The first retail product ever to receive a barcode was a packet of Wrigley’s chewing gum, more than thirty years ago. since then, warehouse technology has raced onwards and now radio frequency identification faces its second incarnation with the arrival of Gen 2.
David Lyon, business manager for EPCglobal Network says: “Some of the large organisations and ‘leading lights’ sponsored a large chunk of research to be carried out at the Massachusetts Institute of Technology (MIT) to look at the future of the generic supply chain. It boiled down to RFID tags and the data that they capture to be shared in a secure way across the internet.
“Globalisation of trade and the encouragement of that is the philosophy of everything we do at GS1. GS1 was then looked at to do what we did with the barcode thirty years ago, that is drive the adoption and deployment of RFID-based technology into the supply chains.”
Eric Sanchez, product strategy, Tibco Software says: “Gen2 offers significant advancements over its predecessor and most importantly is the added value that it can provide the market in general… Gen2 offers better security, and supports longer passwords.”
The current concept behind modern RFID is a standardisation of technology on a global basis, so that global supply chains will not need different equipment, allowing the chain to operate cheaper and more efficiently. Different frequency ranges, used in Europe and the USA have so far prevented the use of RFID on a fully global scale.
Kenneth Traub, chief technology officer for RFID and Edge Server at BeA says: “With Gen 2, you have a few advantages over earlier generations of Gen1 tags. It has been engineered for worldwide operation. Every country has a regulatory agency that oversees use of the radio spectrum. Gen1 tags could work in the US but not all over the world. Gen2 has been engineered so that it can be used in all parts of the world, not just in the US supply chain.”
However, says Sanchez: “While Gen2 has made significant strides forward on a technical level, there still seems to be hesitancy in the market for increasing investment in RFID initiatives. I don’t believe it’s a matter of lacking in technical capabilities, but rather a lack of organisations being able to see sponsoring RFID initiatives as strategic investments rather than operational expenditures.
“We strongly believe that RFID will revolutionise the supply chain industry, this level of visibility into the workings and mechanics of business will enable organisations to understand what drives supply and demand, transforming the business from reactionary to proactive/predictive; whereby, the organisation will be to anticipate what to expect based on historical trend information and current market activity.”
Some of the world’s major supermarkets have invested heavily in developing RFID since day one and the adoption of Gen2 has been met with the same enthusiasm. Metro Group, the German supermarket chain, is one of the first retail companies worldwide, to use RFID throughout its entire supply chain. Zygmunt Mierdof, member of the management board Metro, says: “We recognised the potential of radio frequency identification early on. RFID helps us design all retail processes more efficiently, more transparently and more cost-effectively.”
The Metro Group RFID Innovation Centre, in Neuss near Cologne, was established to research applications of the technology, as well as “smart chips”, which store the numerical EPC code. The numbering system is similar to the conventional bar code and encodes both manufacturing and merchandising information.
Metro has been fielding tests with smart chips in its Future Store initiative showcased earlier this year at the NRF Show in New York. Future Store is a supermarket-environment in which Metro tests latest technologies including some interesting RFID applications such as: Smart Shelves, a project using readers to recognise and inform staff when retail shelves need to be restocked. The readers are fitted into the base and are connected to a central monitoring system, when a product is removed from or added to a shelf, the built-in reader registers the movement and transmits the information accordingly.
Wal-Mart has almost become synonymous with RFID since it began its trials back in 2003, asking its top 100 suppliers to adopt the new technology.
David Lyon says: “In the case of Wal-Mart, it is really no longer considered a pilot scheme. You are talking about millions of tags having been read on thousands of pallets, it really has now become an operational part of the business. Wal-Mart’s roll out plan was to get it out in the States and then move on to Europe. Asda hasn’t done very much but it’s always been in Wal-Mart’s plans that when it starts rolling out in Europe, the UK would be one of the first countries.
“No one knows yet what they are going to do first. When they do bring it over, because they have amassed so much knowledge over what they’ve done in the states, it will happen very quickly.”
“Tesco has invested and is still investing in RFID and it is public knowledge that it will be installing readers at all of its sites. Elsewhere in Europe, Metro is very much a leading light and advocate of RFID and they are using EPCglobal Generation 2 tags with their suppliers already.”
Simon Langdon, director of RFID strategy for Wal-Mart has confirmed that Wal-Mart is currently upgrading its RFID systems to the second-generation EPC standard.
At last year’s RFID academic convocation at MIT, he tried to dispel rumours that Wal-Mart was backing away from the technology saying that the retail giant might deploy up to 100 RFID reader-equipped forklifts at Sam’s Club stores around the US before the end of 2006.
“Such technology would allow supply movement at the retail level to be so intelligent as to give employees directions and actionable information in true real-time. The technology has now moved on from the early experiments and Wal-Mart is investigating wearable RFID solutions.” These he says, might include equipment attached to employees belts or vests.
“The system could be reading tags in the background and giving the associates information on what they need to do. When we said we needed an EPC standard that would work globally, we didn’t need a global tag that offered a small improvement in performance. We needed a step change,” he says. “I’m pleased to say Gen2 is a step change in performance.”
Geoff Barraclough, marketing director for BT Auto-ID Services says: “It is often the case in the IT sector that the introduction of new technologies is addressed “upside-down”. I have seen many instances where a new IT system is hailed as a panacea for all. The expectation is that once the technology is in place, the operations and efficiency of the organisation will be transformed.
“Not so. Technology is a tool and to make it work effectively, organisations need to ensure that it really does meet a business need. When it comes to transforming the supply chain, RFID is an excellent example. We have all seen the hype about RFID. The question is, is it really delivering against expectations?
“Some organisations, such as Marks & Spencer, are already beginning to realise the benefits of RFID. Others are moving with caution and the key for those organisations tempted to follow in M&S’s footsteps is to take a step back and establish the key issues that their business faces. Then see if RFID is the solution.”
The Educational & Productivity Solutions business of Texas Instruments said it was adopting Gen 2 as “a platform to facilitate advanced data exchange and processing capabilities on a global basis” with its retail trading partners. Advancements in retail supply chain data exchange processes enabled by EPC Gen 2, will allow it to achieve improved product visibility and lower out-of-stocks at the retail store. The company began its development and implementation of Gen 2 in 2004, deciding to leapfrog legacy EPC Gen 1 solutions which will be phased out in 2006.
Keith Hodnett, vice president, Texas Instruments and supply chain manager for E&PS, says: “This marks a significant milestone for our business and the industry as a whole. Moving forward, we are prepared to expand our Gen 2 efforts with other retail trading partners when they are ready.”
In July 2005, Texas Instruments RFID systems began production of EPC Gen 2 inlays and straps.
However, Bernard Williams, Zebra Technologies’ RFID business development manager, sees a change of emphasis this year, away from retail and into other more traditionally technology savvy industries. He believes that companies have realised “it is about return on investment and not about the band wagon. It is now about adopting the technology in the right areas of business and not seeing RFID as the solution to all an industry’s problems.
One such technologically savvy company is Savi, which has had its existing $207.9m contract with the US Department of Defence (DoD), extended for two years and increased in value to $424.5m. Savi Technology, a developer and provider of RFID for both NATO and commercial enterprises, has provided RFID solutions to the DoD for more than a decade.
Replacing the barcode?
There has been speculation that RFID tags could eventually replace barcodes. However, David Lyon of EPCglobal says: “We believe that there are a number of application that bar coding is absolutely suited to. We see RFID as an emerging technology that has definitely has benefits in some applications over the barcode, but conversely we will still see the barcode around for a very long time.”
A work group has prepared several use cases for RFID at the item-level and will soon evaluate a variety of technologies to determine what steps need to be taken to create an item-level standard.
EPCglobal has been exploring potential applications for using RFID at the item level. The organisation’s Item Level Tagging Joint Requirements Group recently identified seven critical scenarios and will soon apply these to test tags operating at a variety of frequencies, including the 125 kHz low-frequency, the 13.56 MHz high- frequency and the 902 to 928 MHz ultra high-frequency bands.
The goal is to determine which frequency bands will likely be used for tagging items and whether new air-interface protocol standards need to be created to meet the requirements for item level tagging. “The scenarios in which you will use item tags are very different from the scenarios for case and pallet tags,” says Sue Hutchinson, the facilitator for the item-level tagging requirements group. “The tags will originate farther back in manufacturing and go farther forward in retail operations. We are going to look at the business requirements and use the same disciplined approach we used when we created the Gen 2 standard.”
The working group explored a wide variety of potential situations in which items would be tagged and interrogated, such as on the manufacturing line, at receiving bays and at the point of sale. The group looked at the operating environment in which item-level tags would need to perform.
Gen2 or Generation 2 tags is a standard designed to standardise RFID technology on a global scale.
GS1 UK is a leading authority on global, multi-sector supply chain standards and is actively involved in promoting the use of RFID and the Electronic Product Code (EPC) in the EPCglobal Network. GS1 started life as the Article Numbering Association, with the goal of commercialising the standards for bar coding. Today more than a million multi-sector organisations in 140 countries are represented by GS1.
The Electronic Product Code or EPC is a globally unique serial number that can identify anything that a tag is fixed to; whether it is a pallet, roll cage or single retail item. The EPCglobal Network enables the immediate, automatic retrieval of accurate, trusted information regarding individual items in the supply chain via the internet and is one of the four cornerstones of GS1.
