While still in its infancy, radio frequency identification technology is gaining momentum in business and now with the federal government. One thing is certain, the tags will be arriving on shipments in a couple of years.
The Department of Defense last week instituted a policy to require its suppliers to install radio frequency identification (RFID) tags on individual parts and pallets by 2005, a federal stamp of approval on the technology. The tags will enable an operator to wirelessly scan a package for asset management and tracking data.
This move by the military follows on the heels of the worlds largest retailer, Wal-Mart Stores Inc., which recently decided to require RFID from its suppliers by January 2005.
The difference between the two announcement, analysts said, is that the military will be able to overcome any technical hurdles by throwing wads of cash at problems that may arise. However, it will be unlikely, they predicted, that American consumer-goods suppliers will have more than a token RFID effort in place in 2005.
The DODs Defense Logistics Agency plans to host an “RFID Summit for Industry” in February 2004, to work more closely with suppliers in developing RFID strategies. However, the DOD also warned the industry that its RFID policy and implementation strategy will be finalized by June 2004.
Currently, the military mandate requires that radio frequency (RF) tags be installed at both the crate and pallet level, not on individual items, according to DOD spokeswoman Marcia Klein. The agency will work with its almost 24,000 suppliers to deploy the individual tags and the systems to monitor and analyze the data, she said.
“Right now were trying to figure out the best way to get those details done,” Klein said. To her knowledge, the DOD has not released a public estimate on the costs or benefits of the RFID deployment, she added.
When Tags Meet the
The DOD will use two types of tags: passive, which requires the monitoring device to power the tag itself; and active, where the tag contains its own power supply. Passive tags are often powered by low-power microwaves, which convert the transmitted energy into power and reply with a weak radio signal.
According to analysts, the problems will be that the shipping containers will be subjected to the harshest environments imaginable: snow, wind, rain, heat, and ambient moisture—all bad news for the semiconductors in the tags and for wireless transmission.
“A supply chain does not yield the ideal conditions of a laboratory,” said Pete Abell, an analyst with The ePC Group Ltd., a consultancy assisting Wal-Mart with its RFID deployment.
There can be basic logistical problems, according to Kara Romanow, an analyst at AMR Research Inc. For example, she pointed to Wal-Marts loading portal, which is approximately 14 feet wide, while passive RFID tags can only transmit 5 feet in any direction.
The militarys supply-chain specifications are unknown.
Reading the RFID tags on the outside of the pallet isnt difficult; identifying the central containers is, Abell observed. In both commercial and military environments, various materials—ranging from meats and fishes to paper products, water and gasoline and the steel used by rotisserie ovens and rifles—may be bundled within a pallet, and all interfere in varying degrees with radio signals. Transmitting an RF signal through liquids and metal is especially difficult, Abell said.
The DODs policy seeks to avoid this interference problem by excluding “bulk commodities” such as sand, gravel, or liquids, from its RFID tagging plan.
In addition, the failure rate of current tag technology is a problem tags failure rates are an additional problem, Romanow said, pointing to a failure rate of as much as 30 percent.
Moreover, the tags dont have to be checked just once, but monitored within several locations within the depot and at satellite hubs, Abell added. That means rechecking the tags under a variety of conditions, such as from the electrical interference generated by forklifts and conveyor belts.
“To meet Wal-Marts performance requirements, you dont want to slow down a forklift or the identification device fastened to the driver,” Abell said. “Hes going to need to read these things at his speed, like 10 to 15 MPH. You cant slow down their conveyor belt lines, either.”
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The difference between Wal-Mart and the military will be in the budgets involved. Wal-Mart, notorious for its low prices, is pushing to keep the price per RFID tag in the $0.05 range, Abell said.
The U.S. military, which used RFID tags as early as the first Gulf War, spent roughly $100 per tag at that time, Abell said, a figure the DODs Klein confirmed. Active tags contain their own power sources, typically a flat power source contained within the walls of the corrugated material. Compared to the cost of an artillery shell, a missile, or even a military-spec toilet seat, a high-powered RF tag is still an incidental expense.
The bottom line, according to analysts?
“Due to the immaturity of the technology, very few (consumer products) manufacturers are actively implementing RFID and many are worried about complying with their customers mandates,” AMRs Romanow wrote in a recent report. “Something has to give.”
Abell agreed. In January 2005, Wal-Mart expects its top 100 suppliers to have RFID programs in place, something which Abell expected will only be a pilot program extending across one or two sites. However, those 100 suppliers could represent about 50 percent of the retailers volume.
“While I cant speak for Wal-Mart, Id say that the first two years are going to be learning experiences for both the industry and Wal-Mart,” Abell said.
Meanwhile, another industry group is attacking an additional problem: the amount of information stored on the tags themselves. On Oct. 31, The Uniform Code Council, Inc. (UCC) and EAN International Inc. will establish AutoID Inc., a not-for-profit organization that will develop and oversee commercial and technical standards for the Electronic Product Code (EOC) network which will determine the codes used by the RF tags.
“Our job is to take this (RFID) technology into the commercial marketplace,” Jack Grasso, public relations director for AutoID, said.
Currently, six universities—the Massachusetts Institute of Technology in the US, the University of Cambridge in the U.K., the University of Adelaide in Australia, Keio University in Japan, and the University of St. Gallen in Switzerland —in conjunction with over 100 companies formed the Auto-ID Center. After Oct. 31, the universities will split off and their research efforts will be known as Auto-ID Labs, Grasso said.
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