Radio Frequency Identification RFID

1
Radio Frequency Identification (RFID)

• Reference
• RFID Journal (www.rfidjournal.com)
• R. Angeles, RFID Technologies Supply-Chain
  Applications and Implementation issues,
  Information Systems Management, 221, 51-65,
  Winter 2005.

2
What is RFID?

• A system that transmits the identity (i.e. a
  unique serial number) of an object/person
  wirelessly using radio waves
• Other Automatic Identification Technology
• Bar codes, Optical character readers, Biometrics,
  e.g. retinal scans
• Benefits
• Unique identification
• No manual intervention, no line-of-sight, no
  moving parts in reader
• Fast read (300 reads/sec), Reduce effort in data
  entry, Improved data accuracy
• Information accessible

3
The Grand Vision

• Perfect supply chain visibility know the
  precise location of any product anywhere at any
  time!
• When Firm A ships a pallet of goods, the tags on
  the cases and pallet are scanned as the shipment
  leaves, and (via software) Firm B is notified
  that shipment has left the warehouse. Firm B can
  then look up data associated to find out whats
  coming, when it will arrive, etc. Upon arrival at
  Firm B, tags are scanned automatically and Firm A
  notified.
• Goods automatically pulled through the supply
  chain based on real-time demand Store shelves -gt
  store backroom -gt warehouse -gt DC -gt manufacturer
  -gt raw material suppliers
• Value proposition
• Reduced info latency
• Decreased labour
• Increased agility
• Increased goods velocity
• Increased security
• Revenue protection

4
Potential savings?

• Up to 20 food discarded due to spoilage
• Estimated 60 billion of goods shrinkage (expiry,
  damage) per year
• Cargo theft 20 to 60 billion per year
• 75 of product costs is in logistics
• Stock-out around 6 of sales
• 50 of trucks travel empty (deadhead)
• 2004 Forrester Research estimates 9 savings in
  cost per year

5
Why RFID is hot now?

• Higher frequencies offer greater range and faster
  data transfer rates
• Data not stored in tag tag stores a code, look
  up corresponding data (via Internet)
• Cost (more than US1 per tag) has been major
  obstacle to adoption, especially if tags are not
  reused
• Cost now down to US 20
• Open Standards
• Ubiquity of the Internet
• Potential Business savings
• US300 million spent on RFID tags market
  forecasted to be US3 billion in 2009

6
Wal-Mart

• First retailer to require suppliers to put RFID
  tags on cases/pallets of goods
• Top 100 suppliers to comply by January 2005!
• (only 30 accomplished full-scale
  implementation).
• Rest by 2007!
• HP (Wal-marts 8th biggest suppliers)
• Texas implementation (3 DCs and 150 stores)
• slap and ship tags on 40 types of products
• Compliance with Class 1 2 (915 MHz)
• Estimated ROI US8.35 billion, 4.2 revenue
• Warehousing (6.7 b), inventory (600 m), theft
  (575 m), track--trace (300 m), Supply-chain
  (180 m)
• Other champions Tescos, Metro

7
RFID Technology

• RFID tag
• Transponder (transmitterresponder) -- a
  microchip attached to a radio antenna mounted on
  a substrate
• Stores up to 2 kilobytes of data
• (info on product, shipment, manufacture
  destination, sell-by date, etc.)
• RFID reader
• Device with one or more antenna that emits radio
  waves and receive signals back from the tags (to
  retrieve the info on tags), then passes the info
  in digital form onto a computer system
• Database/system/Internet

8
History of RFID Technology

• 1935 RADAR (radio detection and ranging)
  invented by Sir Robert Alexander Watson-Watt.
• WW II IFF (identify-friend-or-foe) system,
  signal sent to transponder on plane which either
  reflects back (passive) or broadcasts (active) a
  signal.
• 1960s anti-theft electronic surveillance tags
  (1-bit), turned off at Point-of-sale, else alarm
  sounds when going past reader at exit.
• 1973 Mario Cardullo obtained first US patent for
  active RFID tag with re-writable memory.
• 1973 Charles Walton obtained patent for
  card/reader for unlocking doors (E-lock card!)
• 1970s - 80s Los Alamos National Lab project for
  tracking nuclear materials placed transponders
  on trucks and readers at gate. Commercialised in
  mid-80s to automated toll payment systems
  (Auto-toll!)
• 1980-90s 13.56 MHz RFID systems used for access
  control, payment systems, contactless smart
  cards, car anti-theft device (reader in steering
  column reads tag in plastic housing around key
  for ID car wont start otherwise.)
• 1990s UHF RFID systems developed by IBM and sold
  to Intermec, but cost a deterrent.

9
MIT Auto-Id Center

• Initially (1999) funded by the Uniform Code
  Council, EAN International, Gillette and Proctor
  Gamble. Later supported by over 100 companies
  and U.S. Department of Defense
• Profs. Brock and Sarma
• research on low-cost disposable tags (US 5)
• Ultra-high frequency (longer range)
• Open international standards
• Network architecture (integrated with the
  Internet) for anyone to look up information
• Only a simple chip storing only a serial number
  data associated stored in a database accessible
  via Internet.
• from mobile database (on tag itself) to
  networking technology
• 2003 handed-off to the non-profit EPCGlobal
  (joint venture of UCC and EAN International)
  which will develop and run the EPCglobal Network

10
RFID Tags

• A silicon microchip that stores a unique serial
  number and additional information
• A Passive tag does not have a transmitter it
  simply reflect back energy (radio waves) from
  the reader antenna
• An active tag has a transmitter and a
  power source (battery) and can
  broadcast a signal
• Chip-less RFID using embedded fibres to reflect
  back radio waves
• Semi-passive (battery-assisted) tags non-active
  (sleep) until woken up by signal from reader,
  conserves battery, expensive

11
Active RFID systems

• Active tags typically used on large assets
  (containers, railcars) that are tracked over long
  distances
• Frequencies 455 MHz, 2.45 GHz or 5.8 GHz
• Read range 20 to 100 metres (60 to 300 feet)
• Cost US10 to 50, depending on features
  (temperature sensors), ruggedness (plastic
  housing), memory and battery life
• Transponder
• When woken up by signal from a reader, it
  transmits its unique ID to the reader (conserves
  battery life) e.g. auto-toll
• Beacon
• Emits a signal at pre-set intervals
• Signal read by at least three reader antennas
  positioned around perimeter of area tracked
• Used for real-time locating systems (RTLS) e.g.
  WIP in large manufacturing facility

12
Passive RFID systems

• Passive tags have no power source and no
  transmitters
• Can be embedded in a plastic card, key fob, or
  other packaging to resist heat, chemicals, etc.
• Cheap (US 20 to 40), no maintenance
• Frequencies and ranges
• Low and high frequency systems more easily
  controlled (smaller field size)
• UHF signals sent over long distances are harder
  to control reach and read unwanted tags

13
Passive RFID Technology

• Inductive coupling (for low and high frequencies)
• A coil in the reader antenna and a coil in the
  tag antenna form a electromagnetic field
• The tag draws energy from the field to run the
  circuitry in the chip and changes the electric
  load on the antenna
• Reader senses the change and converts the changes
  into digital signals (0s and 1s)
• Because a magnetic field must be formed, the tag
  and reader must be in close proximity (short
  range)
• Propagation coupling/ Backscatter (for UHF)
• Reader antenna emits electromagnetic energy
• Tag gathers energy from the reader antenna (not
  from the electromagnetic field), used by
  microchip to change load on antenna and reflect
  back altered signal
• Amplitude shift, Phase shift, Frequency shift
• Reader picks up signal and converts binary
  signal into data

14
Combining Passive and Active RFID

• Passive tagging of pallets, cases and items
• Active tagging of containers
• US Department of Defence (43000 suppliers)
• Tags on cases scanned and associated with a
  pallet tag
• As pallets loaded on containers, case and pallet
  info written to active tag on container
• Active tag info uploaded onto the Total Asset
  Visibility System
• Location tracked as it moves from depot to train
  station to airport or port
• GPS transmitters on trucks can provide real-time
  location information

15
EPCGlobal Network infrastructure

• Tag stores a Electronic Product code (EPC)
• Global distributed network infrastructure (via
  internet) for companies to look up info about
  items as they move through the global supply
  chain
• Savant enterprise software
• Each savant node will pass info from the tags to
  other savants in the network
• Savant does data smoothing, reader co-ordination,
  data storage, task management, etc.
• Companies can have servers that host Object Name
  Service directories (like Domain Name Service
  pointing to websites) that will point computers
  to Internet databases where data associated with
  an EPC is stored

16
Technical Concerns
Reliability?

• Performance factors
• UHF (more like light) cant penetrate materials
  and tends to bounce off tags in centre of
  pallet not read
• Low and high frequencies (more like radio waves)
  works better around walls, metal and water
• Detuning the antenna
• Tag antenna tuned to particular frequency can be
  de-tuned when close to metal and other
  materials, not enough energy to reflect back
  signal
• Solution create air-gap, special design for
  metal and water
• Signal attenuation
• Reduction in energy of signal
• Rate of decrease proportional to inverse square
  of distance (reflected signal proportional to
  inverse 4th power)
• UHF energy absorbed by water, carbon and other
  materials (e.g. soft drinks, batteries, printer
  toners)
• Electromagnetic Interference
• noise generated from motors, conveyors with
  nylon belts, robots, older wireless LANs using
  UHF frequencies, cordless phones, etc.

17
Next Generation Antennas

• Currently antennas made of strands of copper,
  aluminium or other conductive materials
• Performance impacted by shape of antenna
  vis-a-vis type of products
• Under development using conductive ink (made
  with conductive materials, e.g. silver) to print
  antennas onto items
• Customisation!
• Multi-layer chips
• NCR has also developed a hybrid bar-code RFID
  scanner

18
RFID System Components and Costs

• Cost of Passive Tags depends on
• frequency (HF tags uses more copper, more
  expensive than UHF tags)
• Memory
• antenna design
• Packaging (plastic housing, protection from
  chemicals)
• RFID label (transponder sandwiched between an
  adhesive layer and paper for printing (e.g.
  bar-code)
• Cost per passive tag ranges from US 20 to
  several dollars
• Additional costs for testing and spares
• Failure rates up to 20 (antennas detach from
  chip)
• Active tags range from Us 1 to 50 or more
• UHF Readers cost from US 500 to 3000 or more,
  depending on features and functionality
• Intelligent readers have on-board computing power
  to filter data, store information and execute
  commands
• Multi-frequency readers
• Agile readers (using various protocols)
• Readers can have internal or external antennas
• Readers can connect to other devices (antennas,
  electric eye, program logic controller, conveyor
  sorter, computer networks) via serial, Ethernet,
  Wi-Fi or USB ports

19
RFID System Components and Costs

• Middleware
• Software between RFID reader and enterprise
  applications
• Takes the raw data (reader might read the same
  tag 100 times in one second), filters them into
  useful event information to back-end systems
  essential!
• Additional functions include monitoring of
  reader, database management, even electronic
  shipment confirmation and receipt (using XML or
  other protocols)
• Cost? Estimated to be US183,000 for a 12
  billion manufacturer
• Servers
• Enterprise Application Software
• Warehouse management systems, ERP systems, etc.
• Costs depend on number of users and locations,
  etc.
• Other costs
• Systems integrator to design location of readers
  and install them, determine placement of tags on
  items, test equipment, middleware, etc.
• Train employees to manage equipment, It staff to
  work on systems to manage the data
• Cost could be over US 500,000.

20
RFID Business Applications

• RFID is an enabling technology (like the
  Internet)
• Key features
• Unique identification
• No human intervention
• Tags can be read without contact, without line of
  sight
• Info transmitted in real time
• It is up to companies to develop applications to
  exploit RFID!

21
Asset Tracking

• Put RFID tags on assets that are lost or stolen
  often, underutilized or hard to locate
• NYK Logistics (3PL based in New Jersey) uses a
  real-time locating system using RFID beacons
  to locate containers to within 10 feet at their
  distribution center in Long Beach, CA.
• Air Canada tracks its food carts at airports
  (active transponders under the carts and readers
  at every catering facility around the world),
  loses fewer carts, better management movements of
  carts and availability, saves millions of dollars.

22
Manufacturing

• RFID has been used in manufacturing for more than
  a decade to track parts and WIP, manage the
  production of different versions of the same
  product.
• Johnson Controls, Wisconsin-based supplier of car
  and truck interiors to the big three automakers,
  uses a 13.56 MHz system to track the various
  types of car/truck seats, dashboards and other
  components (99.9 accurate).
• Boeing uses a 915MHz system in its Wichita
  facility to automatically track parts as it
  arrives and is processed (used to use manual
  scanning by bar-code), reducing errors and need
  to look for the parts on the manufacturing line.
• AM General uses an active RFID system to
  track parts bin at its Hummer manufacturing
  plant in Mishawaka, Indiana. (Hummer is a 4x4
  vehicle with a lot of options.)
• Club Car uses RFID in its golf cart assembly
  line, cutting the time to build a vehicle form 88
  minutes to 46 minutes, whilst ensuring each car
  built to specifications.

23
Supply Chain Management

• Paramount Farms, producer of 60 of USAs
  pistachios and export to 20 countries, use RFID
  to automate processing of incoming shipments of
  pistachios from grower partners
• Canus, Canadian manufacturer of skin care
  products from goats milk, using RFID to check
  shipments to retailers and is exploring RFID
  temperature sensors to monitor condition of
  products in transit.
• By better matching supply and demand, waste is
  reduced --- positive impact on environment

24
Woolworths

• 2001 launched pilot project, partially
  funded by UK Govt, to reduce theft using RFID.
• Savi Technologies (Sunnyvale, CA) fitted 16000
  Series 6000 RFID tags onto dollies used to
  deliver tote-boxes of goods to stores.
• At the DC, AS/RS places totes on dollies, order
  manefest associates totes to dollys RFID tag
  (license plate) and ensure dolly loaded onto
  right vehicle
• Driver has handheld devise which provides GPS
  location tracking and is a reader to ensure dolly
  delivered to the right store.
• Item level visibility without item-level
  tagging
• 2003 Supply Chain Solution of the Year Award
  from European Retail Solutions.

25
Retailing

• Metro, the worlds third largest retailer, and
  Intermec Technologies implemented the first
  commercial deployment of an RFID system in
  Metros largest and busiest distribution centre
  in Unna Germany.
• 99 tag read rate on 50,000 pallets so far
• At Metros RFID Innovation Centre in Germany,
  customers/employees can access customized
  information about the shopping experience from an
  advanced inventory system supplying real-time
  info about store products and sales.
• Tag deactivator kiosk
• Key middleware to collect, integrate and manage
  data from RFID tags from manufacturers to
  distribution centers to stores, eliminating
  physical checking of pallets delivered. (Pilot
  project underway in 250 stores.)

26
Consumer applications

• Automate the checkout process and eliminate lines
• RFID scan and pay with smartcard
• Focussed marketing to consumers in loyalty
  programmes during in-store shopping experience
• Shopping cart with screen, plays different
  advertisements depending on what is put inside
  cart
• Smart washing machine (Merloni Electtrodomestici)
• RFID in appliance can read tags in clothes and
  wash accordingly
• Automated kitchen and pantry (Unilever)
• Cost a deterrent!
• Invasion of privacy?

27
Privacy Concerns

• Directive 95/46/EC of the European Parliament
  protects individuals with regard to the
  processing of personal data and on the free
  movement of such data
• European Council Directive 2002/58/EC on Privacy
  and Electronic Communications
• Enables Location based service
• Extends control on unsolicited direct marketing
  (e-mail spamming)
• Combining product info (RFID) and customer
  profiling (CRM) for marketing -gt violation?
• Storing personal data on RFID chips
• Privacy enhancing technologies (PETs)
• Kill switch deep sleep mode

28
Safety Related Applications

• Product recall
• Companies now do not know if all defective
  products (esp. if dangerous) are returned
• With RFID, can traced all bad products that have
  been released to the stores, registered customers
  can be contacted individually
• Prevention of Medical errors
• RFID tags on medical equipment (e.g. catheters)
  so doctors/nurses warned if wrong tube inserted,
  unsterilised equipment used, or drugs given to
  patient with allergies
• Counterfeit drugs
• Estimated 8-10 of drugs are counterfeit
• If drugs can be tagged, then can ensure only
  authentic drugs are sold through legitimate
  pharmacies

29
Payment Systems

• Auto-toll for cars (1980s, popular in 1990s)
• Tag on vehicle read at booth, owner billed by
  toll authority
• Less time waiting and fumbling for change
  (safety!)
• ExxonMobil Speedpass (1997)
• Fob for keychain for purchasing petrol
• payment charged to credit/debit card
• RFID lift-tickets for Dolomiti SuperSki resorts
  in Europe
• Smartcards for drive-through windows for fast
  food
• Japan, consumers can download movie tickets to
  their DoCoMo cell-phones and enter theatre by
  swiping an RFID tag in their phone past a reader
  in a turnstile at the theatre
• Public transit
• People pass through turnstiles quicker, reduces
  congestion
• Fewer mechanical parts in reader, less maintenance

30
Security and Access Control

• Electronic key for access to office areas or
  buildings
• E-lock card
• Car theft prevention reader in steering column,
  tag in housing around key
• Reduced auto theft by 50 since introduction in
  Europe in 1994
• Snagg RFID tag for priceless violins and other
  musical instruments, can look up rightful owner
  when item recovered by police
• Active RFID tags can be combined with motion
  sensors so that alarm sounds when objects (e.g.
  military weapons) are moved without authorisation
• US Dept of Transportation RFID seals for cargo
  containers
• If container opened without authorisation, signal
  sent to computer next time tag is read, notifies
  agents to inspect container

31
Other Applications

• Active tags in a bracelet to locate children in a
  theme park
• Brinks (security company) in France bills
  destroyed of too far from a RFID reader in an
  armoured car
• Environmental-conscious robots can sort through
  rubbish to recover batteries
• Tags combined with sensors for temperature,
  motion, radiation, etc.
• JPL Pilots projects with wireless sensors
• Environmental monitoring in Antarctica
• Gauge movement of water in recharge basin in AZ
• Automatically turn on sprinkler in Huntington
  Gardens in San Marino

32
Octopus card (1997)

• 11 million in circulation
• used by more than 95 of Hong Kong population
• 8 million transactions per day
• about HK50 million per day (25 non-transport
  related)
• Accepted by more than 100 transportation service
  providers and 160 retailers
• 50 secondary schools and City University of Hong
  Kong use the Octopus card to record the
  attendance of students, and to manage library
  books
• Personalised cards for security and building
  access
• History
• 1994 Creative Star Ltd. (renamed Octopus Cards
  Ltd. In 2002) established consortium of MTR,
  KCR, KMB, CityBus, HK-Yaumati Ferry
• Developed by AES ProData (HK) Ltd., a member of
  ERG Group in Perth, Australia
• Technology
• Sony 13.56 MHz Felica RFID chip, range 3 to 10
  cm, transmit rate 212 kbits/s
• Non-compliant with ISO/IEC 14443 technology (no
  standards in 1994!)
• Store-and-forward system (MTR/KCR uses a frame
  relay wide area network)

33
ISO RFID Standards

• Standards needs for
• Air interface protocol (tags and reader
  communication)
• Data content (data format and organisation)
• Conformance (product features meeting standards)
• Applications
• International Organisation for Standardization
  (ISO)
• ISO 11784 (tag data structure), ISO 11785
  (air-interface) for tracking cattle
• ISO 14443 air-interface for payment and
  contactless smartcards
• ISO 15693 vicinity cards
• ISO 18047 conformance testing of tags and readers
• ISO 18046 performance testing of tags and readers
• Proposed standards for containers, pallets, etc.
• ISO 18000 series for RFID air-interface for
  supply chain tracking of goods for frequencies
  ranges in use around the world (135 KHz, 13.56
  MHz, 2.45 GHz, 5.8 GHz, 860-930 MHz, 433.92 MHz)

34
EPC Global Standards

• MIT Auto-ID Center rejected ISOs UHF protocol
  (too complex and costly).
• Proposed a hierarchy of classes for air interface
  protocols
• Class 1 a passive read-only backscatter tag with
  one-time field-programmable non-volatile 64-bit
  memory (WORM write once, read many times).
• Class 2 a passive backscatter tag with up to 65
  KB of read-write memory.
• Class 3 a semi-passive backscatter tag, with up
  to 65 KB read-write memory essentially, a Class
  2 tag with a built-in battery to support
  increased read range.
• Class 4 an active tag that uses a built-in
  battery to run the microchip's circuitry and to
  power a transmitter that broadcasts a signal to a
  reader.
• Class 5 an active RFID tag that can communicate
  with other Class 5 tags and/or other devices.
• Eventually adopted Class 0 tag (64-bit read-only,
  programmed at foundry) using a different protocol
  than Class 1 !
• Class 0 and Class 1 adopted as EPC standard in
  2003.
• Problems
• Class 0 and 1 not inter-operable, multi-protocol
  readers needed!
• Incompatible with ISO standards
• Cannot be used globally (Class 0 sends and
  receives signals at different frequencies,
  prohibited in Europe?)
• 2004 EPC developed a 2nd generation protocol
  (Gen 2, 96 bit), NOT backward compatible with
  either Class 0 or 1, more closely aligned with
  ISO standards.
• Obstacle to ISO approval 8-bit Application
  Family Identifer (AFI) that identifies origin of
  data on tag
• Preceding 1-bit to distinguish whether next 8-bit
  is ISO AFI or EPC header?
• To be continued . . .

35
EPC Standards

• Electronic Product Code (EPC)
• Unique identifier for 268 million firms, 16
  million object classes, 68 million serial numbers
  in each class.
• Object Name Service (ONS)
• Like the Domain Name Service (DNS) that
  associates an IP address with a domain name (web
  address).
• When tag read, EPC code transferred to nearby
  savant which contacts ONS to find location with
  more info about product read, retrieves info and
  forwards to sofeware application.
• Physical Markup Language (PML)
• Global standard for describing the product items,
  e.g. Fooddrinkcarbonated, date-stamps,
  temperature, etc.
• like XML for documents

36
Successful RFID Implementation

• Companies shipping 50 million cases will spend up
  to US 23 million to meet Wal-marts
  requirements.
• Suppliers RFID implementation should be
  scalable, flexible and meets own needs as well.
• Questions to ask
• Will the enterprise technology infrastructure
  support the massive amounts of new RFID data?
  Enough network bandwidth? Enough storage? How
  will the middleware route data correctly to
  applications and business processes? Which
  middleware? Insight to operations and
  logistics from RFID data?
• Technology solution for seamless integration
  with vendors and customers? Does the
  technology selection enhance existing business
  processes, preserve competitive advantage, and
  support reengineering so that new practices can
  be designed/implemented based on continuous,
  intelligent data analysis? How can other
  wireless technologies be blended with an RFID
  application to provide the lowest-cost,
  most-effective infrastructure?

37
Ten Questions to ask RFID Vendors

• Which frequencies and standards do you support?
• Evidence for performance claims?
• Site inspections before installation?
• How will you help me protect my investment?
  (upgrade? New standards? Multi-protocol?)
• How will you help me minimize my maintenance
  costs? (self-diagnostics? Warranty?)
• Interoperability testing done?
• Do you offer middleware?
• Can you (or partner) integrate readers with
  backend systems?
• Will you work with me to customize tags if
  needed?
• Can you deliver the tag volume that I need?

38
Middleware is KEY!

• RFID middleware is software that sits between the
  RFID reader and back-end applications (or other
  middleware)
• Facilitates communications between auto-ID
  devices (readers, bar-code scanners) and the
  enterprise systems
• RFID middleware performs functions such as
• Filter and Process streams of tag or sensor data
  from readers,
• Commission (physical write on) tags with unique
  EPC number assigned.
• Conventional middleware links disparate
  applications, both internal and external, to the
  enterprise (e.g. Web services, data routing,
  format translation)
• Moe stable vendor, more mature product, better
  interfaces
• Key function of RFID middleware cross-platform
  hardware integration and data filtering/reduction
• Key function of conventional middleware
  cross-platform software integration and data
  mapping
• When to use RFID or conventional middleware
  depends on technical requirements and application
  integration needs.
• Combination of both!
• Robustness? Simplicity?

39
Ten Questions to ask RFID Integrators

• What hardware have you integrated successfully?
• What is your area of expertise?
• How much experience do you have in auto-ID and
  data capture?
• How much industry knowledge do you have?
• Can you do a business case analysis and develop
  business processes?
• Do you have test facilities set up to test my
  products?
• Is your platform based on industry standard
  technology?
• Do you write code?
• Who owns the intellectual property of solutions
  developed?
• Do you have a vision for how to build and extend
  the system?

40
Planning for RFID data

• Flood of data!
• Questions to ask
• What data to collect and store?
• How is RFID data different from before?
  Integration with previous databases?
• Who owns the data? Security? Privacy?
• How to visualise and interpret this data, so can
  act on key events?
• What business process needs to be changed to
  enable people to make effective decisions with
  this info?

41
RFID Data Management Strategy

• Lead with well-defined business processes.
• Granularity driven by business needs, not
  technology!
• Business rules determine what meaningful info is
  passed from edge-servers to back-end
  applications.
• What should be filtered and what should be
  archived?
• Change in database schema?
• Leverage existing architectures/frameworks for
  data integration.
• Minimize transition disruption and cost.
• Consider business dynamics related to data
  ownership and privacy, and develop strategies
  that benefit company and supply-chain partners.
• Improved visibility benefits to be shared by
  supply-chain partners.
• Make sure data interpretation and analysis
  provide information people can act on.
• Determine key performance indicators,
  Event/exception alerts!

Sense Respond
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43
Walmarts Strategic Move

• Recognise the potential of technology as a key
  enabler for cost savings
• First mover advantage
• Using its industry strength, Walmart
• Pushes out infrastructure cost to suppliers
• Limits own exposure to costs and risks
• Reap benefits of supply chain savings
• Broad mandate speeds commoditisation and
  standardisation of the technology

44
The Reality for Walmart in 2005

• Most suppliers tentative, some reluctant.
• Only about 65 of cases heading to Walmarts
  Texas distribution centers are RFID tagged.
• ARC surveyed 24 Walmart suppliers, most are
  shipping fewer than one dozen SKUs with RFID
  tags only two companies are committed to tagging
  all their SKUs.
• Logistics Management surveyed 26 Walmart
  suppliers
• 61.5 shipping less than 25 of their SKU with
  RFID tags
• 11.1 tagging between 25 and 49 of their SKUs
• 7.4 tagging between 50 and 74 of their SKUs
• Only 3.7 tagging more than 75 of their SKUs.
• 42.3 cited lack of return on investment their
  greatest concern.
• High cost of technology a concern for 23.1.
• Performance and technological problems
• High tag-mortality 30 of tags fail to work.
• High cost US 25 to 50.
• Lack of industry standards.

45
Breakeven for suppliers? (Jorge Santana)

• Can manufacturers afford to swallow the cost of a
  tag ?
• Many products are low-value with thin profit
  margins!
• Retailer mandates tagging every item, with no
  increase in price. Will buy more items, say by a
  fraction of F. Worthwhile?
• Current profit (Quantity) x (Profit)
• New Profit (Quantity)(1F) x (Profit tagcost)
• Breakeven
• (Quantity) x (Profit)(Quantity)(1F) x (Profit
  TagCost)
• i.e. Tagcost (Profit) x F/(1F)
• or Profit (1 1/F) TagCost
• Example
• With 25 tag and 1 profit, need 33.33 increase
  in orders.
• With 5 tag and increase of 5 volume, profit
  margin at least 1.05

46
RFID in Logistics (Robert Hadow)

• Eyefortransport study
• 62 of transport and logistics providers said
  business case for RFID not strong enough for
  deployment.
• 53 believe currently installed technology gives
  all the efficiency, accuracy and visibility we
  need.
• Railways have used RFID to track and manage
  rolling stock for years!
• For a chassis (undercarriage with wheels for
  transporting containers), an increase in
  utilisation from 50 to 60 is 35 days, or about
  US300 per year enough to buy a lot of tags and
  readers!
• To calculate the breakeven fleet size (tradeoff
  operating costs vs. stockout and equipment
  re-positioning), we need the following
  information
• Data on equipment in fleet, availability and
  location
• Historical data on use of fleet (to estimate
  demand)
• Projected date of return of equipment currently
  with customers
• Appointment system, incentives for on-time
  returns
• Stockout costs
• Opportunity cost / foregone profit
• Revenue loss
• Loss of goodwill and even entire account!

lt-RFID
47
RFID logistics

• Average cost of container is US1800 a tag cost
  US30.
• Hadow estimates it cost US480 million to tag the
  entire 16 million containers in the world, and
  US200 million to equip 5000 facilities with
  50,000 readers.
• With just an increase of utilisation of 0.6,
  there would be positive ROI.
• So why are logistics companies holding back?
• Game Theory! I will adopt RFID if my
  competitors adopt too.
• If only a few companies adopt RFID, not
  sufficient readers outside those facilities, and
  exchanged containers wont be tagged tracking
  not effective!
• Industry-wide consensus needed.
• Impetus
• US Dept. of Homeland Security pushing for smart
  containers
• ISO standard for container, chassis and seal
  tagging (UHF passive tag, 433 Mhz active tag)

48
RFID Adoption in China

• China accounts for over 70 of US imports.
• Walmart accounts for 10 (US 12 billion).
• Drivers of RFID adoption
• Mandate from major retailers
• Chinese govt.s concern to upgrade logistics
  infrastructure.
• Chinese supply chains inefficient
• Logistic cost 20 of GDP of China, vs. 8 of GDP
  in US.
• Fewer out-sourcing to 3PL, more duplication and
  under-utilisation of assets, and fragmentation of
  industry
• Cost comparative advantage eroding pressure on
  currency appreciation
• Government will play active role in RFID adoption
  in China

49
RFID Benefits

• Reduced shrinkage
• Scottish Newcastle brewery saves US25 million
  per year by tagging its high-value beer kegs
  better record keeping, reduced kegs lost or not
  returned.
• Delivery receipt and reconciliation process
  improvement
• Marks Spencer reduced time to read stacked
  trays of food by 80
• Time-sensitive goods monitoring
• Inventory and warehouse management improved
• GAP in-store inventory accuracy increased from
  85 to 99.9
• Defect Tracking and Recall
• Stock out reduction Increased product velocity
  and inventory turns

50
RFID opportunities

• Integrated supply chain
• Improved visibility
• Improved error handling
• Process improvement
• Equipment and software development
• Training and consulting
• Future
• Sensors and actuators to extend IT infrastructure
  to integrate physical devices with business
  process applications through standards-based
  middleware.