The Smart, Sensor-Based RFID Network
This white paper addresses significant issues around emerging auto-identification technologies, such as the strategic approach and business process changes. As Figure 1 illustrates, a clear and precise view of auto-identification technologies and their impact provides the basis for a discussion of how these technologies will shape our future, and how they will fundamentally change existing strategies, business processes and information systems. GlobeRanger has formulated a vision for auto-identification technologies they will lead to the proliferation of smart networks of connected items at the edge.
This vision expresses our belief that we will soon witness the emergence of item-level traceability throughout supply chains facilitated by machine-to-machine communication before, during and after their usage, and real-time data and event management capabilities that allow for true exception management. Ultimately, with the advent of pervasive computing enabled by wireless sensor networks, new supply chain capabilities will evolve for proactive intervention in case of unintended and unwarranted events. RFID and sensor-based technologies will allow consumers to experience drastic improvements.
RFID, Wireless Sensor and Mesh Networks: Moving the World to the Edge
According to Andy Grove, former chairman of Intel Corp., there are strategic inflection points in businesses, technologies and the life of a company. These inflection points are a convergence of forces making sudden and rapid change inevitable, and they create fullscale changes in the way business is conducted. By this definition, the next inflection point could be RFID when deployed in combination with wireless sensors. Tagging and sensing everything from tires to hospital equipment to clothing is expected in the next few years. This change, which will impact current supply chain operations and the logistics associated with moving goods, includes a set of new standards, the proving of the business case, adoption by key companies and delivery of new technologies linking the supply chain.
EAN International, the Uniform Code Council and the International Standards Organization are legitimizing a set of global standards for product identification, effectively signing off on a number of technologies that will launch one of the most important revolutionary shifts in business history. This will allow all participants in the supply chain to know where a particular product began its life, where it has been and its current location. The underlying technology, RFID, has been around for several decades in a variety of forms. However, it is the new generation of low-cost RFID tags and readers, combined with emerging software solutions, that has the potential to deliver unprecedented value for supply chain management.
With the imminent adoption of a global set of standards, the advent of radically lower-cost RFID technology, and ever-increasing demands for a very lean worldwide supply chain, Fortune 500 companies are starting trials and implementing RFID solutions. In the very near future, RFID will be used throughout the supply chain because companies desperately need a fast, efficient and cost-effective way to collect accurate and relevant data for real-time decisions.
The corporate world has been diligently cutting costs in supply chains and business operations for years. In the quest for improvement, businesses have invested in tools and systems that optimize their processes, and they have made significant progress in areas that they can measure. However, limited visibility and significant delay of information between what is actually happening with physical goods and enterprise systems have constrained further efficiency improvements.
Information from the supply chain is typically captured through manual, error-prone processes. If everything always went according to plan, the visibility of inventory in motion would not be an issue, and enterprises would have accurate, relevant information for planning and decison making. However, exceptions occur with almost every transaction. When the true status of inventory and orders falls out of alignment with what the enterprise system expects, decisions are made based on out-of-date or inaccurate data, negatively impacting revenue, customer satisfaction and inventory management. Todays inefficiencies cause a number of problems, including out-of-stocks, lost sales, expedited shipments, production slowdowns, excess buffer inventory, shrinkage and billing delays.
In the consumer packaged goods and retail segment, these problems are well understood. Estimates of lost sales due to out-ofstocks and shrinkage exceed $100 billion per year. Recent research by the Grocery Manufacturers of America reports that 8 percent of supermarket products are out of stock at any particular time; even more astounding, promotional products are unavailable 20 percent of the time. Studies by IBM have shown that 30 percent of these outof- stock items can be found within 100 feet of where they should be. As businesses strive to meet rapidly changing demands with a high degree of certainty, accurate and real-time information from the edge of the supply chain becomes crucial. The ability to enable real-time decisions at the edge of the supply chain can bring immediate value in areas such as inventory management, replenishment and shrinkage.
Looking For the Right Stuff in a Sea of Data
The new generation of RFID- and sensor-based solutions will bring an unprecedented level of real-time, item-level information, fundamentally changing how inventory is managed across the enterprise. New software infrastructure will be introduced to handle the explosion of data on a real-time basis and handle the complexities of deploying and managing a network of RFID devices across multiple sites and multiple enterprises.
Today, the process to collect bar code data requires an SKU, case or pallet to be scanned individually. In an RFID/sensor environment, data gathering is not such a serial process. The data itself is collected simultaneously in one scan, regardless of the variety or quantity of items. In its raw form, the data requires no delineation between pallet, case and SKU in order to ascertain and reconcile inventory and process conformance. A middle layer of software called edgeware is used to transform an unstructured mass of data into information and context that the traditional enterprise systems can understand and process.
Companies are beginning to experiment with RFID deployments on a trial or single-site basis. Projects being publicized today are mostly focused on gaining experience in making devices work together. This requires simple software that provides some rudimentary connectivity, data smoothing and filtering. However, in a production deployment that involves multiple sites, the complexities of managing the data and the network of devices will require a more robust software solution.
The Role of RFID Edgeware
To achieve cost-effective deployments, software, in the form of edgeware, must be used not only to simplify the initial deployment but also to monitor and manage the performance of the network. In addition, business logic must be distributed to the location where transactions occur, allowing control systems to work optimally. Such platforms are designed to tackle the even larger challenges of having multiple sites deployed across multiple enterprises. This becomes the network at the edge. The problems of data access, making information mobile and overcoming the process and network constraints will have to be solved. The edge is going to be a very busy place as numerous varieties of devices, readers, tags and workflows will be in use. The software must be able to deal with this environment in an effective manner.
The Final Frontier
The concept of connecting the edge of the enterprise has been evolving rapidly over the last several years, enabled by mobile technology and pervasive automation technologies. At the core, enterprise resource planning (ERP) systems allowed groups of people within an enterprise to work together. For example, all accountants used the same general ledger. Execution systems including supply chain planning, warehouse management and transportation management systems were built extending the ERP core out to key supply chain operations. Mobile applications enabled distributed functionality beyond the four walls of the enterprise, linking mobile workers via wireless networks. The next big push is the convergence of a number of technologies such as wireless, low- cost auto-ID or RFID tags and readers plus software that will provide visibility and management control of individual items without human interaction. This trend, called pervasive automation, without humans involved at every step of the way, will allow enterprises to revolutionize the way items are produced, warehoused and distributed.
Moving Toward the Connected Edge
This would radically change the relationship between large-scale manufacturers and their products. Approximately 15 percent of products made by large companies are typically unaccounted for at any given time, amounting to as much as $2 billion worth of missing inventory for a large company. These are neither lost nor stolen, but unaccounted for somewhere beyond the reach of inventory counts. As a result, manufacturers inject about 15 percent more products in their supply chain at every level than needed by the retailers as safety stock to prevent any items from being out of stock. The promise of new technology that is capable of reducing that number to 10 percent, 5 percent or even less will save tens of billions of dollars annually.
There will be several trends that drive auto-identification technologies over the next few years. Some of the most important trends are:
- The integration of multiple sensor inputs in RFID-based processes;
- The inclusion of wireless technologies such as WiFi, UWB, WiMax or ZigBee into RFID solutions;
- The utilization of intelligent agent technologies for RFID solutions;
- The emergence of mature RFID-enabled best practices; and
- The evolution of smart sensor networks that include many other technologies that we can only begin to imagine today.
Over the next five to 10 years, wireless sensors will have an enormous impact in almost all major industries. At a more fundamental level, RFID and wireless sensors enable an Internet of items. Today, wireless sensor networks are being used primarily for military and environmental monitoring. They are just entering the field of building automation and control, wireless automated meter reading and industrial equipment monitoring. Soon wireless sensors will be used for healthcare, in vehicle applications, personal security and asset tracking as well as business process and supply chain management applications. Advances in MEMS, nanotechnology and fiber optics have enabled a wide array of new and smarter sensors.
Imagine billions of tiny computers and sensors in the real world, connected by a smart network, drawing civilization closer to the day when computing devices connect every object to every other object in pervasive and, ultimately, unthinkable ways. That is a strategic inflection point.
