Beyond Bar Codes: The Rise of Automatic Identification
Automatic identification (Auto-ID) is generally associated with tools and techniques
for capturing information without human intervention. Auto-ID applications are
extremely broad — tracking everything from people to pallets — but the
term refers mostly to radio frequency identification (RFID) technologies with
supply-chain-related uses (keeping tabs on products, cases, and shipments). Auto-ID
systems thus consist of:
- RFID tags: Either active (with on-board battery) or passive
- RFID readers: To activate and read information on the tags
- Communication technologies: To move captured information
- Information processing systems: To store, compile, parse, interpret, and analyze transmitted information
Over the last two years, interest in Auto-ID has surged. Helping to focus that momentum is the Auto-ID Center, a consortium of academics, standards bodies, users, and technology providers. The center recently presented three challenges to vendors: build a five-cent passive tag; build a $100 reader; and agree on a universal tag standard. Although none of these goals have definitively been achieved, great progress has been made — enough so that myriad end users are actively examining, piloting, and testing Auto-ID. This article looks closely at the principal issues that early adopters and future users will want to consider.
Why Auto-ID?
Compared to traditional bar code-based systems, RFID-based data-capture systems have many advantages. Here are five:
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1. Multiple data reads achieved simultaneously: A bar code reader generally
scrutinizes only one bar code at a time. But Auto-ID uses radio waves to examine
numerous tags at once. This "parallel processing" capability has significant
productivity ramifications up and down the supply chain.
2. Automatic data capture: The kinetic nature of the bar code-reading process is inherently problematic: Items must be scanned by a roving operator or moved past a fixed point. Field-of-view limitations are another inconvenience, and there always is the potential for missed scans or multiple scans on the same item. Auto-ID systems remove the human element of error.
3. "Always on": RFID-based systems never sleep, particularly if active (imbedded-battery) tags are used to constantly signal an item's presence. This can help companies confirm any tagged item's existence and location.
4. Reading beyond sight lines: Bar code readers must maintain a direct line of sight with the bar code. Radio waves, on the other hand, bounce on different surfaces and travel through substances, so there is no need for sight lines with RFID. Significant cost and effort is saved because items and readers remain stationary. Moreover, companies have the option to conceal RFID tags, which can help them verify ownership or authenticate products subject to counterfeiting.
5. More data: Compared to bar coding, far more information can be stored and communicated with Auto-ID. With bar coding, tracking usually is cost-effective only at the pallet level. With RFID technology, tracking of cases and even items is increasingly feasible and cost-effective.
What to Tag?
Supply chain decision makers typically are interested in capturing information about three principal entities:
- Products: Items bought, sold, and moved through the supply chain
- Resources: Assets that abet the smooth running of the supply chain — for example: pallets, roll cages, totes, trailers, vehicles, and tools
- People: Individuals involved in supply chain activities
Early adopters of Auto-ID have tended to focus on supply chain resources, since tags can be reused and fewer are needed in the first place. However, attention now is turning to product-level applications, driven by the need for greater availability of materials and product, and higher visibility and accuracy from manufacturer through physical distribution, sale, and the returns cycle.
Using RFID to track people is more contentious, but there are important uses here as well. For example, tagging can help care — givers keep tabs on Alzheimer's patients. Similarly, theme park operators can use RFID to help parents keep track of their children. From an industry perspective, tagging employees or contractors could be beneficial in environments where there are health and safety concerns — for example permitting only certain operators to access restricted areas or operate sensitive equipment. Lastly, Auto-ID systems could help companies locate people prior to, during, or after an accident such as a fire.
Key Business Drivers
The importance of bar coding to supply chain management is incontestable. And since Auto-ID represents an improvement over bar codes (as noted earlier), a business case for Auto-ID already is becoming clear. But a host of business drivers make that case even stronger. For example, Auto-ID offers fundamental value in the form of greater productivity, labor savings, and better data and inventory accuracy. In today's hyper-competitive business climate, it's increasingly important to seize opportunities of this magnitude.
It also is true that companies are experiencing diminishing levels of return from bar code-based systems. In many organizations, bar codes are commonplace. However, they will always be subject to error and convenience issues, and the finite costs associated with bar code scanning will always limit the granularity of gathered information (see Figure 1). Auto-ID largely negates these key concerns.
Figure 1: Bar code systems cannot deliver the ever-increasing returns enjoyed in previous decades.
With Auto-ID systems, companies have a new opportunity to leverage ERP investments. Many organizations have yet to extract their ERP systems' maximum potential, often because of poor data quality. By increasing data accuracy, as well as the quantity of data points, Auto-ID gives ERP additional chances to produce higher returns.
Since 9/11, security of trade routes has become a key issue for businesses and governments. Auto-ID speaks to these concerns by helping companies know where containers and other transportation media have come from, and even what is in them. Look for Auto-ID to take an increasingly important role in this area, as various governments define requirements to be placed on international shippers.
In addition to the market-oriented (pull) drivers just mentioned, rapid improvements in technology are helping to push Auto-ID into the mainstream. For example, the Auto-ID Center's directives (a five-cent tag and $100 reader) are nearing fruition. The only remaining barrier is scale, which seems surmountable since Auto-ID Center members are primarily shippers with more than 550 billion items in their supply chains. For high-value items, a five-cent tag could be the ticket to mass adoption. But in order to tag simple, cheap grocery items, the industry will need a tag that costs less than a penny.
Lastly, the need for global standards is working in favor of widespread Auto-ID adoption. The Auto-ID Center and Uniform Code Council (UCC) have developed the Electronic Product Code (ePC), which is a common standard for data stored on an RFID tag. If early adopters accept the ePC, one of the major barriers to RFID adoption will be removed.
A second standards mission — harmonizing read/write frequencies — will be harder to reach because various countries use different parts of the electromagnetic spectrum for different applications. In addition, the frequency at which tags are read is a function of electrical power, which is subject to the regulatory policies of different countries. As a result, items made, say, in the Far East would require separate (frequency-specific) tags for European and North American shipments, or multi-frequency scanners would have to be implemented. Given this hurdle, near-term, widespread RFID adoption may be limited to intra-country transactions and applications.
Applications Across The Supply Chain
Auto-ID traditionally has been used to track and trace items along the supply chain or within specific processes. These will continue to be mainstream uses, but there are many other applications to which RFID can add significant value (see Figure 2). For example, RFID makes it easy to check the composition, batch number, or genealogy of a chemical or pharmaceutical sub-component prior to use. The potential result is higher product quality, less rework, fewer line clean-downs, and smaller quantities of scrapped product.
Figure 2: Potential Auto-ID applications exist in virtually every business context.
Among the many uses depicted in Figure 3, the least explored ones are customer-facing. Consider the potential of an RFID-enabled loyalty card that is recognized by shelf-edge readers and displays — with promotions and incentives custom-developed for products known to be preferred by that customer.
Naturally, customer-facing applications must be accompanied by a comprehensive examination of privacy issues. But the area's great value — for companies and customers alike — is worth exploring nonetheless. Figure 3 demonstrates that few companies are focusing on "people-tracking." It also shows the range of Auto-ID applications that are being applied or piloted, while confirming that:
Figure 3: The corporate community is currently using or piloting a wide variety of Auto-ID applications.
- Most current applications are tracking supply chain resources, not products.
- There are few examples of end-to-end, open-loop RFID applications. (Open loop refers to tags going from a single supplier to multiple downstream destinations.)
- Auto-ID applications usually are associated with higher-end products.
Barriers to Adoption
Given the improvements that Auto-ID applications could make to today's supply chains, why aren't more applications now in use? Looking back, most barriers have been commercial in nature: cost of the tags, cost of the readers, lack of universal standards, and so forth. With the impetus generated by the Auto-ID Center and UCC, these issues are being surmounted. Down the road, however, are more challenges. They include:
- Item-level data management: Migration from the SKU level to the item
level will mean significant increases in the amount of data flowing through
the supply chain. Companies planning to manage at the item level must find
ways to manage that data, without exceeding the capacities of their ERP or
supply chain execution management (SCEM) systems. This could require new functionality
added to ERP or SCEM systems, or the insertion of a new "item level processing
layer" within an organization's supply chain application architecture. Both
choices will require great flexibility, since each business will want to manage
item-level entities in its own way.
- Communications: Item-level approaches could strain the internal and
external communications infrastructure of just about any company. And because
the Auto-ID Center's endorsed architecture is Web-based, enormous pressure
also will be aimed at firewalls, Web servers, and online storage services.
- Management of mixed worlds: Auto-ID won't replace bar codes overnight,
so a prolonged, mixed, bar code/RFID environment probably will exist for some
time. During this period, RFID tags might be used at pallet and case levels
and bar codes at the item level. Moreover, both systems will need the ability
to feed each other, and a "nesting" capability will be essential. (For example:
These 15 bar codes are associated with the one-case RFID ePC, which is associated
with this pallet RFID ePC.) Companies also must be prepared to progressively
re-engineer their supply chains, as data capture approaches evolve from all
bar code to all Auto-ID.
- Ownership of data: The strategic basis of Auto-ID is that ePC is the only information carried on an RFID tag. All other data (SKU number, product description, physical characteristics, batch number, where it was last scanned, and so on) reside elsewhere. The challenge is to determine who owns the data and how data exchange will occur among supply chain entities. These issues are being addressed from a technical perspective by the Object Naming Standards and Product Markup Language. Both standards are under the aegis of the Auto-ID Center, as are software rules for data transmission (SAVANT). Less clear, however, is the commercial framework for data ownership and exchange. The Auto-ID Center is working hard to address commercial concerns, but most implementation issues probably will have to be decided among trading partners, software vendors, and telecommunication providers.
Vast Rewards, but a Tricky Path Forward
Industry's need for real-time, accurate information about physical supply chain events will escalate indefinitely, which means an ever-more-essential role for Auto-ID. Some of Auto-ID's most formidable barriers already have been broken down. But new hurdles — particularly the inability to process vast quantities of item-level information — are right around the corner.
As always, early adopters will be the first to reap the benefits of this new approach. But they also will have to function in a mixed environment where bar code-based operations work in tandem with RFID. Looking further out, new applications could emerge that focus on tracking consumer behavior and workers, as well as products or supply chain assets. But these, too, will require significant process adjustments, as well as thoughtful dialog about data protection and privacy.
All in all, the future of RFID-driven Auto-ID is bright but complex. Collaboration, patience, and a realistic perspective will be needed to keep development moving and innovation flowing.
