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Supply chain payoffs with RFID

April 6, 2004
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With advances in technology and increased volumes, RFID will become cost effective for many applications.

RFID technology can be used for everything from tracking livestock and pallets to fleets. Source: Matrics.
RADIO FREQUENCY IDENTIFICATION (RFID) IS HERE TODAY, but at a price. Pioneers are claiming limitless potential to drive down costs and provide faster, cleaner data. Today, the price is too high for many food industry applications. But the information that RFID can provide will greatly enhance accuracy and effectiveness.

RFID readers typically cost $1,000 or more. RFID tags are also fairly expensive - 50 cents or more each. Another roadblock is the lack of standards. Despite the drawbacks, food companies should evaluate the technology and consider a pilot implementation within a segment of the supply chain where the technology would realize the most return. For example, Scottish Courage Brewing owns two million beer kegs. It has used RFID tags for four years, obtaining multiple paybacks in cost reduction and service improvement.

Better than bar codes?

RFID is not better than bar codes. The two technologies are different, but have applications that sometimes overlap. The difference is that bar codes are line-of-sight technology; the scanner has to see the bar code to read it. RFID tags do not need a line of sight to be interrogated. RFID tags can be read as long as they are within range of a reader, as far as 300 feet. RFID tags tend to be more rugged while a bar code label that is ripped, soiled or falling off cannot be scanned. RFID tags can be read through nonmetallic substances, paint, grease or other obscuring materials and do not require surfaces with smooth, flat contours.

A key difference is the information that can be stored. Standard bar codes identify only the manufacturer and product, not the unique item. The bar code on a box of cereal is the same as every other, making it impossible to identify which one will pass its expiration date first. Bar codes are passive. Once the code is printed on the label, it cannot be changed. RFID can also be passive or active. An active RFID device can be updated with newer information, for example a random weight or revised shelf life date. Active RFID tags are larger, more expensive and have a shorter operational life than passive tags. They have a memory capacity of up to 1MB.

Common applications

The most common applications are tracking goods in the supply chain, tracking assets, tracking parts moving to a manufacturing production line, security (including controlling access to buildings and networks) and hazardous waste management. RFID is used for everything from tracking livestock and pallets to fleets

Some companies are combining RFID tags with sensors. The same tags used to track items moving through the supply chain may also alert staff to unacceptable temperature changes, rancid meat, or even injections of biological agents into food.

The credit card-sized TempSense label was launched in July 2002. A temperature sensor, microchip, battery and antenna are all integrated into the label. The RFID label tracks the storage temperature of goods as they travel through the supply chain. The labels can be attached or inserted into a shipment or pallet-load of perishable goods as it leaves the farm, wharf or packinghouse. The same technology can be used to track finished goods from the plant to the consumer shelf to alert downstream parties of potential problems.

Where do we go from here?

In a recent study by AMR Research, food and consumer products companies cited efficiency and productivity as the areas where RFID would have the most impact. Reducing out-of-stocks and increasing inventory turns were the top two areas of interest, with improved order fill rates and reduction in warehouse operating costs following closely. The use of RFID to improve the consumer shopping experience was a distant fifth. More than half of those surveyed believed that consumer concerns about privacy would be a major roadblock in the public's acceptance of RFID.

RFID tags will become more common on both movable items (pallets, cases, trucks, etc.) and fixed items (racks, warehouse doors, mixers, etc.). With the placement of readers at appropriate locations, many applications become cost effective.

Smart cases or pallets will know where they have to go. Readers on conveyer belts can sort and direct the units to the correct location (trailer, rack, etc.) A reader on a forklift truck can allow random slotting with the combination of RFID tags on both slots and pallets keeping the appropriate records without manual steps. Picking can be verified with readers checking that the right pallet was picked from the right location and taken to the right trailer. Since a reader can read all the case codes (RFID case codes) on a mixed pallet at once, the order can be checked automatically.

Each retail or food service unit can carry its own RFID with its unique information, for example, expiration date, random weight, lot number, etc.

Raw product or ingredient tagged with RFID tags in smart containers can carry HAACP and quality information. Batching operations can be self-checking and self-documenting with readers sensing item ID and lot information automatically.

Retailers are testing the Smart Shelf, where an RFID reader is incorporated into the shelf and stocked with tagged product. The Smart Shelf monitors its rate of depletion, provides an alert when stock runs low and automates reordering to minimize out-of-stocks. Gillette is testing smart shelves in an attempt to minimize theft. Because store personnel program the system with store sales data, the system detects behavior outside the norm and can alert store personnel by transmitting information to a personal digital assistant. By identifying the nature of the stock loss and mapping and addressing points of vulnerability, losses in some stores have been reduced by 70% to 80%.

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