Over the past 10 years radio frequency identification (RFID) has evolved from an unreliable and expensive gadget into a tool capable of revolutionising the efficiency of supply chains by providing detailed information about assets previously invisible to the business.
RFID chips can provide an efficient method for keeping track of assets as they make their way around the globe, from the factory, inside a shipping container in the middle of the ocean right to the point of sale. Recent advancements in RFID tags and readers make it possible to receive data on a tagged product's geographic location, temperature, humidity and any other detail that could affect the product's condition or resale value.
But the technology is still misunderstood and the diverse range of tags, readers and sensors provides ample opportunity for confusion.
The worst thing that happened to RFID, according to analyst firm Gartner, was the early misconception that it would replace barcodes. Many early implementations of the technology were dogged with reliability issues and costs spiralled as the true potential of RFID was ignored because companies rushed to implement the "next big thing" without a real business case.
But this was the dotcom-boom era when such thinking was common.
Fast forward 10 years and the hype surrounding RFID technology has faded but the technology remains shrouded in mistrust.
Friend or foe?
The first use of passive RFID dates back to World War II. Although both the Germans and Allied forces used radar to track airplanes, they could not tell the difference between enemy planes launching an attack and their own planes returning to base.
The Germans discovered that if their pilots rolled their planes on the way home, their radar images would change, which would differentiate them from Allied fighters. This manipulation of radar readings was effectively the first use of a crude RFID system. In this case, the entire plane was the "tag", which simply returned an altered blip when scanned by the radar.
These days, RFID tags are tiny. The smallest passive tags can be inserted inside a piece of jewellery; active tags containing a two-year battery can be smaller than a sugar cube.
As is common in a maturing industry, the price of the most basic passive tags have bottomed, according to Tim Zimmerman, research analyst at Gartner, who says the cost of a passive tag has fallen from about $1 to about 15¢ over 10 years.
The technology is also far more reliable than early systems, when around 20 percent of tags failed immediately after initialisation.
Zimmerman likens the value of RFID tags to PCs, where the basic system cost is relatively stable but each year the functionality, capacity and range increases.
Integrating tags into products at component level removes any costs associated with tag casings and adhesives, which could reduce the overall cost of a tag down to just a few cents. This method has already been used in mobile phones and even cardboard boxes.
A summary of RFID standards
The International Organization for Standardization has approved various global standards for passive tags in many vertically integrated industries, including the movement of livestock, contactless smartcards and payment cards as well as the structure of data carried on a tag.
Active tags running at 2.4Ghz tend to communicate using the well known 802.11 wi-fi standards, which makes integration relatively straight forward.
But there are some areas, such as shipping container tracking, where standards have yet to be established. These usually run at 433Mhz and according to Zimmerman, are vertical markets that may not be large enough to warrant a large-scale standards effort.
Compared to 10 years ago, the RFID world is a very different place, says Zimmerman.
He readily admits that at the time the big industry players had pronounced the technology was "ready for prime time" in fact it was still a few years away.
For example, in 1998, moving a product from China through the US to Europe would require separate tags for each region and additional tags depending on the materials being tagged. Today, for many vertical industries a single tag would be enough.
Just as importantly, the sensitivity of tags and readers, as well as memory capacity, has significantly improved over the past decade.
If it moves, tag it
Libraries are an obvious customer for RFID tags. Melbourne Cricket Club recently tagged its collection of 100,000 books, which reduced the time required to stocktake by 90 percent when compared to using barcodes. RFID also makes it far easier finding lost or misplaced books.
Another innovative use of the tags is by legal firms or government departments to track important documents as they are moved around the building. If readers are placed in doorways and under employees' inboxes, documents can be located within seconds.
Zimmerman says a US-based legal firm that implemented such an RFID document tracking system found it paid for itself within eight months. Because documents could easily be located, assistants became more productive and no longer spent their time running around the various partners' offices looking for documents and the company no longer had to duplicate work to replace missing files.
Kevin Cohen, CEO of RFID integrator Ramp, described two installations where active tags, which can track objects up to a kilometre away, were being used to save lives.
In China, the port authorities installed the readers into ports to automate the process of tracking fishing boats.
The system makes light work of alerting the authorities if a boat hasn¹t returned to port on time.
A similar system is also being used to track the movement of dementia patients in a nursing home, ensuring staff are alerted if a patient wanders out of bounds.
Ramp's largest active RFID implementation is with DP World, an operator of container terminals, which uses the system to identify and track trucks using the port to ensure the correct cargo is loaded onto them.
The tags also made it possible for the company to deploy a tiered pricing structure, which provided incentives to trucks using the port at off-peak hours. The previous solution meant trucks would roll up at 6am and wait in a queue till they could be served.
These installations demonstrate how RFID is moving out of the supply chain and into a larger market where the technology can provide tangible cost benefits.
Selling an RFID solution
RFID is not a replacement for the humble barcode ¬- this cannot be stressed enough. There is room for both solutions and most of time they complement each other perfectly well. Cohen explains that all of the RFID tags in the Ramp warehouse are labelled with a barcode because trying to read the ID of a single tag when surrounded by thousands of them can be impossible. In these cases, he says it makes sense to simply scan the barcode on the tag.
Gartner's Zimmerman advises integrators to ensure they fully understand their customers' business needs and are also up to date with the latest advances in tag technology, so a solution offering the maximum benefits can be offered. Part of this process is also looking at ways an RFID solution could provide additional benefits that the client may not have realised were possible.
When implementing a solution, the most common mistakes are badly positioned RFID readers, which could leave blind spots where tags could pass unnoticed.
The market penetration of passive tags, according to Gartner, has only reached 40 percent of its potential market. For active tags, that figure is still in single figures, which leaves a huge market that hasn't yet discovered the benefits of this technology.
There are still misconceptions from buyers that RFID can't make a significant impact on their business but these attitudes are starting to change. For integrators of this technology, the future is bright.
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