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A new report from industry analyst firm Aberdeen Group does not bring a lot of optimistic news for RFID proponents.
The report predicts that companies will have trouble in areas such as finding sufficiently experienced RFID (radio-frequency identification) personnel, migrating to the use of biometrics and other new data-collection methods, and scaling RFID to the next level.
One bright note: The survey finds that users no longer see the cost of using RFID as the single most important factor guiding deployment decisions.
Thats significant, because its the first time in the years that Aberdeen has conducted this study where interviewees did not choose cost as the most important issue.
Report author John Fontanella, Aberdeens senior vice president and service director for supply chain and retail research, in Boston, said one of the most troubling findings in the survey of RFID users was that most companies were doing the absolute minimum to comply with mandates. In other words, they werent leveraging what they are required to do for major customers and using it to improve their own operations.
“Most are giving no thought beyond just satisfying the immediate need of collecting the data. The slow adopter is trying to meet whatever mandate theyve been given. Some 99 percent are only adopting because they have to, because someone is telling them to, whether its DOD [the Department of Defense], Wal-Mart, whoever,” Fontanella said. “Now that the information is collected and paid for, its time to start turning that RFID data into something much more positive, to get a much better return on their investment.”
Not all companies, though, are passing up the opportunity, he said. After Wal-Mart started forcing various suppliers to deliver, some suppliers decided to “do what I have to do to meet the mandate” and were “forced to automate the tagging process. But they then use that as the opportunity to not only build ASNs but to also automate centralized customer service,” Fontanella said. “Some companies now are starting to use it as a notice to their carriers, that on this date, were going to be shipping this amount of product and it has to be delivered on this date.”
For some companies, though, making these investments strategic and delivering a stronger ROI (return on investment) has to take a backseat to simply keeping up with the day-to-day RFID demands of their business partners. One huge obstacle—which is likely to get worse before it gets better—is finding enough experienced RFID talent.
“Over half of companies replying to the survey say that they are still suffering from a critical shortage of internal RFID expertise,” the report said.
Next Page: Not an RFID problem as much as an EPC, Gen2 and UHF problem.
Not an RFID Problem
as Much as an EPC, Gen2 and UHF Problem”> Fontanella stressed that this is a continuation of a very unfriendly trend. “This is the second time in six months where weve asked” about difficulties finding talent with RFID experience. Both times, “We get a resounding Yes, we have a shortage. Its bad enough to … slow the growth of RFID,” he said.
Part of the problem is that its not a shortage of experience with RFID itself—which is far from new—but with the particular flavors of RFID deployment that companies are dealing with today.
“RFID has been around for 60 years. Its certainly been used in the industry for 20 or 25 years. Granted, that may be proprietary applications of RFID,” he said. “But the key is that its likely not passive RFID as we know it today, with active tags. Whats new is EPC [Electronic Product Code] and the passive UHF tag and the standard that goes along with it, Gen2. Thats where people are lacking experience, with Gen2 and the readers that support it. And, quite likely, with UHF in general.”
But isnt Gen2 far too new for anyone to have much experience? Not necessarily, Fontanella said, pointing to the extensive advance work many system integrators have been involved with. “If you look at the integrators of any size, the smart ones have been way ahead of the curve on Gen2,” he said. “In fact, theyve been part of the standards construction of Gen2 so they could anticipate what Gen2 would be like well before it was accepted by EPC.”
Working with Gen2s challenges has already proven difficult for industry leaders Wal-Mart and Tesco and the standards groups are already hard at work on Gen3.
Ultimately, Fontanella predicts, this RFID staffing problem will go away, probably in the next two to three years, mostly because universities are starting to focus on RFID education. “There are four or five universities in Europe alone that are focusing on RFID,” he said, adding that some U.S. schools—including MIT, Georgia Tech and the University of Texas—are also beginning to train students in RFID-related topics.
Even for those companies that are faring well today, Fontanella projects some difficulties when they make the next logical RFID move. Not all of the lessons learned in the initial deployment phases will prove helpful when RFID scales up, he said.
“While a quarter of respondents say that they will continue to manage readers at the site level, a significant minority are already planning strategies to centralize control, eliminating the expense of having to have skilled on-site personnel at every RFID-deployed location. This strategy assumes that the complex issues around the physics of a large deployment can be solved as the RFID network scales,” the report said.
“The industry has seen this year [2006] that the trial and error method used to set up one or two points within a site is untenable when planning for 15, 50 or 500 readers that will be in close proximity. The physics issue becomes an order of magnitude larger within such a dense reader environment.”
Much of the explanation for that is a weakness in RFID middleware, which vendors have only recently started to address, Fontanella said. “Its only been over the last year that usable technology has been introduced to [allow companies to] be able to manage multiple sites, multiple deployments of readers,” he said.
As the industry moves into the next phase of deployment, Aberdeen is recommending that companies focus not so much on the software or the networks—and certainly not the tags or chips themselves—but on readers. The extent to which readers become more sophisticated will sharply impact the ease of RFID scalability.
“In many cases, they are going to want to look at much smarter readers, so that the readers themselves have the intelligence to make decisions. In a simple case, if Im tagging boxes on a production line, my reader looks down the line and sees a case and cant read the tag,” he said. “It has to make an instantaneous decision whether to kick that case off the line or let it pass through. Then its got to communicate that decision to the PLC so the PLC can take action.”
Next Page: Managing tons of RFID readers.
Managing Tons of RFID
Readers”> The next step is to look using network appliances to help those vast networks of RFID readers. Procter & Gamble, for example, recently described its huge network of readers.
“When youre using network appliances to help manage readers, were not talking necessarily about software sitting on a server. Were talking about managing over the network,” Fontanella said.
“One of the most likely scenarios is that there will be individual network appliances with the logic to be able to clean data and to be able to provide a level of integrity to the data as its passed up through the enterprise.
“It also provides the ability to manage the readers and the reader configurations. They can identify the status of a reader and whether there are conflicts with simultaneous reads, which is a big problem with UHF. One reader can block out the other if theyre both reading something at the same time.”
On the cost side, Aberdeen Group found a significant change in attitude, with reliability easily overtaking cost concerns. Among aggressive adopters, reliability was now reported as the top concern for 73 percent of the users surveyed, compared with 45 percent who cited price.
Similar—although slightly less dramatic—results came from average adopters, who prioritized reliability over price to the tune of 63 percent over 44 percent. Slow adopters, which often have tighter budget issues, rated them equally at 56 percent, which is still significant because pricing had been a strong preference in that group.
“For the first time since Aberdeen has been tracking end-user buying preferences, cost is not top of mind for most companies involved in implementing RFID. This is in recognition of the fact that RFID technology is now being integrated into processes and systems that operate at very high levels of performance, both in throughput and maintaining quality standards,” the report said.
“Many of these environments are built around Six Sigma standards of quality. The allowed three and one-half defects per million opportunities does not leave much room for failure. Combining the top two criteria of price and performance together, the survey tells us that companies now are more interested in receiving value from their technology vendors rather than just lowest cost.”
Fontanella was struck not merely by the change in priorities, but by how much it had changed and how quickly. Price “was second by a long shot. It was staggering,” he said, adding that concerns about pricing have actually remained pretty much the same, but that soaring reliability concerns have eclipsed them.
Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com.
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