28 January 2009

HP believed that RFID could markedly reduce its costs by offering a means of unique object identification

Radio frequency identification (RFID) technology is transforming supply chain processes for high-tech manufacturers, argues David Lyon, EPCglobal business manager at GS1 UK.

The inaugural Global High-Tech Summit a couple of years ago highlighted the ongoing challenges facing high-tech manufacturing industries: the need to innovate with new products faster, streamline operations, improve value chain integration and collaboration, and increase sales.

A key technology that can help is radio frequency identification (RFID). Six years ago, Hewlett Packard (HP) in Brazil began investigating RFID to see whether it could help drive improved supply chain efficiency for itself, its partners and customers.

HP believed that RFID could markedly reduce its costs by offering a means of unique object identification. At the same time, by linking RFID with sensing technologies, the company could increase its supply chain visibility and controls by tracking objects and physical environments.

Now, the Sao Paolo printer facility has moved to full RFID implementation and currently tags over two million products for the Latin America market. RFID technology is embedded into all operational processes, and thanks to the increased visibility of its products, HP Brazil has reduced its printer inventory in the supply chain by 17 per cent.

Thirty of the company’s other worldwide manufacturing sites also now use RFID to benefit from improved operational efficiencies and reduced internal costs.

At the heart of HP’s successful RFID adoption is a reliance on and confidence in industry standards. RFID users have been the long-term beneficiaries of a drive led by the independent, industry-driven standards organisation, EPCglobal, which took the ‘Gen 2’ standard that defines the physical and logical requirements for passive tags and readers and had it accepted by the international standards organisation (ISO).

EPCglobal has since introduced a number of RFID standards, including EPC (EPCIS information services) a secure, real-time standard for data sharing among trading partners. EPCIS facilitates the transfer of information on the what, where, when, and why events occurring in any supply chain, enabling external sharing of information about the movement and status of goods in the physical world.

Effective security is also a vital element of any RFID application, with rigorous approaches available to authenticate tags depending on the particular use required.

The adoption of RFID by organisations such as HP Brazil and by Airbus in Europe sends a clear signal that RFID isn’t a technology for ‘someday’. It can bring manufacturers a competitive edge right now. RFID is an enabling technology that increases business process visibility, spurring increased efficiency and supply chain effectiveness.

A typical application would be tracking re-usable transport items such as bins, totes, pallets, and racks that stay in a closed-loop and can be managed to increase usage and provide visibility of the items they are ’transporting’.

Such reusable items are used extensively in manufacturing environments, notably in the automotive industry, where racks are used to move parts from suppliers to automotive assembly plants, controlling the overall flow of inventory. These applications are demonstrated at the EPCglobal RFID Test Centre in Cheshire which offers a real-world view of an industrial environment using RFID.

This article first appeared in issue 15 of Prime magazine.

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