RFID tags catch on as supply chain tool
ebnonline.com
RFID tags catch on as supply chain tool
Laurie Sullivan
EBN
(08/11/2003 10:00 AM EST)
The electronics supply chain is playing tag with an inventory tracking system that could replace bar-code scanning in coming years.
When placed on pallets, boxes, or components, radio frequency identification (RFID) tags are able to store and automatically transmit information such as part specifications and serial numbers, and could dramatically cut costs and smooth out bumps in the supply chain, according to advocates.
The ability of RFID tags to send data to RF readers up to 10 feet away could also eliminate warehouse or manufacturing floor personnel who manually swipe each item with a bar-code reader, and in some cases reduce theft and counterfeiting.
Demand for the technology is real along all stops of the supply chain. Wal-Mart, for example, has indicated it wants pallet- and case-level RFID tagging available by January 2005, which is prompting its vendors upstream to investigate RFID-enabled goods as part of their external shipping procedures.
The industry's challenge, however, is to transform this expensive, 60-year-old niche technology into a lucrative supply chain tool.
"RF identification inventory tracking is a community project," said Ian Robertson, director of strategy and programs for worldwide logistics at Hewlett-Packard Co., who is leading an internal nine-member team at the Palo Alto, Calif., company.
"A company's entire supply chain must participate in order for this to work," he said.
Distributor and engineering firm Richardson Electronics Ltd., which specializes in RF technology, aims to help its customers reach this goal. Revenue from RFID applications grew 35% in the last 12 months, according to Greg Peloquin, executive vice president and general manager of the RF and Wireless Communications Group at Richardson, LaFox, Ill.
"RFID is an up-and-coming technology, and a couple of our customers have mentioned it will completely replace bar- codes," Peloquin said. "It's not a huge dollar amount for us today, but we have about six key accounts focused on reader and tag applications for warehousing tags, clothing tags, and toll roads."
However, RFID tags are still too costly, according to Ken Wadors, vice president and division manager of Nu Horizons RF group, a division of Nu Horizons Electronics Corp., Melville, N.Y.
Wadors said the price of a tag must come down from current levels to about 25 cents, and just a few cents for commodity components, before it begins to have widespread industry effect.
"We haven't incorporated RFID tags yet, but we will be looking at it as the industry moves in that direction," Wadors said.
Logistics alterations
Changes also appear to be under way among logistics providers.
Carrier service provider DHL, for example, plans to equip its logistics centers with RFID to replace bar-code scanning at the end of 2004. The network will track packages from pickup to delivery at a cost of approximately $50 million for the first three years. The company said it has been running tests since 1998, and entered into a pilot program with Nokia Corp. in March.
"We're seeing capacity increases in all types of processes," said Trevor Peirce, DHL RFID program manager. "This pertains to anywhere we handle the shipping material. We no longer have to face the bar-code reading up, for example, so the scanners can see them."
DHL's tags for the program in Belgium, Finland, Germany, and the United Kingdom use high-frequency passive technology from Philips Semiconductors, whose RFID technology is compliant with ISO 15693 international standards. Peirce said DHL will not pay more than 20 cents a tag, and expects them to be affixed to more than 1.5 billion parcels annually.
Nokia launched the DHL program in Finland tagging cell phones with color-coded labels using a commercially available thermal printer. The printer is connected to a DHL customer shipment processing system that incorporates a smart reader board that sends information to a secure Web server. The shipments are re-weighed, consolidated, and then re-read, catching data from multiple items at the same time.
During the inbound shipping process, Nokia's packages are unloaded at a DHL facility in the United Kingdom, where they pass through a reader that relays information to the branch manager using a cell phone text-messaging application.
DHL said a similar test is scheduled to begin next month in Asia with an unnamed semiconductor supplier.
HP gives it a whirl
Other tech mavericks are rushing in too. As part of its internal initiative, HP last week rolled out a pallet-level RFID program at its inkjet distribution facility in Memphis using passive tags, after a three-month pilot program proved successful.
A second program at HP's inkjet-cartridge facility in Chester, Va., is scheduled to begin this month, in which cases and pallets will be tagged. A third pilot program, scheduled for September at HP's printer distribution center in Sao Paulo, Brazil, also will operate at the pallet and case level.
"We're also starting to look at how RFID can help us in the actual manufacturing process," said HP's Robertson. "This is to ensure you're using the correct components in manufacturing."
Under its current system, an HP employee scans in-process products on the production line and then scans the component to make sure it's a match. The use of RFID tags would automatically ensure that the right part is being selected by verifying the component's serial number.
HP also takes part in the Smart & Secure Tradelanes initiative, created after Sept. 11, to secure cargo containers coming into the United States. The program uses existing active RFID technology developed by Savi Technology Inc. to give real-time visibility into the status, location, and security of cargo containers coming into sea ports.
"We should have the ability to track 5,000 containers equipped with sensor seals by the year's end originating at ports in Asia and Europe into Seattle/Tacoma, Los Angeles, Long Beach, Houston, Charleston, New York, and New Jersey," said Mark Nelson, director of marketing at Savi, Sunnyvale, Calif. "There are about 65 partners participating, including 20 major shippers." |
