7/16/05
RFID: Questions answered
and examples
Jerry Banks
Atlanta, Georgia USA
7/16/05
Appreciation is given to the RFID Journal from which the
original version of this presentation borrowed much material.
Some of that material on the basics of RFID is retained in
this version of the presentation.
Warning!
Despite recent developments,
the future of radio frequency identification
in the supply chain is not entirely clear,
but its potential impact is too big to
be ignored.
Tom Singer, “RFID 101,” Logistics Today, Nov., 2004.
From RFID Update, June 21, 2005
Our research shows RFID will have strong growth. But some
expectations are unrealistic. Recently, we were asked if RFID
could sustain a 400% compound annual growth rate for
several years. If you make modest assumptions about the
RFID market in 2004, then a decade of 400% compound
annual growth would exceed the US GDP. So it seems
unlikely, regardless of the definition of the RFID market.
From RFID Update, June 21, 2005
“RFID is a complex and still
relatively immature technology for
which expertise is absolutely
required to be successful.”
What is RFID?
• RFID = Radio Frequency Identification
– Used to identify objects (including people)
– RFID tag (or transponder)
• Stores information on a microchip
• Has an antenna
– Radio waves are reflected to a reader
– Reader passes information to a computer
Gemplus GemWave™ Series
How does the system work?
• The reader sends out electromagnetic
waves
• The tag antenna receives these waves
• The microchips circuits are powered by
the field created by the reader
• The microchip modulates the waves that
are sent back to the reader
• The waves are converted to digital data
RFID tags are being placed in Euro notes
Is RFID better than bar codes?
• They are different technologies that have
different applications, sometimes
overlapping
• Bar codes are “line-of-sight”
– Scanner must be properly oriented
• Bar codes can be read if they are within
range
Is RFID better than bar codes?
• If a bar code is ripped or dirt covered, it
can’t be scanned
• Bar codes usually contain less information
than an RFID tag
– Manufacturer and product, but not the unique
item
Will RFID replace bar codes?
• Doubtful
• Bar codes are inexpensive and work well
for certain tasks
Alien Squiggle ‘T’: Low cost, general purpose
Alien M Antenna: Low environmental dependence, general purpose
Alien 2 x 2: Low cost, airplane baggage
Is RFID new?
• Originated in the 1970s
• But, it has been too expensive for
widespread application
• If the price comes down enough they have
lots of advantages
– Radio waves travel though non-metallic
materials
– Unique serial numbers can be stored
What problems have existed?
• All RFID systems use proprietary
technology
– If Company A puts an RFID tag on a product,
it can’t be read by Company B unless they
use the same RFID system
– Unless they use the same RFID system from
the same vendor
– That is, a lack of a standard
“Trends,” Inbound Logistics
January, 2005
• Report of a survey of 669 supply chain
and information technology executives
– 75% say it is “important” or “very important” to
have an effective advanced infrastructure in
place to support RFID mandates
– 33% have already implemented these
effective advanced infrastructures
“Trends,” Inbound Logistics
January, 2005
• Report of a survey of 669 supply chain
and information technology executives
– 66% say they are installing RFID because of
customer mandates such as Wal-Mart or DoD
– 60% believe RFID system deployment will
reduce labor costs and boost process
efficiency – ultimately making them more
competitive
The cost of readers is currently
US$300 to US$1000 each.
Expected to shrink to less than half that
by the beginning of 2007.
What about the cost?
• Readers cost US$1000 or more
• Tags cost US$0.20 or more
– If an item costs US$2.00, a US$0.20 tag is
10% of the cost
Flash: Buy 1,000,000 tags and Alien Technology
will sell them for less than $0.20 each
See: http://www.alientechnology.com/products/rfid-tags/
The latest prediction on RFID tag price,
a widely derided but nonetheless commonly
used benchmark of all things RFID,
came from Alien CEO Stavro Prodromou at last week's
RFID World. Prodromou expects tag prices
to fall to only 10 cents by 2007,
and that assumes substantial production
levels of 100 million tags per month.
That's a far cry from 5-cent tags by 2008,
an aggressive but plausible prediction often heard
in industry circles.
March 7, 2005
Want to buy an RFID reader?
Active Wave
RFID Wizards
Costs of RFID implementation
• Source: Accenture as reported in Logistics
Today, January, 2005
– Tag prices are 2% to 8% of the total cost
– Readers and controllers typically are 7% to
10% of the total cost
– Software and software integration are typically
52% to 80% of the total cost
“RFID hardware shrinking in size”
• Inbound Logistics, December, 2004
• Readers have shrunk from large units the
size of a dictionary to the footprint of a
credit card
• Over time it is predicted that reader
modules will shrink into chips
• By 2007, RFID reader functionality will be
in PDA’s and cell phones
What frequency do the tags use?
• Actually, there are several frequencies
– Low is @ 125-135 KHz
– High is at 13.56 MHz and 433 MHz
– Ultra-high is in the range 860-960 MHz
– Microwave is at 2.45 and 5.8 GHz
• Radio waves behave differently at different
frequencies, so it matters which is chosen
Which frequency is right?
• 13.56 MHz is cheaper than UHF
– Uses less power
– Better able to penetrate non-metallic
substances
– Ideal for scanning objects with high-water
content at close range
• Example, fruit
Which frequency is right?
• UHF tags offer better range and can
transfer data faster
– But, they use more power
• But, they require a clear path between the
tag and the reader
• Better for scanning boxes passing through
a bay door into a warehouse
Are these frequencies standard?
• Most countries have assigned the 125 kHz
area of the radio spectrum for lowfrequency systems
• 13.56 MHz is used around the world for
high-frequency systems
• Countries have not agreed on the UHF
spectrum
– It will take years to work this out
What’s the problem with metal and water?
• Radio waves bounce off metal and are
absorbed by water at UHF
– That makes tracking metal products or those
with high water content a problem
– System design and engineering can
overcome these problems
• Low- and high-frequency tags work better
– Low-frequency RFID tags are even
embedded in metal auto parts to track them
Passive or active tags?
• Active RFID tags have a power source…a
battery…to run the microchip’s circuitry
and to broadcast a signal to a reader
• Passive tags draw their power from the
reader which sends out electromagnetic
waves that induce a current in the tag’s
antenna
Passive or active tags?
• Current interest is on passive tags which
are less costly by far
• Their read range is about 6 meters
• Active tags can be read for more than 30
meters
What is an EPC?
• EPC = Electronic Product Code = RFID
– Developed by the Auto-ID Center as a
successor to the bar code
– A numbering scheme that is used to identify
products as they move through a global
supply chain
China Eying RFID
China Tech News, October 21, 2004
China, Japan and South Korea are making
joint efforts to develop RFID standards.
They are following a similar alliance that
was formed to develop standards for the
Linux operating system. The United States
and Europe are working on their own
standards, which they hope will become
the global standard.
http://www.chinatechnews.com/index.php?action=show&type=news&id=2006,
Accessed November 26, 2004
Three ‘standards’
• EPC
– Businesses in the USA and Europe
• ISO 18000
– Favored by the USA military establishment
• Asian version
– Avoiding the payment of royalties
– Generation 2 standards will be royalty free!
• Announced December 16, 2004
• Actually, only the most basic version!!!
– Clarified on February 3, 2005
The race to ship GEN 2 product is heating up, and it will only
accelerate as 2005 progresses. Since GEN 2's ratification
last December, the RFID tag and chip manufacturers
have been hurriedly ramping up to begin production.
Given that many would-be customers will not purchase
RFID hardware, knowing that whatever they might buy now
will be made obsolete by GEN 2 releases later this year (Quarter 3)
the industry is stalled in an awkward paradox of
pent-up demand and decreased spending.
Information Week, April 4, 2005
Gartner: “Get Ready, GEN 2 Has Arrived”
April 11, 2005
The U.S. Department of Defense has released the
Defense Federal Acquisition Regulations Supplement (DFARS),
which outlines the regulations that suppliers must follow
with respect to shipping the DoD RFID-tagged goods.
Published in yesterday's Federal Register, the document
represents an important step in the DoD's RFID initiative
to introduce track-and-trace functionality across its supply chain.
The document was originally due at the end of last May,
which represents a delay of almost one year.
Those suppliers affected by the DFARS have until June 30
to submit comments about its proposed regulations.
April 22, 2005
Global acceptance?
• While Wal-Mart has worked closely with
EPS Global to promote open standards,
those standards are still far from being
globally accepted
• The ISO has been involved in the process,
so the momentum of the world’s largest
retailer and other global companies could
carry the EPC Global initiatives into
accepted standards worldwide
Source: Logistics Today, January, 2005
How much information can a tag store?
• Typically, 2KB
– Companies are now looking at a simple
“license plate” tag that contains only a 96-bit
serial number
– Cheaper
Slap-and-Ship
Wal-Mart
Wal-Mart
Venture Research’s belt-driven Slap and Ship workstation
A 3-phased approach
• Pilot projects operating in parallel, but could be
in series
– Slap-and-ship with a portable station in the shipping
area
– Print-and-apply systems in the manufacturing line
• Producing both RFID-compliant and non-compliant cases
and pallets
• Meeting the needs of the customer
– Warehouse management system integrating RFID
Beaver Street Fisheries in Jacksonville, FL
Return on Investment
• It will be tough to generate a ROI with slap-andship
• Most organizations are a long way from
achieving ROI on RFID
– Because they are aligned in silos of automation
– There is a receiving system, a production system, a
QA system,…
– And, they won’t share information
– Another silo will be constructed for RFID
Source: Logistics Today, January, 2005
Acronyms
• US DoD
– United States Department of Defense
• WMS
– Warehouse management system
• ERP
– Enterprise resource planning
• ASN
– Advanced shipping notice
Wal-Mart
• Wal-Mart and the US DoD RFID mandates
have sparked a new software market for
RFID compliance solutions
• These applications are typically designed
to work with existing WMS and ERP
systems
• The result is an ASN that is transmitted to
the trading partner
Wal-Mart
• Unless the supplier ships exclusively to
Wal-Mart or the DoD, a decision in
advance needs to be made concerning a
tag or no tag
• One approach is to tag every shipment
– Slap-and-ship
– There is an extra cost for attaching tags when
not needed
But!
"Rapid growth rates predicted for RFID based
on the Wal-Mart compliance deadline
of January 2005 did not come true."
Marketstat, May 27, 2005
Can reader collision occur?
• The signal from one reader can interfere
with the signal from another reader if the
coverage overlaps
• TDMA = Time Division Multiple Access
– Technique that is used to overcome the
problem
Can tag collision occur?
• If a lot of chips are being read in the same
field, it’s possible that more than one chip
reflects a signal at the same time
– This confuses the reader
• Vendors have developed techniques to
overcome this problem
What are some common applications?
• The most common are tracking goods in
the supply chain, reusable containers, high
value tools, and parts moving in a
production line
• Applications are limited only by the
imagination!
Controlling access to buildings
Announcement for a course in Atlanta,
July 19, 2005
US$495
Tracking cattle
Tracking legal files
Tracking baggage
Halted!
Halted!
RFID applications according to Marketstat:
29%
20%
12%
10%
8%
8%
6%
4%
3%
Supply Chain Management
Access Control
Asset Management
Point-of-Sale
Baggage Control
Other
Vehicle Identification
Animal Tracking
Tire Tracking
May 27, 2005
Will RFID lead to massive layoffs?
• RFID is a labor-saving technology, so
some workers will lose their jobs
– Because fewer workers will be needed to
scan bar codes
• But, the transition from bar codes to RFID
tags will take 10 years or more
– So, there will be ample time to make changes
– The technology will create new jobs
Port of LA/Long Beach
Container ships
Port of LA/Long Beach
From autos to zinc (shown here)
Port of LA/Long Beach
Cruise ships
Port of LA/Long Beach
Intermodal
Port of LA/Long Beach
• Port of LA/Long Beach is a 70-acre yard
and transload facility encompassing 1100
parking slots and 250 dock doors
• Can track and trace the comings and
goings of each of the containers and
trailers in its yard
Port of LA/Long Beach
• Attached RFID tags (small, active radio
transmitters) via a clamp to every
container and trailer that enters the yard
• Also, a real-time locating system as well
as its rule-based yard management
system software
Port of LA/Long Beach
• While consumer goods companies
continue their elusive search for ROI from
their RFID investments, very significant
savings are being accomplished for
companies using the less-publicized but
more robust active RFID technology
• An example from Logistics Today,
September, 2004
Port of LA/Long Beach
• Previously relied on traditional data entry
to capture location of the containers and
trailers into PCs on a batch basis
– Very labor intensive
• Was hands on
• Now totally live and accurate
Port of LA/Long Beach
• How the old system worked:
– “In a traditional yard, the driver comes in, gets
a gate pass from a guard, is told to drop off
the container at a specific container at a
specific location. Then, the driver goes to
another window to get the paperwork signed.
If the driver is making a double transaction,
he/she then goes to another location, picks up
the container, goes to the gate, shows the
paperwork, shows it to the guard, and leaves”
Port of LA/Long Beach
• How the new system works
– “When a container comes to the gate, the
driver knows that he/she is there for a double
transaction. An operator standing in the lanes
at the gate has a handheld device tethered to
a printer. The drivers don’t have to stop at the
window and leave their cabs any more.”
Port of LA/Long Beach
• Time to complete a double transaction
decreased by 66%
• Eliminated 100% of costs associated with
manual search
• Improved gate personnel productivity by
50%
• Increased daily throughput of the yard by
38%
Big players in RFID
IBM
I
B
M
TI
HP
SAP
Sun
Intermec
Technology adoption curve
Ultimately, each firm and supply chain
must determine their position on the
RFID adoption curve…a company that
moves too quickly or slowly can risk
its competitive position. Some should
be early adopters while others should
wait until the technology fully matures.
Most will fall somewhere in between.
Tom Singer, “RFID 101,” Logistics Today, Nov., 2004.
RFID adoption is "stuck in neutral." The industry is plagued
by the contradiction that while RFID first movers are
repetitively insisting that others join them in deploying RFID,
they remain unwilling to substantively share their findings
on RFID's benefits. Thus the wave of would-be fast followers
remains hesitant, still unsure of a path to ROI and
Increasingly hardened to the "Get Started Now“ mantra
coming from the chorus of first movers.
AMR Research, April 20, 2005
Sequel to the Wal-Mart Story
• “Despite Wal-Mart’s edict radio tags will
take time,” NY Times, 27 Dec 2004
– RFID is not ready to meet the needs of either
Wal-Mart or its suppliers
•
•
•
•
Sub-100% read rates
High cost
Difficulty of data integration
Only 40 of the 100 mandated Wal-Mart suppliers
will be tagging everything shipped to the retailer
The other side of the story
As of the end of January, all systems accountable
to the mandate are in place.
104 Wal-Marts, 35 Sam's Clubs, and 3 distribution centers
have RFID systems installed.
Roughly half of the 100 mandated suppliers completed the deployment
without outsourcing to consultants or integrators.
RFID data reads are made available within 30 minutes
on Wal-Mart's Retail Link site for its suppliers.
As of March 1st, Wal-Mart has received an aggregate total
of more than 23,500 tagged pallets and 660,000 tagged cases,
comprising more than 5 million RFID data reads.
How to start
• Get an education on market basics
– Attend conferences
– Collect marketing materials
– Make phone calls
– Visit test centers
From “Questions form experts,” Inbound Logistics, January, 2005
Indiana University's Kelley School of Business
in Bloomington, Indiana, has been tapped
to receive $150,000 from
Proctor & Gamble's charitable arm
to develop and offer coursework in RFID.
March 31, 2005
RFID should ultimately be
a successful technology,
but the market evolution
and implementation will take time
From “Questions form experts,” Inbound Logistics, January, 2005
Some challenges that must be faced
• High price tags
– $0.25 to $0.35 in large quantities and $0.50 to
$0.70 in small quantities
• Too high to be absorbed into the item cost
• Tag performance
– 10% to 12% are dead-on-arrival
– Only 80% to 90% that pass inspection can be
read
Some challenges that must be faced
• The laws of physics
– RF does not easily pass through metal or liquid
• Global standard still does not exist
• No ROI seems to be forthcoming
– $13 million to $23 million investment
– Must find alternative benefits
• Theft prevention, counterfeit prevention, labor reduction, …
How long can we get along?
• Indefinitely, if sales are to smaller retailers
• If Wal-Mart is a key customer, late 2005 for
most vendors, and early 2007 for all
vendors
Euro RFID Market to Hit EUR5 Billion in 2007
According to a press release from research firm Frost & Sullivan,
the market for RFID hardware, software, and services will exceed
EUR5 billion in 2007. The growth will result from the decreasing cost
of RFID technology, specifically that of tags.
"Further price decreases are likely to positively impact manufacturers‘
unit shipments and encourage them to attempt
more large-scale projects," the report notes.
May 17, 2005
On the contrary!
• According to a recent survey by BEA
Systems of 150 information technology
and logistics executives from the UK and
Finland, a whopping 70 percent of
respondents claim the need for "a lot more
information" before making a decision one
way or the other about deploying RFID.
– Reported in RFID Update on July 12, 2005
Three RFID pitfalls:
Consumer Goods Technology, March 10, 2005
The first is believing the hype. RFID presents magical opportunities
to control and monitor business operations,
but it still must be weighed against
the on-the-ground needs of each particular organization.
Not all companies need the magic that RFID
professes to offer. Some could do with simpler and
cheaper technologies
Three RFID pitfalls:
Consumer Goods Technology, March 10, 2005
The second commonly-made mistake takes the flipside to this thinking:
if you find your company beholden to a mandate,
approaching the RFID deployment grudgingly and conservatively
will virtually guarantee that your organization
doesn't realize the technology's benefits.
Since you're going to have to implement RFID anyway,
seize the opportunity to do so intelligently and creatively.
Three RFID pitfalls:
Consumer Goods Technology, March 10, 2005
Finally, many consider RFID alone, without stepping back
and questioning how complementary technologies
might also be used. RFID doesn't exist in a technological vacuum.
“Taking a Pragmatic Approach to
RFID Deployments”
Anyone who has followed the market for RFID technology over
the last few years has seen some pretty dramatic highs and
lows. This is to be expected with any emerging technology; it
happened with wireless and the internet before that. The
mandates from large retailers and the US Department of
Defense have altered the market maturation for RFID when
compared to other emerging markets, effectively accelerating the
natural evolution of technologies and standards.
AMR Research, June 13, 2005
“Taking a Pragmatic Approach to
RFID Deployments”
A lot of the early approaches to RFID
deployments and certainly all the initial hype
surrounding the technology were about the
transformational nature of RFID technology. The
application of RFID tags to goods as they moved
through the supply chain would bring
unprecedented visibility and allow companies to
respond in real time. This broad, transformational
application of RFID may ultimately be the
deployment model but it will likely be 8-10 years
before the majority of companies have reached
this scale of implementation.
AMR Research, June 13, 2005
“Taking a Pragmatic Approach to
RFID Deployments”
The current state of technology has made this grand
vision for RFID unrealistic today and companies across
all industries are looking at taking a more targeted,
pragmatic approach to identifying potential RFID uses
and limiting the scope of deployment. Feedback from
many consumer goods companies is that retailers are
becoming much more open to discussing the right
application of the technology for both parties; a very
encouraging sign.
AMR Research, June 13, 2005
“Lessons learned from RFID training”
RFID Update, June 24, 2005
• RFID technology is finicky (demanding, picky)
– The technology behaves differently based on any
number of factors, including orientation, the type of
products being tagged, and an infinite array of
environmental characteristics.
• There is much to learn
– Successfully deploying RFID technology requires
knowledge of: radio frequency engineering and
design, supply chain management, logistics,
warehouse management, and familiarity with RFID
products and brands…
“Lessons learned from RFID training”
RFID Update, June 24, 2005
• Experience is necessary
– Given the overall shortage of RFID expertise,
many people take some training classes or
work with a few products whereupon they
consider themselves qualified to do a
deployment. While such individuals or
companies certainly do have more knowledge
than the average person with respect to RFID,
that hardly means they are ready for prime
time.
“Lessons learned from RFID training”
RFID Update, June 24, 2005
• Every deployment is different
– While the fundamentals of an RFID
implementation are of course similar, the devil
is in the details. Each company's products,
processes, and physical environment are
different, and these idiosyncrasies conspire to
ensure that no two implementations are alike.
“Lessons learned from RFID training”
RFID Update, June 24, 2005
• Expect problems and delays
– Because each environment is so different,
there will be unpredictable variables that rear
their heads and must be dealt with.
RFID Update Conference
Boston, June 14, 2005
• More than 100 attendees
• The overriding message from the
speakers was that there is no substitute
for experience
End