U.S. military learned a lesson that using active RFID worked well in Kuwait in 1991, but with the rapidly moving force in Iraq, the process of delivering the supplies at the soldier level became more difficult.
The U.S. DoD claimed to have not used any passive RFID in OIF.
Although it has used the active RFID, it decided to mandate suppliers to attach passive tags to their merchandise, except liquids, metals, and bulk commodities that interfere with transmission of radio signals. It is important for soldiers to receive the supplies continuously replenished in order to move about in battlefields. When the supplies were not available, the soldiers used American ingenuity to replace them with makeshift versions or cannibalized parts from larger unused supply items.
2.1.2 RFID Technology: Basics, Advantages, and Disadvantages Now the U.S. DoD and Wal-Mart have taken the initiatives to mandate suppliers to put passive RFID tags on cases and pallets as the technology is seen to save costs and time in better inventory and item tracking man- agement. Although the suppliers are finding ways to implement or have implemented the technology, the market for active RFID technology con- tinues to grow but at a slower pace.
The market for passive RFID products is growing faster than the market for active RFID products primarily because the passive products are smaller and easier to handle than their active cousins. Because they are smaller, the data storage capacity for the passive tags is smaller than that for the active products. For example, each passive tag can store about two kilobytes of information, such as how to care for the item, details about its supply chain history, and even data about the customer who purchased it.
The storage capacity for active tags is much larger to allow multiple files of larger size on the server database via a laptop. For both RFID technolo- gies, the readers can be either mounted on a surface or something you can wave in the air with more flexibility in orientation than is possible with bar- code technology. The data transfer rate for active products is much faster than that for passive products.
RFID tags can be programmed to send, receive, and modify data, and may contain protocols on who can read part of the data. Bar codes, on the other hand, are visual presentations of the data to be read by an optical scanner. Once printed they cannot be modified.
The degree of programmability is contingent on how much power the passive RFID readers can generate to the tags, and the active and semi- passive RFID readers can wake up the tags. The more power the tags can
44 RFID in the Supply Chain: A Guide to Selection and Implementation
have or receive, the more possibilities there are for programming read/write capabilities of a reader. In active tags (and perhaps some programmable passive tags), data may be secured, and only certain individuals assigned passwords to read them.
Passive RFID tags draw their power from the silicon chip from radio waves reflected by an RFID reader within the short scanning range of the radio frequency field. When the tags are outside the radio frequency field, they will not work. The power to the chip must meet the minimum voltage threshold needed to turn on the chip. When the chip is turned on, it can send back information on the same radio frequency wave. Range is usually limited to several meters. So ask about the voltage threshold if this infor- mation is not available in a technical specification.
Yet, the possibilities of programming are not realized unless the readers are connected to a laptop via a communication interface, LAN, or a wireless or cellular network. Even with the connected readers, the memory size of the RFID chips (usually 128 bytes) greatly limits how much they can be programmed.
Although the read/write tags are more expensive than the read-only versions, they may provide better anti-theft deterrence and other security features. For some applications, they could be used for quality assurance.
Although passive RFID tags do not require batteries, passive handheld readers contain rechargeable batteries that may be charged directly through the RS-232 or USB port.
Active RFID tags draw power from batteries from a reader with a maximum of up to ten years or so of continuous battery life. The reader is both a transceiver and a decoder. This means when it transmits a signal though the antenna, the tag answers or reflects the information embedded. The memory size is configurable up to eight Kbytes, allowing more programming options than offered by passive tags. Although heavier in weight, the active RFID technology is better in programming asset tracking in mobile environments.
Unlike passive tags lacking battery power, semi-passive tags (also known as semi-active tags or smart label tags) are tags with a power source such as a laminar, flexible, low-cost, and small battery to run a chip’s circuitry (e.g., on-tag temperature sensor). These tags may rely on a reader to power the transmitted signal that can be used for on-tag temperature or other types of sensing. They can be used to monitor inputs from sensors to detect drastic changes in temperature (e.g., too hot or too much mois- ture) or any other aspects of the environment that could adversely affect the quality of the tagged object.
Unlike active tags that come with much stronger battery power, semi- passive tags do not boost the radio frequency range. Semi-passive tags offer a better read range (e.g., more than 100 meters) than their passive counterparts.
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Unlike passive tags, active tags can receive a weaker signal from the reader at a wider field frequency range at a greater distance. These tags get their energy from the batteries that when activated transmit a signal to a reader. The power source on these tags boosts the return signal. These tags have ranges anywhere from tens of meters to hundreds of meters.
They, however, cost more than the passive and semi-passive types because of the complexity of the circuitry. Like semi-passive RFID technology, active RFID technology can be combined with sensor applications to detect environment changes that could result in, for example, spoiled chicken or damaged computers.
Some reasons for the slower growth of active RFID technology are that the batteries may unexpectedly die out long before the battery life is sched- uled to cease, and that the geographical zone for the antennas must be defined. A minimum of one antenna must be located in one zone. Although several antennas enable more accurate tag positioning, improper position- ing due to reflections from walls and equipment can adversely affect the transmission from the batteries. The tags that are not located in the correct horizontal or vertical levels in buildings also affect the transmission quality (see implementation example 3 on Canus in the latter part of this chapter).
Although most industrial, retail, and supply chain sectors require only the simplest, lowest-cost tag, the potential value of more complicated tags justifies their increased cost in certain industries. For example, the food industry may want to add temperature tracking by adding a temperature sensor on tags. If one or more tags detect a sudden increase in temperature during shipment or some other means of transport, the tag will send an alert regarding the unexpected mechanical breakdown of a refrigeration system during the transport or in a warehouse via a fixed, portable, or even Palm-mounted reader to a manager. After getting an alert, the executive or manager can remotely turn on the backup system in a warehouse, redirect a moving vehicle to the nearest supply chain location or send an emergency crew to fix the refrigeration system.
The executives should get a report or two on these alerts, so that they can prevent a similar situation form happening again. It is far cheaper to consider, evaluate, and choose backup refrigeration or other system than to pay the high costs of replacing spoiled foods, the packaging materials, and even thousands of tags affixed to them.
If the tags do not need a sensor, you’d be better off with the cheaper passive tags for other merchandise. On the other hand, if you need a reader that can read both active and passive tags, consider a hybrid reader allowing a handler to easily switch from a passive mode to an active mode with a click. You must determine what data you really need. Unwanted data creates information system bottlenecks adversely affecting the turnaround times for cases and pallets.
46 RFID in the Supply Chain: A Guide to Selection and Implementation