Description
What is RF id?, components of Rf id, How does RF id work?, effect of RF id on supply chain, Advantages of RFID over Barcode, RFID in the Retail Supply Chain , RFID Implementation in Wal-mart, Major Challenges in RFID implementation
Radio Frequency Identification
What is RFID?
Radio Frequency Identification is a generic term that is used for describing system which transmits identity of a person or an object or even an animal wirelessly by making use of radio waves.
Components of RFID
A basic RFID system consists of three components: 1. An antenna or coil 2. A transceiver/reader (with decoder) 3. A transponder (RF tag) electronically programmed with unique information
The antenna emits radio signals to activate the tag and to read and write data to it. The reader emits radio waves in ranges of anywhere from one inch to 100 feet or more, depending upon its power output and the radio frequency used. When an RFID tag passes through the electromagnetic zone, it detects the reader's activation signal. The reader decodes the data encoded in the tag's integrated circuit (silicon chip) and the data is passed to the host computer for processing
Effect on Supply Chain
RFID technology can be used to enhance the efficiency of a supply chain in order to maximize warehouse space, minimize goods shrinkage, minimize errors in delivery, minimize inventory, and improve customer service.
Source: ICFAI Journal of Management Research, Nov 2007
In order to improve the performance across the supply chain, organizations constantly strive to improve customer service to form tighter bonds between the members in the supply chain and build customer loyalty. Real-time tracking of goods throughout the supply chain provides one of the major opportunities for improving customer service. Real-time information on delivery time supports Just-in-Time (JIT) manufacturing and retailing, enabling organizations to make strategic decisions. Goods tracking is also important for direct end-customer service. Companies are investing in tools and systems that optimize their processes and have made significant progress by adopting various technologies for increasing efficiencies and reducing costs. The intense competition makes it vital for all organizations to continuously evolve with an emphasis on optimizing all levels of the value chain. This has led to the growth of supply chain management. Supply chain management effectively integrates suppliers to the end consumers and emphasizes the need for collaboration to optimize the entire system. The basic aim of any supply chain management function is to make the organization more responsive to drastically changing consumer preferences by capturing material, financial, and information flows at all levels of the value chain. Supply chain intelligence can be enhanced by adopting RFID technology. The huge volumes of data, which cover all aspects of the supply chain, including order entry, manufacturing, maintenance, shipping, receiving, and inventory, will push the boundaries of data warehousing scalability, performance and manageability.
Advantages of RFID over Barcode
RFID Line of Sight Requirement Number of Items Automation and Accuracy Not Required Multiple Barcode Required Only one
Fully automated and highly Manual read errors and prone to misaccurate scaning Only series or type Limited codes Not reusable Inexpensive
Identification Data Storage capacity Reusability Cost of Tag Security
Unique item Upto several kB of data Reusable Expensive
Data can be read by any Data is not held on label RFID system
i.
Line of Sight Requirement: Barcodes need to be in the line of sight in order to be scanned by the reader. However, RFID does not require line of sight for scanning. It can be scanned by the reader if it is within a fixed radius from the reader, even if it is present inside a container.
ii.
Number of items: Using RFID, multiple items can be scanned at a time. But with barcoded items, each unit must be read one at a time, which is time consuming.
iii.
Automation and Accuracy: RFID scanning is fully automated and highly accurate whereas barcodes are prone to mis-scanning and manual read errors. Barcodes are also not automated.
iv.
Identification: Items with RFID can be scanned to the unit level i.e., every item can be identified. However, with barcode, only the series or type of item can be identified.
v.
Data Storage capacity: Barcodes can store very limited amount of information. RFIDs can store up to several Kb of data on them.
vi.
Reusability: RFID can be reused because of their read/write feature. Barcodes are readonly, and hence cannot be reused.
vii.
Cost of tags: RFIDs are more expensive when compared to barcodes. This is a major obstacle for the adoption of RFIDs in the supply chain.
viii.
Security: The data stored on an RFID tag can be read by an RFID reader. However, no data is stored on barcodes. This issue of security is also an obstacle for RFID adoption.
RFID in the Retail Supply Chain
The figure is a pictorial depiction of the different stages in the supply chain where the RFID tag is used.
Step 1: Each item contains a tiny microchip which includes a radio antenna and a unique identifier called an EPC (Electronic Product Code). Step 2: The item is now automatically and cost effectively identified, counted and tracked. Cases and pallets can also carry their own unique tags. Step 3: As pallets leave the manufacturer, an RFID reader positioned above the loading dock beams a radio wave that activates the tags. Step 4: If the unloading area contains an RFID reader, there?s no need to open the packages and examine the contents. The pallet is then quickly routed to its appropriate truck. Step 5: As soon as the shipment arrives at the retailer, the retail systems are updated to include every item. Hence, stores can locate their entire inventory automatically, accurately and low cost. Step 6: Reader-enabled „smart shelves? can automatically order more products from the
manufacturer. With such a system, the need to maintain expensive „safety stock? in warehouses is eliminated.
Advantages of RFID
RFID application areas include warehouse management, distribution of goods and services, retail store, manufacturing and service, as well as streamlining libraries with smart labels. By adopting RFID technology, huge quantities of information can be analyzed and made available to both internal and external systems in real-time, leading to improvement in the quality of business operations.
With the help of RFID, the following can be achieved: • Improved tracking of high-value items/assets • Reduced shrinkage and shipping errors in the supply chain • Inventory visibility, accuracy, and efficiency at each stage • Improved production planning and smart recalls for effective scheduling, and • Technology standards to drive down costs with higher consumption of tags (economies of scale).
RFID provides a quick, flexible, and reliable electronic means to detect, identify, track and manage an array of items. RFID can also improve efficiency and reduce cost in different industries which include shipping and receiving, warehousing, manufacturing, logistics, pharmaceutical, library, cashless payment, transportation management, and hospitality.
RFID Implementation in Wal-mart
Early adopters of SCM with RFID have reported smaller inventories, faster response to market, lower procurement costs, shorter cycle times and reduction in forecasting errors. Wal-Mart reported 18% reduction in inventory level, followed by 20% in replenishment cycle, 32% increase in sales and 40% more accurate forecast after implementing RFID in their operations.
Walmart had started implementing RFID in January 2005 after doing pilots at the distribution centres in Dallas. At that time Walmart had just above 100 suppliers tagging their products.
However, today, wal-mart has more than three times that number involved in feeding RFID tagged goods to 500 wal-mart facilities through five distribution centers.
RFID in India
The Radio frequency band allocated to India for RFID is 865 – 867 Mhz. This band has been freed solely for RFID since March 2005. The power has been set to 4W. Expectations toward applying RFID for logistic management are Cost Reduction, Lead Time Reduction, Efficient control of inbound traffic, Automated Management of Logistics. Governing Body is the Wireless Planning & Coordination Wing, Ministry of Communications and Information Technology, Department of Telecommunications. The “National RFID Program” was launched by Government of India in April 2007 with the following objectives ? ? Focus on R&D areas of RFID Provide RFID based techno solutions to the Indian industries
The pilot project undertaken was the parcel tracking system for department of posts by C-DAC, Noida (Centre for Development of Advanced Computing (C-DAC) is the premier R&D organization of the Department of Information Technology.)
The department of Road transport and Highways had an RFID-based vehicle tracking project on the Delhi-Jaipur highway of India. Under the project, 68 buses of Rajasthan State Road Transport Corporation (RSRTC) plying on the highway have been fitted with RFID tags and readers have been placed to track the vehicle movement along the highway, whereby their movement is being tracked, monitored and managed
RFID Initiatives from some of the Indian software companies are as follows
Company Patni Computers
Initiative Systems Patni?s Lab has delivered an RFID pilot that integrates with a SAP back-end for processing transactions. It has successfully delivered a complete Animal Tracking System for an overseas customer to track farm animals
Wipro Technologies
It has been associated with the Auto-ID lab at MIT for the last two years. Wipro Technologies is among the first Indian companies to become a member of the Electronic Product Code (EPC), a unit of the Uniform Code Council that oversees the development of standards behind the development of RFID in retail and consumer product goods. It is setting up a lab to study RFID and plans to try out the technology in its Electronic City campus at Bangalore. The company is working on a pilot project with a UK-based retail company. Three other customers in the US and Europe are in pipeline.
Infosys Technologies
One of the founding members of EPC. It undertakes consulting on areas where clients can effectively implement RFID. It is working with a US-based logistics player in the RFID space.
Intellicon
Intellicon sells retail solutions from Tag Master, Zebra and MIRC in India. It worked on a pilot project for BEL Bangalore in the RFID space three years ago where tags were installed on employee buses. Buses inside the BEL campus were tracked with the aim of gauging employee punctuality.
TCS, Satyam, and HCL companies have also made forays in the field of developing RFID applications. Oracle-Warehouse Management System (WMS), SAP, and other ERP systems have been integrated with RFID enabled solutions.
RFID adoption by Indian Retailers
RFID deployment has already started in India. The Big Bazaar, Pantaloon has taken initiative in piloting RFID in its Tarapur Warehouse. With the help of Wipro Infotech, the architecture of implementing RFID is being worked out with existing Pantaloon infrastructure. The benefit foresighted includes amplified collaboration across supply chain right from the point of sale. Almost one million Stock Keeping Units (SKUs) out of total of three million will be tagged with RFID chips. Madura garments got 500% ROI with the implementation of RFID. The major benefits indicated were increased visibility, faster and more accurate processes. Many players such as Spencer?s, More and others are planning to consider RFID technology in the next 3-4 years.
Other sectors of the industry such as FMCG, Oil and Gas, Defense have shown interest on RFID implementation. Government is also keen on becoming one of the large potential end users of RFID/EPC (Electronic Product Code) for tracing and tracking equipments and spares, asset management, effective stock management, zero error production, order processing, distribution and logistics management etc. With its varied usage and benefits, RFID is poised and anticipated to be one of the emerging technologies which have the capability to transform business problems into profitable and positive outcomes.
Retailer Pantaloons Big Bazaar ITC Wills Lifestyle Reliance Madura Garments TATA Arvind Mills Shoppers Stop
Adoption Year 2005 2007 2007 2008 2007 2007 2006 2006
Major Challenges in RFID implementation
1. Along with the advantages come the challenges. First, implementation of RFID requires retailers and suppliers to undertake strategic review of business processes. Both need to understand each other?s process execution clearly and maintain relationship for reaping benefits of this technology. 2. Cost of establishing RFID infrastructure and weighing cost against anticipated benefits needs to be looked upon. This has become one of the biggest hindrances to retailers for not adopting RFID. To quote an example of Woolworths in 2002, which was on trial of RFID, announced later in 2004 that the company had delayed in implementing RFID as the management felt that they could achieve better ROI from other areas. 3. Though the cost has been declining in the last two to three years and might continue to fall in the future, the adoption rate may increase gradually. However, this technology is useful for players who are trading in high volumes, but the additional cost factor may hinder the adoption process. 4. There is Lack of international standards to capture the data in a standard format. However, efforts are made to have agreed protocols on the type of tags to be used. Protocols have been established in the area of frequency and read rate of tags. 5. When it comes to individual items, RFID tagging data handling and transmission requires increased band width storage and accessibility. Moreover, there can be environmental problems such as moisture which can tamper the captured data. Also, noise from electric motors and fluorescent lights can interfere in RFID communication. Thus the ability to make use of the data captured by RFID is of major comcern. 6. Implementation of RFID calls for training of employees for the new job function. This requires adequate time to be spent by employees in mastering and executing this new system. 7. Consumer privacy concern is also one of the major challenges for RFID implementers. This technology has given scope for privacy issues when the information is collected item wise. This technology allows companies to track customer movements without their
knowledge. However, in the market, several solutions are available to avoid tracking of tags, such as kill tags, password lock, cage approach, active-jamming, cryptography 8. The vision of RFID requires data to be shared. Very few players are ready to share the data across the supply chain. Companies are worried as they feel data related to producing and shipping is being monitored by their competitors.
References
1. 2. 3. 4. http://www.cicc.or.jp/japanese/kouenkai/pdf_ppt/pastfile/h19/afit/6afit_india.pdf http://www.mit.gov.in/content/radio-frequency-identification-rfid ICFAI Journal of Management Research, November 2007 ICFAI Journal of Supply Chain Management, March 2009
doc_849652214.docx
What is RF id?, components of Rf id, How does RF id work?, effect of RF id on supply chain, Advantages of RFID over Barcode, RFID in the Retail Supply Chain , RFID Implementation in Wal-mart, Major Challenges in RFID implementation
Radio Frequency Identification
What is RFID?
Radio Frequency Identification is a generic term that is used for describing system which transmits identity of a person or an object or even an animal wirelessly by making use of radio waves.
Components of RFID
A basic RFID system consists of three components: 1. An antenna or coil 2. A transceiver/reader (with decoder) 3. A transponder (RF tag) electronically programmed with unique information
The antenna emits radio signals to activate the tag and to read and write data to it. The reader emits radio waves in ranges of anywhere from one inch to 100 feet or more, depending upon its power output and the radio frequency used. When an RFID tag passes through the electromagnetic zone, it detects the reader's activation signal. The reader decodes the data encoded in the tag's integrated circuit (silicon chip) and the data is passed to the host computer for processing
Effect on Supply Chain
RFID technology can be used to enhance the efficiency of a supply chain in order to maximize warehouse space, minimize goods shrinkage, minimize errors in delivery, minimize inventory, and improve customer service.
Source: ICFAI Journal of Management Research, Nov 2007
In order to improve the performance across the supply chain, organizations constantly strive to improve customer service to form tighter bonds between the members in the supply chain and build customer loyalty. Real-time tracking of goods throughout the supply chain provides one of the major opportunities for improving customer service. Real-time information on delivery time supports Just-in-Time (JIT) manufacturing and retailing, enabling organizations to make strategic decisions. Goods tracking is also important for direct end-customer service. Companies are investing in tools and systems that optimize their processes and have made significant progress by adopting various technologies for increasing efficiencies and reducing costs. The intense competition makes it vital for all organizations to continuously evolve with an emphasis on optimizing all levels of the value chain. This has led to the growth of supply chain management. Supply chain management effectively integrates suppliers to the end consumers and emphasizes the need for collaboration to optimize the entire system. The basic aim of any supply chain management function is to make the organization more responsive to drastically changing consumer preferences by capturing material, financial, and information flows at all levels of the value chain. Supply chain intelligence can be enhanced by adopting RFID technology. The huge volumes of data, which cover all aspects of the supply chain, including order entry, manufacturing, maintenance, shipping, receiving, and inventory, will push the boundaries of data warehousing scalability, performance and manageability.
Advantages of RFID over Barcode
RFID Line of Sight Requirement Number of Items Automation and Accuracy Not Required Multiple Barcode Required Only one
Fully automated and highly Manual read errors and prone to misaccurate scaning Only series or type Limited codes Not reusable Inexpensive
Identification Data Storage capacity Reusability Cost of Tag Security
Unique item Upto several kB of data Reusable Expensive
Data can be read by any Data is not held on label RFID system
i.
Line of Sight Requirement: Barcodes need to be in the line of sight in order to be scanned by the reader. However, RFID does not require line of sight for scanning. It can be scanned by the reader if it is within a fixed radius from the reader, even if it is present inside a container.
ii.
Number of items: Using RFID, multiple items can be scanned at a time. But with barcoded items, each unit must be read one at a time, which is time consuming.
iii.
Automation and Accuracy: RFID scanning is fully automated and highly accurate whereas barcodes are prone to mis-scanning and manual read errors. Barcodes are also not automated.
iv.
Identification: Items with RFID can be scanned to the unit level i.e., every item can be identified. However, with barcode, only the series or type of item can be identified.
v.
Data Storage capacity: Barcodes can store very limited amount of information. RFIDs can store up to several Kb of data on them.
vi.
Reusability: RFID can be reused because of their read/write feature. Barcodes are readonly, and hence cannot be reused.
vii.
Cost of tags: RFIDs are more expensive when compared to barcodes. This is a major obstacle for the adoption of RFIDs in the supply chain.
viii.
Security: The data stored on an RFID tag can be read by an RFID reader. However, no data is stored on barcodes. This issue of security is also an obstacle for RFID adoption.
RFID in the Retail Supply Chain
The figure is a pictorial depiction of the different stages in the supply chain where the RFID tag is used.
Step 1: Each item contains a tiny microchip which includes a radio antenna and a unique identifier called an EPC (Electronic Product Code). Step 2: The item is now automatically and cost effectively identified, counted and tracked. Cases and pallets can also carry their own unique tags. Step 3: As pallets leave the manufacturer, an RFID reader positioned above the loading dock beams a radio wave that activates the tags. Step 4: If the unloading area contains an RFID reader, there?s no need to open the packages and examine the contents. The pallet is then quickly routed to its appropriate truck. Step 5: As soon as the shipment arrives at the retailer, the retail systems are updated to include every item. Hence, stores can locate their entire inventory automatically, accurately and low cost. Step 6: Reader-enabled „smart shelves? can automatically order more products from the
manufacturer. With such a system, the need to maintain expensive „safety stock? in warehouses is eliminated.
Advantages of RFID
RFID application areas include warehouse management, distribution of goods and services, retail store, manufacturing and service, as well as streamlining libraries with smart labels. By adopting RFID technology, huge quantities of information can be analyzed and made available to both internal and external systems in real-time, leading to improvement in the quality of business operations.
With the help of RFID, the following can be achieved: • Improved tracking of high-value items/assets • Reduced shrinkage and shipping errors in the supply chain • Inventory visibility, accuracy, and efficiency at each stage • Improved production planning and smart recalls for effective scheduling, and • Technology standards to drive down costs with higher consumption of tags (economies of scale).
RFID provides a quick, flexible, and reliable electronic means to detect, identify, track and manage an array of items. RFID can also improve efficiency and reduce cost in different industries which include shipping and receiving, warehousing, manufacturing, logistics, pharmaceutical, library, cashless payment, transportation management, and hospitality.
RFID Implementation in Wal-mart
Early adopters of SCM with RFID have reported smaller inventories, faster response to market, lower procurement costs, shorter cycle times and reduction in forecasting errors. Wal-Mart reported 18% reduction in inventory level, followed by 20% in replenishment cycle, 32% increase in sales and 40% more accurate forecast after implementing RFID in their operations.
Walmart had started implementing RFID in January 2005 after doing pilots at the distribution centres in Dallas. At that time Walmart had just above 100 suppliers tagging their products.
However, today, wal-mart has more than three times that number involved in feeding RFID tagged goods to 500 wal-mart facilities through five distribution centers.
RFID in India
The Radio frequency band allocated to India for RFID is 865 – 867 Mhz. This band has been freed solely for RFID since March 2005. The power has been set to 4W. Expectations toward applying RFID for logistic management are Cost Reduction, Lead Time Reduction, Efficient control of inbound traffic, Automated Management of Logistics. Governing Body is the Wireless Planning & Coordination Wing, Ministry of Communications and Information Technology, Department of Telecommunications. The “National RFID Program” was launched by Government of India in April 2007 with the following objectives ? ? Focus on R&D areas of RFID Provide RFID based techno solutions to the Indian industries
The pilot project undertaken was the parcel tracking system for department of posts by C-DAC, Noida (Centre for Development of Advanced Computing (C-DAC) is the premier R&D organization of the Department of Information Technology.)
The department of Road transport and Highways had an RFID-based vehicle tracking project on the Delhi-Jaipur highway of India. Under the project, 68 buses of Rajasthan State Road Transport Corporation (RSRTC) plying on the highway have been fitted with RFID tags and readers have been placed to track the vehicle movement along the highway, whereby their movement is being tracked, monitored and managed
RFID Initiatives from some of the Indian software companies are as follows
Company Patni Computers
Initiative Systems Patni?s Lab has delivered an RFID pilot that integrates with a SAP back-end for processing transactions. It has successfully delivered a complete Animal Tracking System for an overseas customer to track farm animals
Wipro Technologies
It has been associated with the Auto-ID lab at MIT for the last two years. Wipro Technologies is among the first Indian companies to become a member of the Electronic Product Code (EPC), a unit of the Uniform Code Council that oversees the development of standards behind the development of RFID in retail and consumer product goods. It is setting up a lab to study RFID and plans to try out the technology in its Electronic City campus at Bangalore. The company is working on a pilot project with a UK-based retail company. Three other customers in the US and Europe are in pipeline.
Infosys Technologies
One of the founding members of EPC. It undertakes consulting on areas where clients can effectively implement RFID. It is working with a US-based logistics player in the RFID space.
Intellicon
Intellicon sells retail solutions from Tag Master, Zebra and MIRC in India. It worked on a pilot project for BEL Bangalore in the RFID space three years ago where tags were installed on employee buses. Buses inside the BEL campus were tracked with the aim of gauging employee punctuality.
TCS, Satyam, and HCL companies have also made forays in the field of developing RFID applications. Oracle-Warehouse Management System (WMS), SAP, and other ERP systems have been integrated with RFID enabled solutions.
RFID adoption by Indian Retailers
RFID deployment has already started in India. The Big Bazaar, Pantaloon has taken initiative in piloting RFID in its Tarapur Warehouse. With the help of Wipro Infotech, the architecture of implementing RFID is being worked out with existing Pantaloon infrastructure. The benefit foresighted includes amplified collaboration across supply chain right from the point of sale. Almost one million Stock Keeping Units (SKUs) out of total of three million will be tagged with RFID chips. Madura garments got 500% ROI with the implementation of RFID. The major benefits indicated were increased visibility, faster and more accurate processes. Many players such as Spencer?s, More and others are planning to consider RFID technology in the next 3-4 years.
Other sectors of the industry such as FMCG, Oil and Gas, Defense have shown interest on RFID implementation. Government is also keen on becoming one of the large potential end users of RFID/EPC (Electronic Product Code) for tracing and tracking equipments and spares, asset management, effective stock management, zero error production, order processing, distribution and logistics management etc. With its varied usage and benefits, RFID is poised and anticipated to be one of the emerging technologies which have the capability to transform business problems into profitable and positive outcomes.
Retailer Pantaloons Big Bazaar ITC Wills Lifestyle Reliance Madura Garments TATA Arvind Mills Shoppers Stop
Adoption Year 2005 2007 2007 2008 2007 2007 2006 2006
Major Challenges in RFID implementation
1. Along with the advantages come the challenges. First, implementation of RFID requires retailers and suppliers to undertake strategic review of business processes. Both need to understand each other?s process execution clearly and maintain relationship for reaping benefits of this technology. 2. Cost of establishing RFID infrastructure and weighing cost against anticipated benefits needs to be looked upon. This has become one of the biggest hindrances to retailers for not adopting RFID. To quote an example of Woolworths in 2002, which was on trial of RFID, announced later in 2004 that the company had delayed in implementing RFID as the management felt that they could achieve better ROI from other areas. 3. Though the cost has been declining in the last two to three years and might continue to fall in the future, the adoption rate may increase gradually. However, this technology is useful for players who are trading in high volumes, but the additional cost factor may hinder the adoption process. 4. There is Lack of international standards to capture the data in a standard format. However, efforts are made to have agreed protocols on the type of tags to be used. Protocols have been established in the area of frequency and read rate of tags. 5. When it comes to individual items, RFID tagging data handling and transmission requires increased band width storage and accessibility. Moreover, there can be environmental problems such as moisture which can tamper the captured data. Also, noise from electric motors and fluorescent lights can interfere in RFID communication. Thus the ability to make use of the data captured by RFID is of major comcern. 6. Implementation of RFID calls for training of employees for the new job function. This requires adequate time to be spent by employees in mastering and executing this new system. 7. Consumer privacy concern is also one of the major challenges for RFID implementers. This technology has given scope for privacy issues when the information is collected item wise. This technology allows companies to track customer movements without their
knowledge. However, in the market, several solutions are available to avoid tracking of tags, such as kill tags, password lock, cage approach, active-jamming, cryptography 8. The vision of RFID requires data to be shared. Very few players are ready to share the data across the supply chain. Companies are worried as they feel data related to producing and shipping is being monitored by their competitors.
References
1. 2. 3. 4. http://www.cicc.or.jp/japanese/kouenkai/pdf_ppt/pastfile/h19/afit/6afit_india.pdf http://www.mit.gov.in/content/radio-frequency-identification-rfid ICFAI Journal of Management Research, November 2007 ICFAI Journal of Supply Chain Management, March 2009
doc_849652214.docx