Complying with RFID Mandates
Creating a radio frequency identification system to comply with a mandate can be both challenging and highly rewarding. RFID must be implemented on a deadline to satisfy a customer requirement, rather than just to address internal business efficiency improvements. An RFID compliance mandate specifies when and how tagging must be done. Unfortunately, many companies are left wondering where to begin. We will identify and guide you through the important questions companies must answer to build a successful RFID program.
What Business Problem Am I Trying to Solve?
For many, the answer need go no further than to keep the customer. Companies
who do comply with customer mandates can also find that RFID could improve inventory,
warehousing, distribution, logistics, and security. Many companies will meet
their compliance tagging requirements with smart labels, which consist of an
RFID inlay (the chip and antenna combination) contained within an adhesive label.
Smart label printers encode the RFID chip inside of the label material and can
print text, bar codes, and graphics on the outside.
How Is RFID Different From Bar Code?
Bar code and RFID are both identification technologies that hold data accessed by some type of reader. In actuality, they complement each other very well and can be used effectively side by side in many applications. Bar code is an optical technology and RFID is a radio technology. The ways these technologies exchange data account for most of the differences between RFID and bar code and help determine where each identification technology is best put to use.
RFID requires no line-of-sight between the reader and the tag to exchange data. RFID tags can therefore be read through packaging, including cardboard containers and plastic wrap used to seal pallets. RFID is subject to interference however, particularly from metal, so potential sources of interference must be recognized and accounted for during system planning.
Because no line-of-sight is required, tagged objects can be read regardless of their orientation through the use of optimized RFID systems. Paving the way for unattended handling, items dont have to be placed label side up onto conveyors to be read. If workers are accustomed to placing items on conveyors, they will be more productive if they dont have to locate and align labels when handling objects.
RFID readers can automatically recognize and differentiate all the tags in their reading field. This simultaneous processing capability provides additional flexibility for material handling, packaging, and sorting operations because there is no need to maintain spacing between objects to ensure they will be read.
The ability to read dozens or even hundreds of tags per second makes RFID ideal for high-speed sorting, receiving, cross-docking, and other applications. The data capacity of RFID tags enables them to carry all the same information as bar codes and more. Just like bar code, RFID tags are available with different memory sizes and encoding options.
What Are the Compelling Drivers?
Co-users can take advantage of RFID performance features to create reading and sorting systems that operate with minimal or no operator intervention required. The traits are especially valuable in high-speed sorting and cross-docking operations, where manual labor is often the biggest limitation on throughput speed and processing accuracy.
There are many possibilities to take advantage of unattended handling, and one of the most promising is for unattended monitoring. For example, manufacturers can use RFID to reduce their inventory shrink by 10 percent according to a study from Accenture. RFID readers can be strategically placed, either hidden or visible, to create security zones within facilities. Readers could constantly and discretely monitor finished goods inventory, components, tools, equipment, and other valuable items by reading the tags on all items within the read zone. Tags on items can trigger alarms or a discrete notification to a supervisor if unauthorized removal is attempted.
What Are the Benefits to My Business?
Tagging mandates are sprouting up in a variety of industries because organizations have become convinced that RFID can lower distribution and handling costs and reduce inventory levels by improving visibility. The best approach is to start evaluating a single, small application and to expand as experience and benefits are gained. One approach is to work backward from where tags need to be applied to find the easiest and most logical places to begin internal use.
The shipping area can be a good place to start, since many companies will print and apply their compliance labels just prior to shipping. As shipments are being loaded, RFID tags on cases, cartons, and pallets could be read to log out the items and build a shipping manifest. By interfacing the RFID system with shipping or order management applications, shipments could be verified for accuracy by using the RFID readings to make sure all of the required items were loaded, and in the right quantity. Similar processes could be developed to expedite receiving.
Converting to RFID-based verification would enable shipments to be processed faster because RFID readers can capture data from dozens of packages simultaneously regardless of their orientation.
Making only a small, incremental improvement to shipping accuracy can produce strong benefits, as the following calculation illustrates. Various analyses have established that shipping errors cost between $60 and $250 to resolve, depending on labor rates, shipping expenses, and the amount of clerical and administrative time required. Therefore, each 1 percent improvement in shipment accuracy should reduce shipping expenses between $60 and $250 per every 100 shipments. For a company that ships 100 orders a day, each 1 percent improvement in shipment accuracy would produce annual savings of $15,600 to $65,000.
Shipment verification is only one way manufacturers can take advantage of RFID tags applied to meet customer mandates. Manufacturers could gain previously described security and shrinkreduction benefits by tagging finished goods inventory or creating a security system to monitor dock doors and other exit points.
RFID tags could be used as a form of authentication to fight the growing problem of counterfeiting, which the International Chamber of Commerce estimates now accounts for 8 percent of global trade. Smart labels on packaging provide a method to audit distribution channels to detect counterfeit or diverted shipments. Tags on products could provide further authentication and a means to verify eligibility for warranty service.
EPCglobal, the organization formed to commercialize and support the EPC RFID system that was originally developed at the MIT Auto-ID Center, offers a series of RFID business case analyses on its Web site, (www.epcglobalinc.org). Of particular interest is a study titled Auto-ID On Demand: The Value of Auto-ID Technology in Consumer Packaged Goods Demand Planning. This study found that RFID systems could improve demandplanning forecast accuracy for consumer packaged goods manufacturers by 10 to 20 percent. Other projected benefits include a 10 to 30 percent reduction in required inventory levels, and 1 to 2 percent sales improvement attributable to reduced outof- stocks.
Which Standards and Regulatory Considerations Apply?
Suppliers in compliance tagging relationships must meet customer tag performance and data requirements, and also comply with all relevant international regulations that govern electronic devices and radio communications.
The two largest compliance tagging programs announced to date, by Wal-Mart and the U.S. Department of Defense (DOD), each specified the use of EPC RFID technology. It is believed that other major end users, such as Metro AG, the leading retailer in Germany, who has recently announced their intent to deploy RFID for pallet and carton tracking, will be adopting the specifications and standards being developed by EPCglobal. In respect to automatic identification and data capture systems, the EPC system defines data structures for producing unique ID numbers, and also defines the technical specifications for reader to tag communications, and tag (or reader subsystem) performance. The EPC system assigns an ID number to every tag to uniquely identify the tagged item. The EPC code serves as a serial number, or digital birth certificate, and can be used to distinguish an item (which may be a pallet, case, carton, or individual product) from similar items.
The EPC is a license plate code, which does not describe the item or its owner but provides a unique lookup identifier for databases that hold the information, just as with license plates on automobiles. EPC codes are similar in structure to codes standardized under the EAN International and the Uniform Code Council identification system, which is the basis of much global trade and is created and maintained by EAN.UCC.
The unique identifier is the basis of the EPC system and is a constant in all EPC specifications. It represents a major difference from the EAN.UCC system as it pertains to retail trade, which includes UPC/EAN bar codes used on consumer goods around the world. UPC/EAN symbols typically only identify the manufacturer and type of product. If the product is a broom, every instance of that broom made by the manufacturer will have the same UPC number. In the EPC system, each broom would have a unique ID number, which facilitates item-level tracking. Unique identification is also useful for traceability, returns authorization and processing, warranty and service management, and more.
EPC specifications differ in operating frequencies, tag functionality, and communications protocols. There are different versions (also known as generations) of EPC specifications in addition to different classes of tags. Wal-Mart and the DOD are expected to announce final requirements around summer 2004.
Specifications, standards, and terminology are continually being updated. To ensure compliance with customer requirements, consider the compliance specifications and other program documentation provided by your customer as the most authoritative guideline. In addition to meeting customer requirements, RFID systems must comply with all relevant regulatory requirements. Governments regulate allowable frequencies, power output, emissions, and other performance characteristics. RFID regulation falls under the authority of the Federal Communications Commission in the United States and various other bodies around the world.
RFID standards created by the International Organization for Standardization in Geneva meet all worldwide regulatory requirements, so users can be assured their systems are available for worldwide use. The ISO 18000 series of standards is being considered for many supply chain and compliance tagging systems. ISO 18000- Part 6 has already been ratified as a standard for RFID in the 860- 930 MHz band. Numerous other ISO RFID standards for RFID have been ratified with the 18000 series being most appropriate for item identification-type applications. Still more standards are nearing final ratification.
EPC specifications are now in the process of being turned into standards, through due process, under the auspices of EPCglobal, which is a joint venture of EAN and the UCC. The EAN and UCC are committed to open, user-driven standards development processes, and jointly manage the EAN.UCC system for global commerce, which includes the UPC/EAN bar codes used on consumer goods around the world. As such, EPCglobal is ideally positioned and equipped to commercialize and standardize the EPC technical specifications, data structures, usage guidelines, and continued development.
In summary, standards development is a complex and rapidly changing area. Zebra, through our active participation in standards development activities, including EPCglobal, seeks to demystify the maze of standardization initiatives and always support appropriate standards with our comprehensive range of smart labeling solutions.
What Changes to the Information Systems Infrastructure Are Required?
RFID should change more than the way data is collected; it should provide new types of actionable information that create opportunities to do things differently and more efficiently. RFID can provide visibility into operations that were previously inaccessible because of limitations to bar code and other data collection technologies. Organizations can take advantage of its ability to track items in more places, without human intervention, to create new features and applications. These capabilities are new, so software applications will need to be modified or developed to take advantage of them, and the IT infrastructure may need to be extended to support RFID operations.
RFID readers can automatically detect and identify all the tags in their reading field, which can potentially produce hundreds of readings per second. Each reading represents a data point that the enterprise information system may need to process. Hence identification data and ID-event-related data (such as time and location) will need to be collated and filtered using flexible rules, prior to being pushed to a business application, or submitted in response to a request for data. Otherwise, the RFID system could produce too much data and not enough quality information.
Middleware has been developed specifically to support RFID systems to filter data for legacy information systems and software applications. Some leading enterprise resource planning and warehouse management system software providers also offer middleware or software modules to support RFID use with their applications. Labeling software may also need to be modified as discussed in the following section.
What Changes to Labeling and Packaging Processes Are Required?
Smart labels can be applied to meet most current compliance tagging requirements. Smart labels are a convenient option because they can be produced on demand and a single smart label can meet RFID, bar code, and text marking requirements. However, successfully satisfying compliance tagging mandates also requires planning for tag encoding, RFID media selection, label placement, and software changes.
A smart label printer/encoder programs the RFID tag embedded in a smart label effectively at the same time the label is printed. This extends the flexibility of on-demand printing to meet encoding needs. Variable information, such as order numbers, manifest information for mixed-load pallet labels, and advance ship notice data, can be conveniently encoded and printed on demand with smart label printers.
Thermal printers are used for smart labeling. Thermal printers are available as traditional label printers or print engines for use with automated applicators to integrate into a variety of packaging and shipment labeling processes. Labeling software will need to be added or modified to support smart labeling and RFID encoding.
Most smart label printers use rolls of media with RFID inlays in the label stock, which requires the media to be changed each time printing operations switch between smart label and traditional printing.
Compliance tagging may cause suppliers to change where they place labels on the package, carton, or pallet. As a radio technology, RFID is subject to signal disturbance, particularly from metals, which reflect signals, and liquids, which absorb them. Placing labels on different areas of the pallet or carton can impact reading performance. Tag size, frequency, orientation, and placement location all affect reading performance and may need to be adjusted for marking different types of objects.
Organizations may need to use several types of smart label media for identifying different objects or to meet incompatible compliance specifications from different customers. In this situation, it is important that printers can support all the required media, and procedures are established to prevent different smart label media from being used interchangeably.
Processes must also be established to prevent unreadable or erroneous smart labels from being applied to shipments. Smart labels occasionally arent readable because of defective components or damage sustained during handling, and sometimes encoded information is incomplete or inaccurate. These problems are usually undetectable unless the tag is read after printing to validate readability and content. If problems are detected, processes must be in place to divert the label and prevent further output until the problem is resolved.
What Kind of Predeployment Testing Is Required?
Pilot projects and predeployment testing should uncover any interference, quality, or performance problems that need to be resolved before the system is deployed. As with any labeling system, the media and adhesive must withstand all the environmental and usage conditions the label will be exposed to throughout the supply chain.
It is crucial to test all the different items that will be labeled under as many conditions as possible to ensure proper performance. In addition to these specific test conditions a series of large-scale test runs should be conducted to determine if the smart labeling system can keep up with labeling volume requirements during normal and peak conditions. Smart labels take a little longer to produce than non-RFID shipping labels, and in a high-speed, automated labeling environment, this must be taken into account to ensure adequate throughput capacity.
More extensive functional testing may be required if RFID will be used for internal operations. Interference is the main concern; an experienced RFID solutions provider can provide an assessment of potential interference and suggest remedies. The assessment is similar to the site survey that is conducted before wireless LANs are installed. Interference can be avoided or mitigated by using different styles and sizes of RFID antennas and tags, and experimenting with different frequencies, power output levels, and tag mounting options, all within the scope defined by the application requirements. Dont forget, if the driver for using RFID for internal applications is an externally generated labeling or tagging compliance directive, then certain choices that you would otherwise have been free to make will have already been determined.
With RFID, you probably cant test too much. There are many variables to test and contingencies to plan for. Dead spots, where no reading is possible, may mysteriously appear in a warehouse one day and disappear the next because different materials are on the shelves on which tagged products sit. Testing may not reveal every hurdle, but thorough planning can overcome them.
Conclusion
Implementing an RFID compliance tagging system may seem daunting, but is quite manageable once you have a clear understanding of requirements and options. The topics we discussed provide an excellent starting point from which you can begin to identify areas for further investigation and develop specific questions to advance your project. Maintaining consistent communication with customers, supply chain partners, technology providers, and internal departments affected by the changes, and allowing ample time for system testing and refinement, will go a long way to making the project successful.
