Feature

Radio frequency identification tags technology finds supply chain niche

Once promoted as a game-changing automatic identification and data capture (AIDC) capability, and more recently maligned for not living up to initial expectations, radio frequency identification tags have settled into a variety of compelling use cases in the manufacturing supply chain -- even though RFID is no longer viewed as an industry panacea.

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RFID technology, which transmits data encoded on tags or so-called smart labels to readers over radio waves, offers a number of benefits over better-established AIDC technologies such as bar codes. Most importantly, unlike bar codes, RFID tags don't require optical line of sight to communicate their contents, can communicate over greater distances, and multiple tags can be read simultaneously, according to RFID industry experts.

When retail giant Wal-Mart announced a mandate in 2003 for its top 100 suppliers to employ RFID to tag pallets and cases of goods, and the Department of Defense followed up with an RFID initiative around the same time frame, industry pundits were hailing RFID as the killer technology that would revolutionize the supply chain. Today, nearly a decade later, those prognostications never fully came to be, experts say. While a lack of standards is in part to blame, experts agree that the real hurdle is price. RFID tags start at around 10 cents and go considerably higher -- a far cry from the promised 5-cent tag needed to fuel the revolution.

"While the price of RFID continues to come down and [becomes] more affordable, the benefit across the supply chain has not been fully demonstrated yet, and that's caused a big delay," said Jim Bulter, senior vice president of Transtech Consulting, a supply chain and warehouse consulting firm.

RFID technology part of AIDC toolbox

RFID technology has experienced a delay, perhaps, but not a total derailment, experts say. While RFID has certainly taken its share of knocks over the years, there are signs that the technology is finding its place, helping manufacturers gain visibility and intelligently track products throughout the supply chain. Experts point out that retailers and suppliers continue to use RFID tags to facilitate inventory tracking, particularly on high-priced product assets. Others are looking at the technology as a means of monitoring inventory flow for all forms of inventory, be it raw materials, work in progress (WIP) or finished goods, according to a multiyear survey conducted by researchers at Sam Houston State University and Southern Arkansas University. The study, which took place between 2005 and 2012, noted an increase in the number of U.S. manufacturers requiring suppliers to provide RFID-tagged materials for inventory tracking and found that manufacturers intend to expand RFID usage over the next several years.

Rather than serving a full-scale replacement for the bar code or another AIDC technology, however, experts say RFID is better served as just one of several technologies in the AIDC toolbox. "What we found is that the original intercompany vision of the [RFID] smart tag on everything using a single standard never materialized," noted Simon Ellis, practice director of supply chain strategies for Framingham, Mass.-based IDC Manufacturing Insights.  "Where we are with RFID today is that it's a tool in a toolbox available for companies to use depending on what the business challenge is."

Radio frequency identification tags find use within manufacturing facilities

As opposed to playing a starring role in intercompany supply chain visibility, Ellis said RFID is gaining traction as an intracompany technology, helping manufacturers track inventory, totes and pallets within their own four walls in an automated fashion. Where bar codes can't be used because of line-of-sight restrictions or because the product can't support placement of a bar code, RFID tags come into play, Ellis said, as well as for use cases where it is important to identify a specific product or tote, rather than just classifying an asset as a generic item.

Those are the primary reasons The Blood Center of Wisconsin opted for RFID to help track its blood products, according to Clive Hohberger, the center's RFID systems architect. "We need to be able to identify objects without physically seeing them, and RFID is superior technology for that," he explained. With 20 blood products in line for shipment to customers, the Blood Center needs to carefully go over every order to make sure it is exactly what was specified.  "Nothing more and nothing less has to go into the carton," Hohberger said. "It would be a very costly operation to do if we had to take everything out and scan it with a bar code scanner."

Beyond tracking applications, many companies are starting to leverage RFID's "intelligent" capabilities to gather and report on additional information in the supply chain. For example, with battery-assisted passive or active RFID tags, companies in the pharmaceutical and food product space are tracking the temperature and other conditions during transit. "RFID is now being used to collect humidity, vibration and other parameters that a bar code couldn't collect," said Tim Zimmerman, vice president of Network Infrastructure, Mobility & RFID, at Cambridge, Mass.-based Forrester Research Inc. "In this way, a manufacturer could know if refrigeration was turned off during transport, which would adversely affect the useful life of a perishable product."

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This was first published in December 2012

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