Industry must prepare systems for the coming RFID revolution

2005 is the year that radio frequency identification (RFID) technology will really start to take hold, according to experts and early adopters from a variety of industries.

But delegates at the third annual Global RFID ROI Summit in London last week heard there would be no quick route to achieving return on investment (ROI) using RFID, and that no one standard, type or application will suit all.

Last year the first retailers, and automotive and aerospace manufacturers launched RFID programmes across Europe and the US. The knock-on effect was to persuade or even mandate suppliers across their supply chains to start RFID-enabling their own systems.

Companies such as Tesco have been talking about the efficiency benefits of RFID for some time, but Peter Jordan, director of international business-to-business strategy for Kraft Foods UK, says huge changes are still in store with RFID.

'Tesco and Wal-Mart hope to increase the accuracy of stock and, in some cases, track cases through the store, then link through to electronic-point-of-sale systems,' said Jordan.

'But there are many capabilities required to make this work, and there is a huge emphasis on the retailers to change their systems. This will happen. ROI will be difficult without upstream investment.' Jordan, who oversees Kraft UK's RFID rollout programme, has a logistical view of the difficulties faced by manufacturers.

He says Kraft's objective, as the second largest food producer in the world, is to know the status of stock at warehouse level before dispatch, and in real time. 'We want to achieve this at case-level scanning,' he said.

The company also has ambitions to monitor the product on retailers' shop shelves. 'At the moment many retailers don't have the processes in-store or the confidence in their supply chain data to do that,' said Jordan. 'It needs everybody in the supply chain to start thinking now about how they are going to start making changes to their own systems.'

Patrick Wall, chief executive of delivery and order management software vendor MetaPack, told Computing that RFID technology could be the key to managing supplier stock from outside the main supply chain, warehouse and distribution resources.

'We are working with retailers to explore and develop that area,' he said. 'The advantage is that you don't actually need to bring the stock into your supply chain. RFID will help identify and track products at item level, so retailers can retain control.'

Airbus is another organisation that has embraced RFID, most recently equipping its A380, the world's largest commercial jet unveiled last month, with 10,000 RFID chips. Now the company is turning its attention towards suppliers.

'We implemented a process involving suppliers last year, and this year we're adding forums to show them the best way to implement the technology,' said Jens Hietmann, head of systems and equipment standardisation.

He says the Airbus RFID strategy is quite mature, and its use has produced unforeseen efficiencies to the company's stock maintenance and tracking.

Now Airbus suppliers attach RFID tags to oxygen masks, so they can be checked by reading the tags without having to remove the masks from their plastic housing above each airplane seat. This was previously a manually intensive job.

The implications to manufacturers working with RFID in industries as diverse as retail, healthcare and aerospace are becoming clearer, and standards and integrated strategic approaches throughout an industry's value chains need to be established, according to delegates at the conference.

Faye Holland, worldwide RFID leader for IBM Global Services, said: 'RFID is still absolutely a catalyst for change, and it's not going away.'

She says the establishment of standards for readers and tags is well under way, with the ratification of a second-generation ultra-high frequency specification for all electronic product code (EPC) technology from industry body EPCglobal's board of governors arriving at the end of last year.

But Holland says standards for sharing data beyond proprietary stock and enterprise resource planning systems, and those of supply chain partners, will be the next big challenge before tracking stock on the shelf or through to the checkout becomes feasible.

'The message needs to be to take a phased approach,' she said. 'The end-to-end-approach is extremely complicated. Conduct your business case, understanding what the pain points are. Go in with limited pilots in a cyclical test, and evaluate process.

'Then, and only then, should you go into implementation.'

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The RFID Centre: a hub for knowledge and best practice A centre jointly funded by government and the IT industry for exploring, testing and evaluating RFID technology opened its doors last week.

The Department of Trade and Industry announced plans last summer to fund an RFID research centre in Bracknell, Berkshire. Since then Microsoft, Intel, Cisco and Cable & Wireless have added their support, providing technology, expertise and sponsorship.

The centre will provide an independent environment, free from sales and marketing pressures, for businesses wanting to find out more about the technology and its applications.

'The centre is for those business or IT people who are considering adopting RFID for their own purposes or because they have been mandated to do so as a supplier,' said Ed Cowley, the RFID Centre's director.

Interested parties from various sectors can visit the centre by appointment to see, test and demo RFID and related technology from a number of different vendors.

Cowley says the centre will act as a hub for government, business and academia to share RFID-related knowledge and best practice, with specialists on hand to answer specific questions.