- Many companies have asked suppliers to begin using RFID (radio frequency identification) tags by 2006
- RFID allows pallets and products to be scanned at a greater distance and with less effort than barcode scanning, offering superior supply-chain management efficiencies
- This unique plain-English resource explains RFID and shows CIOs, warehouse managers, and supply-chain managers how to implement RFID tagging in products and deploy RFID scanning at a warehouse or distribution center
- Covers the business case for RFID, pilot programs, timelines and strategies for site assessments and deployments, testing guidelines, privacy and regulatory issues, and more
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Read an Excerpt
RFID For Dummies
By Patrick J. Sweeney
John Wiley & SonsISBN: 0-7645-7910-X
Chapter OneTaking the Mystery out of RFID
In This Chapter
* Discovering RFID
* Getting a handle on the technology
* Figuring out what you need to know
* Knowing what to expect in the future
With all the recent hype over radio frequency identification (RFID) and the requirements to implement it, you might think that RFID can turn water into wine, transform lead into gold, and cure the world's diseases. You might also be worried that RFID will enable Big Brother to track your movements to within a foot of your location from a satellite five hundred miles up in space. The truth is, RFID can do none of these things.
In this chapter, you find out the basics of what RFID is, what forces are driving RFID as a replacement for the bar code in the marketplace, and what benefits RFID can offer.
If you are responsible for complying with high-profile mandates from one of your suppliers or customers, this chapter also offers a framework to help you begin setting up a system and making it work within your existing business process. The bad news is that an RFID implementation is a daunting project even at a minimal compliance level, sometimes referred to as slap and ship or, more appropriately, tag and ship. The good news is that the benefits to the business are substantial, particularly if your trading partners are involved. RFID technology is here to stay, sothe sooner you understand it, the quicker you can make key strategic decisions for your company.
What Is RFID?
RFID is a very valuable business and technology tool. It holds the promise of replacing existing identification technologies like the bar code. RFID offers strategic advantages for businesses because it can track inventory in the supply chain more efficiently, provide real-time in-transit visibility (ITV), and monitor general enterprise assets. The more RFID is in the news, the more creative people are about its potential applications. For example, I recently heard from someone who wanted to use RFID to track fishing nets in the North Sea.
The origins of RFID in inventory tracking
Wal-Mart has spent millions of dollars since the late 1990s researching the efficacy of RFID systems to replace bar codes (which have been in use since the days of The Brady Bunch and Gilligan's Island - that's the early 1970s, for those of you with all your hair left).
In 1999, with the help of scientists at the Massachusetts Institute of Technology (MIT), a consortium of companies formed the Auto-ID Center - a center for continued research into the nature and use of radio frequency identification. The consortium had a new idea about how organizations could identify and track their assets. The vision underlying automatic identification (or Auto-ID) is the creation of an "Internet of Objects." In such a highly connected network, devices dispersed through an enterprise can talk to each other - providing real-time information about the location, contents, destination, and ambient conditions of assets. This communication allows much-sought-after machineto- machine communication and decision-making, rendering humans unnecessary and mistakes a thing of the past.
Today, Auto-ID can track not only enterprise assets, but also the movement of products, containers, vehicles, and other assets across vast geographic areas. For more about the Auto-ID Center and the current organizations involved in developing RFID technology, see Chapter 2.
Tracking goods with EPC codes
RFID is actually nothing new. Just as goods today have bar codes, goods in RFID systems have codes that enable systems to share information. Because the mandated RFID systems require businesses to share information with each other, the different systems need to use the same code - the electronic product code (EPC). The EPC is the individual number associated with an RFID tag or chip.
The EPC was developed at MIT's Auto-ID Center in 2000 and is a modern-day replacement for the Universal Product Code (UPC). A tag's embedded EPC number is unique to that tag. However, the EPC protocol is universal to all EPC-compliant systems and serves two specific functions:
Wal-Mart, like other large retailers, had more pragmatic issues at hand when they established an RFID requirement for their suppliers. Under Wal-Mart's mandate, each supplier is required to identify their products not by bar codes and waybills, but through EPCs that are automatically broadcast by RFID tags as new products arrive at the retailer's warehouse, distribution center, or store. In Chapter 2, I explain how EPC works in more detail.
Sizing Up the Benefits of RFID
Capturing inventory as it arrives from the supplier is the first step in a company-wide tracking system that "knows" where every item is throughout its lifetime in the store. This tracking offers retailers tremendous insight into their inventory, which enables those retailers to control costs and reduce investment on inventory, which means lower prices and better competition for consumers.
Having better information about inventory offers retailers all sorts of potential benefits. The retailers know how much inventory is still on pallets in the warehouse, how much is on its way to distribution centers and stores, and how much is currently on the shelves in each of its stores. With this knowledge, retailers have the foundation for measuring product consumption, seeing buying patterns, and controlling inventory more efficiently. Through this process, a retailer ensures that its shelves are stocked and that customers can buy high-volume products (such as razor blades, diapers, and toilet paper) when they need them and in the quantity they need.
Of course, businesses don't spend money unless they expect to make money off that investment. Major retailers believe that a comprehensive RFID program - tying suppliers to inventories to retail outlet shelf stock - will generate savings of around 10 to 16 percent, based simply on inventory cost reduction in each of their distribution centers (DCs). This translates into billions of dollars in savings each year - a pretty impressive result by any measure. The benefits can extend to other applications beyond retailers: Third-party logistics companies can speed up their billing cycle and create a new revenue stream with RFID; government agencies can reduce loss and increase security; museums can reduce cost to conduct inventory; sports teams can increase sales at games - the applications are limitless.
In an RFID system that uses an electronic product code (EPC) or similar numbering scheme, the following RFID attributes lead to those kinds of savings:
In the following sections, I explain each of these benefits in more detail. In Chapter 2, I compare RFID to other auto-identification technologies, like the bar code, and offer tips for developing an overall Auto-ID strategy so that you see how you might apply RFID's benefits to your own business.
Obviously, there is a genuine reason for the excitement surrounding RFID and the EPC. People are anxious to implement the technology so they can track supplies from the factory to the foxhole, or from the grower to the grocer. Much like the excitement surrounding the Internet, RFID carries the promise of a very disruptive technology with substantial future rewards. The excitement (dare I say hype?) needs to be tempered by the real-world limitations of the technology and the laws of physics. Adding to the practical limitations of today's RFID technology is a deluge of misinformation and broken promises. Today's marketplace dynamic is the cause of much of this RFID heartache. I introduce a well-balanced approach to RFID in "Finding Success with Four Ps in a Pod," later in this chapter, to make sure that you stay on an even keel and take a pragmatic, process-driven approach to the technology.
Tracking individual items with serialized data
Serialized data means that each item has its own unique identifier or serial number. This helps an enterprise
The benefit of serialized data is better inventory control, reduced loss, reduced carrying cost, and improved customer satisfaction (customers at every level, not just walk-in-off-the-street Joe Brown). Each of these advantages over the existing system has a benefit of reducing cost and improving productivity (another way of saying the same thing!).
RFID tracks individual items by associating the unique EPC number to a secure database. This concept is often likened to license plates. Just like the DMV knows who owns a car by looking up the license plate number on a central server, an RFID system can pull up a limitless amount of information about a tag based on its unique identifier.
In some instances, particularly with active tags, the RFID tag allows all the critical information to be stored directly to the tag. No need to look to a database - all the info is right on the tag. This technology can be very useful in instances such as the shipment of military supplies to overseas theaters, where accessing a central database is nearly impossible.
Reducing human intervention
Thousands of applications require humans to scan an object with a bar code scanner or read information on a label. When you check out at the supermarket, the checker has to pass each item in your cart over the lasers that scan the bar codes. RFID technology has the potential to eliminate this human intervention. If all your groceries had RFID tags, you could walk straight out the door and have all the items in your basket read automatically as you passed by a portal, with no need to take things out and scan them.
Think about cases of items coming off of a tractor trailer into a distribution center. Today, someone scans each box one at a time with a bar code scanner and often sticks a label on the box as it leaves the truck. From a logistics perspective, RFID can automatically verify a shipment, optimize cross-docking and flow of goods, and automate much of the pick-and-stow functions. With RFID, things can move off the truck by the pallet-load. Hundreds of items can be read simultaneously, and the data can immediately hit the inventory system as being on-site, identifying what it is, where it came from, where it's going, and so on.
The benefit of having fewer human hands involved is reduced errors, which produces reduced costs, faster throughput, and reduced damage and returns. The overall implication of reduced human intervention, given the high cost of salaries, benefits, and the cost of management associated with crews of human workers, is a dramatic reduction in operating costs.
Automated toll systems are a prime example of how the lack of human intervention saves both time and money. Remember how long the lines at highway tollbooths used to be? This was especially annoying if your daily commute was on a toll road. With automated toll systems (made possible by RFID), no longer does a car have to stop to hand cash to an exhaust-inhaling person stuffed in a 2-x-3-foot box all day. Zoom by and smile. Less traffic, lower cost, elimination of a hazardous job. Thank you RFID!
Moving more goods through the supply chain
Supply chains that can move more goods (also called higher throughput supply chains) reduce processing time, which leads to reduced costs, higher turnaround for billing customers, improved cash flow, a better bottom line, and, of course, reduced error rates, which also contribute to improved customer service. This leads to better customer retention, higher sales, and an increase in profitability and throughput performance.
Before RFID systems became a viable Auto-ID technology, systems with highvolume throughput (airline luggage handling, package delivery, road race participants) all had to be read one item at a time because a bar code scanner can read only one bar code at a time. Whenever only one item is read at a time (manually or with a bar code), the maximum throughput is - you guessed it - one.
Entire systems were designed around processing one as quickly as possible. Fred Smith, the CEO of FedEx, spent millions trying to figure out how to collect one package at a time and read it in the shortest amount of time as it goes down a very high-speed conveyor. That was the design goal of systems that required optimization of a one-at-a-time bottleneck.
RFID changes all that by allowing a whole bundle of packages, a trailer of luggage, or tens of runners to be read all at once, greatly increasing throughput. With RFID, you can read hundreds of objects all nearly simultaneously. No longer will systems be designed to optimize the speed of one; rather, they will be designed using the laws of physics to maximize the number of simultaneous reads.
Capturing information in real time
Real-time information can help you reduce costs, improve sales, increase cash flow, allow for specialized servicing and manufacturing for top customers, and thus capture a larger market share and improve overall capitalization per client and per employee. Because you know, in real time, where everything is, you can deliver on promises, reduce errors, increase customer loyalty, reduce waste, optimize materials use, and directly impact the tactical (departmental) and strategic (corporate and division-level) bottom line.
If time is money, information is insurance. What is on a store shelf, off the shelves, selling well, about to spoil, running low in back, and missing is all critical information to a retailer, producer, or supplier.
An RFID system can also allow machine-to-machine communication and automated decision-making. Automated decision-making is based on two principles of RFID: lack of human intervention and real-time information flows. In real time, a conveyor can close a gate and route a package at 600 feet per minute from one line to another line all because it reads the data off an RFID tag and retrieves a command specific to that individual item (it's that serialized data benefit again).
RFID's increased security means improved delivery and control and increased anti-counterfeit measures, as well as theft reduction, which leads to a significant reduction in costs.
If you are responsible for the tracking and accounting of property items, or if shrinkage to you is more than what happens when you jump into that frigid Cape Cod Bay, RFID is a dream come true. (Shrinkage in an inventory sense is the loss or theft of items in the supply chain.) The ability to permanently affix a tag to every item of value in a location and know exactly where that item is at all times as it passes through various doorways is something no other technology can offer. From a security perspective, RFID's ability to track and trace property can help everything from the war on terrorism to anti-fraud and anti-counterfeit measures. Here are some examples:
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Table of ContentsIntroduction.
Part I: Now That You Can Spell RFID, Here’s the Rest of the Story.
Chapter 1: Taking the Mystery out of RFID.
Chapter 2: Auto-ID Technologies: Why RFID Is King of the Hill.
Chapter 3: Making Basic Decisions about Your RFID System.
Part II: Ride the Electromagnetic Wave: The Physics of RFID.
Chapter 4: What Makes Up an RFID Network.
Chapter 5: Understanding How Technology Becomes a Working System.
Chapter 6: Seeing Different RFID Systems at Work.
Part III: Fitting an RFID Application into Your World.
Chapter 7: Seeing the Invisible: The Site Assessment.
Chapter 8: Testing One, Two, Three: Developing Your Own Lab.
Chapter 9: Tag, You’re It: Testing for Best Tag Design and Placement.
Chapter 10: Hooked on Phonics: Reader Testing, Selection, and Installation.
Chapter 11: Middle Where? It’s Not Just about the Readers.
Part IV: Raising the Beams for Your Network.
Chapter 12: From Pilot to Admiral: Deploying RFID Successfully.
Chapter 13: Getting Set to Administer and Maintain Your System.
Chapter 14: Ping-pong, the Tags Are Gone: How to Monitor Your RFID Network.
Part V: How to Speak Bean Counter.
Chapter 15: Making the Business Case.
Chapter 16: Fitting RFID into Strategic Plans.
Chapter 17: What to Look for When Considering Outsourcing.
Part VI: The Part of Tens.
Chapter 18: Ten (Or So) Equipment Vendors.
Chapter 19: Ten Web Sites for Information on RFID.
Chapter 20: Ten Tips from the Experts.
Chapter 21: Ten (Or So) RFID Standards and Protocols.
Appendix: Glossary of Electrical, Magnetic, and Other Scientific Terms.