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RFID-It’s more than just technology

The technology's future doesn't depend upon its technical advantages. It depends upon the type of applications and roadmap that enterprises take while deploying RFID solutions. by Ben Gaucherin

Radio Frequency Identification (RFID) represents a quiet revolution disrupted by the occasional shout. Many have heard the shouts: media reports that went, 'Wal-Mart to throw its weight behind RFID,' 'Gillette to buy 500 million RFID tags,' and '22 million US households use RFID tags for payments.'

However, the bigger story is what we do not hear. We hear little about companies quietly struggling to understand the impact that this new technology will have upon their businesses. We hear almost nothing about the challenges encountered in trying to understand how to comply with Wal-Mart's supplier mandate.

Teething trouble

Two things are clear when it comes to RFID. First off, there has been no clear roadmap that a company can employ while evaluating RFID opportunities or mandates. The typical approach has been one of trial and error. Secondly, the future of RFID is going to be determined more by the dominant applications rather than by the technology.

Wal-Mart is clearly counting on RFID to improve its already best-in-class supply chain efficiency. The implications of Wal-Mart's RFID adoption are far-ranging for its suppliers. Each will have to determine how to meet Wal-Mart's requirement while simultaneously understanding the benefits that RFID brings. However, most companies don't know where to start while evaluating the technology. Worse yet, the resources to guide them are scarce or non-existent.

Instead of debating bandwidth options, read-range requirements, and interference challenges, you should first consider how you can use RFID. This will determine your target application and will lead to appropriate technical solutions. Remember that the technology acts as an enabler and a constraint. Focus first on the two dimensions of RFID applications: objectives and medium. Start with your objective and then consider the medium that has to be monitored.

Myriad objectives

Early RFID adopters have chased myriad objectives, but these generally fall into three categories-efficiency, security and marketing. Wal-Mart, for example, has focussed its RFID initiatives on improving supply chain efficiency. By contrast, the driver behind Gillette's initial interest was the promise to improve product security and reduce the theft of its high-margin razors. Prada, on the other hand, is focussing on employing RFID to effectively market its wares to in-store customers and improve service.

Once you identify the key objectives, you can refine the outcomes and processes that you are targeting for improvement. For example, the E-ZPass automated toll collection system reduces long lines at highway tollbooths. The ability to keep a portion of the traffic moving non-stop through the tollbooths almost eliminates the bottleneck for participating motorists and simultaneously reduces the queue wait-time for other motorists. The outcome of shorter tollbooth wait-times was achieved by employing RFID technology at the process bottleneck of toll collection. Analysing your target outcomes and key processes will help you refine your target application.

The medium

Your second critical decision is to determine what medium you intend to monitor. To date, four RFID mediums have emerged. They are payment devices, products, property and people. Some common RFID payment devices are the E-ZPass transponder and Exxon Mobile's Speedpass.

These are among the most mature commercial applications of RFID. Marks & Spencer has initially focussed on tracking products through its supply chain. Product tracking can increase inventory accuracy, lower material-handling labour costs, and reduce product theft. You can accomplish product tracking in several ways. The most obvious is item-level tracking. However, most current initiatives revolve around tracking products by pallets, cases or conveyances.

Newer applications are now emerging in property or asset tracking. This application involves fixing RFID tags to a variety of assets. These assets can be stationary and report on performance, or be movable and report on their location.

For example, Air Canada has employed RFIDs to track its in-flight service carts, the US Army is using RFIDs to track supply containers overseas, and ES3 is using RFIDs to track trailers in its shipping yards. (ES3 provides true just-in-time food distribution and delivery service to retailer distribution centres, and direct to stores.)

Finally, the most nascent-and controversial-RFID medium is people. While this topic has generated mild protest in the United States, the Malaysian government has already issued eight million RFID-enabled passports to improve immigration security.

Meanwhile, Prada is experimenting with RFID-enabled loyalty cards to help sales associates better serve its best customers. Dolly's Splash Country (a water park in Tennessee, US) lets its patrons track each other's whereabouts throughout the park; thus, parents can quickly locate their children on an electronic map of the park.

Capturing business intelligence

The most nascent-and controversial-RFID medium is people. While this topic has generated mild protest in the United States, the Malaysian government has already issued eight million RFID-enabled passports to improve immigration security

Finally, the output of an RFID system is data. Often the technology simply enables more timely, accurate and efficient recording of basic information about payments, property, products and people. However, the data can also yield valuable business intelligence. It can help you respond more quickly to important changes or exceptions in your operating environment, and can be analysed to provide more insight for future decision-making.

Whatever your objective and medium may be, it is critical to consider what data you will need and how you will use it to take full advantage of an RFID initiative.

Getting started

Identifying an application is only the first step. As you refine the application objectives and define the operating requirements, you will be able to select appropriate technology and design an effective pilot. Taking this approach will help you avoid conducting an entire pilot programme only to learn that your technology selection was incorrect and the investment wasted. Moreover, taking an application-oriented approach will enable you to better align your RFID efforts with your company's business objectives.

RFID may represent a quiet revolution, but it is a revolution nonetheless. RFID technology is already being employed to improve supply chain efficiency, increase security, and provide new marketing services for users and customers.

With leaders such as Wal-Mart, Ford and P&G leading the way for RFID adoption, it is destined to become an important and pervasive technology.

The author is the Worldwide CTO of Sapient

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Indian Express - Business Publications Division

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