5 November 2009

RFID has evolved into a key technology for tracking goods and assets around the world, and is becoming critical to an efficient supply chain. Lindsay James finds out more.

When the radio frequency identification (RFID) mandates from retail giant Walmart and the US Department of Defense came into force back in 2005, the manufacturing world had no option but to comply with them. At the time, though, the technology was relatively untested, many implementations were rushed, and the majority of manufacturers didn’t give much thought to how they themselves might benefit from such an implementation.

“The RFID-enablement programmes championed by Walmart were all about ubiquitous adoption of standards at all levels,” says Anush Kumar, chief technology officer at S3 Edge, an RFID software provider. “As a result, these open system initiatives spanned multiple companies and required extensive cross-company coordination. The return on investment was not equal for all parties in the chain – to some the system was just a cost, they saw little or no return.”

Almost five years on, things have changed. Manufacturers are making unprecedented use of RFID to track, secure and manage items from raw materials stage through the entire life of the product.

“The RFID conversations I have on a daily basis with our manufacturing customers are no longer about mandates or the latest active tag capabilities,” explains Sudhir Hasbe, Microsoft’s senior product manager for BizTalk Server. “They are about business value and how RFID can be leveraged in their supply chains and manufacturing facilities to drive a level of visibility and execution that was not possible before.”

“In recent years RFID applications have emerged with strong business cases,” says Dean Frew, CEO at RFID specialist Xterprise. “As organisations learn of the success and competitive advantage their peers are enjoying, the pace of adoption naturally begins to accelerate. RFID-based applications have emerged as necessary table stakes to remain competitive in the new global manufacturing reality.”

Xterprise’s Jim Caudill says manufacturers are benefiting from RFID systems that provide real-time visibility by connecting existing mainstream business applications to real world events. “The world is rapidly moving towards the vision of enterprises equipped with real-time, high-fidelity, context rich data rapidly responding to the important events across their supply or demand chains,” he says. “They are moving towards every material asset having an identity that can be monitored, measured, and as a result, better managed. The management of these assets in real-time, without the dependency of human capital to constantly and reliably capture the volumes of data is what we refer to as the high definition enterprise. Just as the advent of high definition TV changed the way we view sports and movies, enterprises will soon be unable to conceive of how we ran our businesses with high latency, batch oriented, aggregated data, making decisions without the ability to really see and understand what was happening across the organisation.”

Advantages of RFID can be seen at the very beginning of the supply chain. By applying RFID tags to subassemblies in the production process, manufacturers can gain accurate, real-time visibility into work-in-process in environments where bar codes are unusable. Industrial control and material handling systems can integrate with RFID readers to identify materials moving down a production line and automatically route the items to the appropriate assembly or testing station. This capability, which requires no human intervention to look up item serial numbers or other identification marks, provides the accuracy and labour savings needed to efficiently execute complex sequencing and make-to-order production.

“Real-time visibility systems replace manual data entry and paper-based processes that are prone to errors,” says Kumar. “They significantly reduce the number of errors that are allowed to propagate through the system by providing real-time feedback and alerts to the operators at the instant an error is detected. Any problems can then be corrected before complex error recovery and exception handling is required. By eliminating these errors, manufacturers experience significant labour and operational cost savings.”

Keith Sherry, general manager at BT Supply Chain Solutions, concurs: “Automating processes removes the element of human error, for example, in picking orders. If orders go out correctly first time, you have a satisfied customer, you retain that customer, you reduce your reverse logistics costs and thus you lower your carbon footprint and any associated tax levies that it brings.”

Inventory is another source of potential benefits. “Research shows that 19 per cent of items put away in a large warehouse are placed in a location that does not match the controlling warehouse management system’s records,” says Kumar.

Because they can be read through packaging, without concern to orientation, and can withstand exposure to dirt, heat, moisture and contaminants that make bar codes unusable, RFID tags can remove blind spots from inventory and supply chain operations. Readers covering warehouse racks, shelves and other storage locations can automatically record the removal of items and update inventory records. If an item is misplaced or is needed urgently to complete an order, fixed-position readers or a worker with a mobile computer and RFID reader could automatically search for the item by reading for its specific ID number.

Manufacturers are also benefitting from RFID in asset tracking. Fixed position readers placed at strategic points within the manufacturing plant can automatically track the movement and location of tagged assets with 100 per cent accuracy. This information can be used to quickly locate expensive tools or equipment when workers need them, eliminating labour-wasting manual searches.

“Assets that can make sense to track include those that support the manufacturing process such as generators, tools and maintenance equipment, and those that don’t such as laptops, disk drives with confidential information,” explains Hasbe. “Other assets that make sense to track are reusable transport items. These are bins, totes, pallets and racks – any items that stay in a closed-loop and can be managed to both increase use and provide visibility of the items they are transporting.”

By tracking pallets, totes and other containers with RFID, and creating a record of what is stored in the container as items are loaded, manufacturers can have full visibility into inventory levels and locations. What’s more, by tracking items right to the retailer’s door manufacturers can reduce the possibility of counterfeiting, as Sherry explains: “Counterfeiting is a very real threat to a manufacturer’s brand. RFID technology can ensure that the ‘Nike’ shoe in the sports shop is indeed the genuine article and not a very convincing copy that has entered into the supply chain at one of the points from manufacturer to retailer.”

Moving even further down the supply chain, RFID really comes into its own when it comes to product recall. With RFID tagging at the item level, manufacturers have the capability to track and trace accurately and very quickly, by lot number, the items that have to be recalled, instead of investing in an all-product recall process. “Recall is a huge problem as supply chains are becoming more complex and globalised,” says Hasbe. “If something gets recalled then having a better visibility into products can really help. RFID technology really is key to this.”

Realising the full potential of RFID requires a common set of tools and a framework that manufacturers and technology providers can use to build the solutions that improve business processes – solutions like inventory management and asset tracking. Microsoft’s BizTalk RFID does this, allowing partners and users to create solutions incorporating RFID much more quickly and easily.

“Microsoft is very good at making complex things simple,” says Hasbe. “Its goal has been to drive RFID into the mainstream, and support widespread adoption by providing a platform that is affordable, scalable and open to the .NET development community. Microsoft has achieved these goals, and is the only company that provides an end-to-end scalable RFID platform that covers PCs and servers, mobile devices and cloud computing.”

The Microsoft RFID platform provides plug and play connectivity to RFID devices, much the same as a Windows desktop supports printers and external hard drives. “Because BizTalk RFID simplifies development and systems integration, you don’t need to integrate four or five different pieces of software,” says Hasbe. “BizTalk RFID makes it much more seamless, which allows system integrators and application developers to satisfy their customers more quickly.”

Hasbe reckons an important aspect of Microsoft’s approach is its close work with hardware and software partners to create low-cost solutions on top of BizTalk RFID. “Our customers now not only have the option of leveraging the global Microsoft partner community to build RFID applications, but can also ‘build-their-own’ on a platform that is supported as part of their existing Windows infrastructure. In my view, the RFID vendors and providers that will be successful in this are those that provide exciting new RFID applications ‘off-the-shelf’ to address business problems. Xterprise, a company that has built standard applications for high value solution areas, is a great example of this.”

“Instead of retrenching and retreating in response to economic pressures, we are seeing our customers make smart investments in Microsoft platform technology such as SQL Server and BizTalk Server, along with our Clarity RFID applications to reduce their costs, eliminate wasteful processes and improve overall customer service and satisfaction,” says Xterprise’s Jim Caudill. “For example, a leading pharmaceutical and health care firm is using our applications to assure the safety of employees in the event of an emergency at its production facilities, reducing its corporate risk profile; and a global logistics service provider is providing shipment visibility and value-added services with RFID applications to its European and Asian manufacturing customers in its international shipping business.”

“Our organisation is staunchly committed to Microsoft technology,” says Frew. “Only Microsoft can give us the unique combination of performance and low total cost of ownership advantages.”

As time goes on RFID will inevitably continue to be advanced by new technological breakthroughs that make it more accurate than ever. Hasbe says that because BizTalk RFID is based on flexible, scalable technologies and open standards, it is well-positioned to adapt to future industry developments. “The next generation will be device-to-cloud applications,” he concludes. “One of the biggest challenges for manufacturers today is deploying software across multiple locations – for most this means huge infrastructure costs. With device-to-cloud you can run applications across an indefinite number of manufacturing sites, all from one central location. This drastically reduces the cost of deployment and will most definitely be the way forward for RFID.”

This article first appeared in the Autumn 2009 edition of Prime.

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