RFID Update:

The Basics, The Wal-Mart Mandate, EPC, Privacy Concerns, and More.

 By Dave Piasecki

The Basics

Radio Frequency Identification (RFID) refers to devices attached to objects that store data and are able to transmit that data to an RFID receiver.  These devices can be large pieces of hardware the size of a small book, such as those attached to ocean containers, or they can be very small devices inserted into a label on a package (commonly known as smart labels).

A little RFID vocabulary:

Active tags are RFID tags that contain their own power source (battery) and have longer read ranges.

Passive tags are powered by the signal generated from the reader device.

Read/write tags can have their data changed.

Read only tags are programmed once and their data cannot be changed.

EPC (electronic product code) is a set of standards designed to utilize RFID technology for the tracking of individual items, as well as cases and pallets. EPC is similar to UPC used for bar code tracking of consumer goods.

GTAG  (global tag) is an international RFID standard that can be used for general asset tracking.

RFID Reader, also known as an interrogator, is a device that reads RFID tags.

Smartlabels are labels with integrated RFID chips. The idea is that you would continue to produce labels (probably with bar codes) as you currently do, but you would also be programming the RFID chip embedded in the label. This would provide all current functionality (human and machine readable text and bar codes) as well as adding RFID functionality.

Slap-and-ship describes an approach to complying with customer requirements for physical identification of shipped goods. Most recently, slap-an-ship has been used to describe complying with RFID requirements (such as those from Wal-Mart), however, it is also applicable to any compliance labeling requirement (such as compliance bar code labels). Slap-and-ship implies you are meeting the customer's requirement by applying the bar code labels or RFID tags, but are not utilizing the technology internally.

Comparisons to Bar Codes.

It’s difficult to describe the potential applications (and misapplications) for RFID without using bar codes as a point of comparison. So here goes:

Advantages.

RFID technology does not require line-of-sight reading. Unlike a bar code, an RFID tag can be read through other materials (though some materials may cause problems). Theoretically, this means that you could take a pallet of mixed products, all of which contain individual RFID tags, and have an RFID reader read all the tags within the palletized load without having to physically move any of the materials or open any cases.

RFID tags can hold more data than bar codes. The operative word here is “can”. As the data storage capacity of RFID tags increase, so does the cost of the tags. Therefore, you will likely find that many RFID tags will not hold any more data than a bar code.  

RFID tag data can be changed or added to as a tag passes through specific operations. Once again, cost comes into play here, as read-only tags are much less expensive than read/write tags. Therefore, you will likely see limited use of this functionality.

RFID tags are more effective in harsh environments where bar code labels have problems. RFID tags can be sealed within a plastic enclosure eliminating many of the problems that plague bar codes in harsh environments where they are exposed to chemicals, heat, abrasion, dirt and grease buildup, etc.

A large number of RFID tags can be read almost instantaneously. This brings us back to the palletized load scenario where the load contains a large quantity of products, each with its own RFID tag. Though it may seem as though the tags are all read at once, they are actually read sequentially (one at a time), however, this happens so fast that it is virtually imperceptible.

 

Disadvantages.

Cost, Cost, Cost. This is the biggest hurdle to RFID tags replacing bar codes for item-level tracking of low-cost products. You can produce a bar code on an item for less than 1 cent, yet the most optimistic proponents of RFID are still “hoping” for 5 or 10-cent RFID tags sometime in the future (this may be years away). And even if we get 5-cent tags, that is still a significant cost to add to the manufactured cost of low-cost consumer goods. And even with higher-cost products, or case and pallet level tracking, the benefits of RFID must be greater than this additional cost.

RFID signals may have problems with some materials. Metals and liquids can cause problems when trying to read RFID tags. Tag placement is becoming a science in and of itself since — depending on the product — even a case-level RFID tag may have to be placed in a specific location on the case and cases stacked in a specific orientation to get a consistent read. When you get back to the mixed-pallet scenario, it is unclear whether or not you can be assured that you have read all the tags on the pallet.

Though RFID does not require of line-of-sight, it is also not restricted by it. With the proper bar code equipment, I can selectively read a single bar coded case on a shelf more than ten feet away. I can’t do that with RFID since an RFID reader will read all tags within its range. Even though you can get directional RFID readers, they are still not as selective as a visual device (bar code scanner). There are still many warehouse applications that require this line-of-site capability.

RFID tags can fail. Yes I know, bar code labels can fail as well. The unique issue with RFID failure is the automated nature of RFID optimized processes. If you have a pallet of materials with RFID tags and one of the RFID tags is damaged, how will you know that you did not read all the tags. And, what happened to your system data when this occurred.

RFID programming speed. The smartlabel scenario (using labels with integrated RFID chips) seems to be the most likely one for mass utilization of RFID for case and unit tracking of inventory. Unfortunately, it takes more time to print, program, and verify an RFID enabled label than to simply print a bar code label. In addition, RFID smartlabels seem to have some serious quality problems. I have been hearing of average failure rates (inability to properly program and read the tag) of anywhere from 10% to 30%. For automated print-and-apply applications, this could be a serious problem.

RFID standards are still being developed. You don’t want to invest in an RFID system that is based on soon-to-be obsolete specs. Most RFID systems currently in place are based upon proprietary technology where the readers are designed to only read RFID tags from a specific manufacturer. When compared to bar code technology, where standards have been in place for decades, most bar code scanners are designed to read all standard bar code symbologies.

General advice:

As a general recommendation, RFID is not yet practical for most businesses looking to automate their inventory related transactions (though it does work for other applications such as with returnable containers and asset tracking). Despite the hype over RFID, bar codes are not becoming obsolete and are still very effective at quickly and accurately identifying products, locations, and documents. Unless you have an application where bar codes simply don’t work, or where RFID offers a significant advantage over bar codes, use bar codes. Duh!  Even if you have an application that cries out for RFID, you may want to consider waiting (if possible) as the cost of the technology comes down. In the next few years, standards will be finalized, hardware prices will drop, software will become more readily available, and, more importantly, the bugs will be worked out of these systems. Let the Wal--Marts and other big companies pay the initial development costs and bear the brunt of the pain related to early adoption.

More information on utilizing RFID for inventory tracking is available at http://accuracybook.com/RFIDUpdate.htm

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What is EPC and why is it so important?

EPC (electronic product code) is an emerging RFID standard developed by the AutoID center. It is the RFID version of the UPC barcode standard (you know, that bar code on just about everything you buy). Like UPC, EPC is intended to be used for specific product identification as well as case and pallet identification. However, EPC goes beyond UPC by not only identifying the product as an SKU, but also providing access to additional data (via the EPC Network) about the origin and history of the specific units. The EPC tag itself identifies the manufacturer, product, version, and serial number. It's the serial number that takes EPC to the next level by providing the key to data related to specific lots/batches/units. It potentially allows you to track the specific unit's history as it moves through the supply chain. This unit-level data is stored somewhere else (the internet or other network) but a standardized architecture allows you to access the data much like you would access a web page (though this would be happening automatically behind the scenes). This architecture is known as the EPC Network.

EPC has become increasingly important because it is the standard being utilized  by Wal-Mart and the Department of Defense in their upcoming RFID mandates. Well, sort of. In reality, Wal-Mart and the DOD will likely modify the standard to suit their needs.

EPC myths and misconceptions.

Misconception #1, EPC is strictly an RFID standard. Granted, RFID is part of EPC, but there is a lot more to EPC when you look under the hood. Most notably is the EPC network, which is where all the data related to EPC will exist. This is a significant change in item-based data management and should not be taken lightly.

Misconception #2, the use of RFID for EPC tags will allow them to hold more data than bar codes. This is simply not true. RFID tags could hold more data than a bar code, but under the EPC standard, they will not. The data in the EPC RFID tag simply acts as an address to the rest of the data and works similarly to the way a URL provides access to a web page. The EPC network essentially takes the concept of the internet and applies it to inventory data. When an RFID reader reads a tag, it will pass this address to your software which can then access the additional data residing on servers that could exist anywhere in the world.

So what kind of data will exist on the EPC network? Just about anything related to the item or container. For example, detailed item information such as description, ingredients, size, weight, cost; manufacturing information about the specific lot such as when and where it was produced and expiration dates; and distribution information about where it has been including addresses, dates and times. The data could be as detailed as including environmental factors such as temperatures during manufacturing or storage. This data flexibility is accomplished through the use of a new computer language called Physical Markup Language (PML) which is essentially a variation of the more commonly known Extensible Markup Language (XML).

This finally brings me to Misconception #3, whereby data in the tags will be changed as they pass through the supply chain. Once again, RFID technology is capable of this functionality, but the EPC standard is not utilizing it. Data will only be written to the tag once under the EPC standard. Any changes in status or other update information will be written to the EPC network, not the tag.

I should mention that I am not criticizing the EPC standard for not fully utilizing the capabilities of RFID. These were conscious decisions made in an effort to keep costs down.

So is there value in knowing that a specific item on your shelf was stored in a warehouse in Chicago for two weeks prior to being shipped to you? It could easily be argued that most of the physical tracking aspects of EPC are only necessary because the processes are flawed. Lean philosophy would strongly push towards fixing the process rather than adding more to it. Since I occasionally find myself on the other side of this argument, I’ll refrain from pushing this point too far.

I guess what I’m really trying to say here is that EPC consists of several technologies that are being packaged together into a larger solution that addresses a variety of issues. I could suggest that if the functionality you were most interested in was related to accessing the data on the EPC network, you could scan a bar code rather than an RFID tag and the EPC network would not know the difference. Alternately, if you were looking for the productivity advantages of RFID technology for receipt and tracking of materials through your enterprise, you could use RFID tags to facilitate automated data collection using your current UPC-based databases and EDI technology. I’ll admit these alternate solutions do not provide the complete functionality of the EPC solution, but maybe you don’t need all that functionality.

Misconception #3, the use of RFID for EPC tags will allow them be more durable than bar codes. Probably not. While more expensive RFID tags encased in a plastic shell are more durable than bar codes in harsh environments, the lower cost unprotected RFID circuits glued to a paper label that are more likely to be used do not share these durability characteristics. My guess is that these tags will prove be less durable than bar codes in many applications.

Though the EPC standard (like all standards) is very specific, recent hype has confused the issue and left many believing the terms RFID and EPC can be used synonymously. EPC has a lot of extra stuff in it and it’s important for decision-makers to understand what all this other stuff is and whether or not it will benefit their industry or just be more stuff. In addition, RFID has capabilities beyond the RFID capabilities of EPC, and you can expect to see many RFID applications in the future that have nothing to do with EPC.

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The Wal-Mart Mandate.

Wal-Mart is planning on implementing an RFID-based pallet and case-level tracking system by 2005. They are starting by requiring their top 100 suppliers to start supplying products with RFID tags on cases and pallets.  Because of the enormity of Wal-Mart's supply chain, this implementation is having a significant impact on RFID and it's transference from an "emerging technology" to a more mainstream technology. What that means to the rest of us is unclear, but will likely result in lower cost RFID tags, more readily available RFID equipment, acceptance of RFID standards, and resolutions of integration and operational issues related to the technology. Though this announcement is only related to pallet and case tracking, this is still a significant step. And though Wal-Mart is utilizing the EPC standard, it looks like they are creating their own version of EPC. No doubt, the Wal-Mart version of EPC will have a significant impact on changing the existing EPC standard.

Probably the most significant anxiety related to EPC is being felt by those suppliers that may be required to implement the technology (as in the WalMart mandate). Their biggest concern is obviously related to cost and resource requirements to implement the technologies. Once again, it’s important to understand the entire scope of EPC as well as determine the level of compliance that will be required. I think it’s easiest to break the technology into several categories: the physical EPC tags, technology to initialize the EPC tags, technology to utilize the EPC tags, and technology related to the EPC network.

The cost of the physical EPC tags could range from a negligible cost at the pallet level to a potentially devastating cost at the unit level depending on the type of product. I am extremely doubtful that we will see widespread use of EPC at the unit level for quite some time, so cost at the case-level will likely be your biggest concern. Though these costs could be significant, they are at least relatively easy to calculate once you know the case-level requirements and the cost per tag.

When it comes to the technology required to initialize the tags, I think you’ll find that the investment here will likely not be as significant as you may have feared. By the time the mandate nears, I would expect to see many affordable solutions for this. Waiting as long as possible here will likely save you money. [Update: Upon attending DC Expo in Chicago in May, 2004, it was evident that most major bar code printer manufacturers have incorporated RFID smartlabel (labels with integrated RFID chips) writer capabilities into their printers. In addition, major bar code label software companies are adding RFID capabilities to their products. These tools will make producing EPC labels almost as simple (though a bit more expensive) as bar code labels.The biggest wildcard here is related to the ability of the tag manufacturers to provide better tags. I have been hearing of failure rates of between 10% and 30% for tags embedded in labels. Ouch!!!]

Technology to utilize the EPC tags through your own processes could be significantly more expensive. The good news is it is unlikely you will need to do this. If it provides an advantage to your operations, go ahead and invest in this technology, otherwise just continue using bar codes or whatever technology you currently have. Despite some of the hype related to RFID, bar codes will be around for quite some time.

I think the biggest uncertainty is related to costs associated with the EPC network. The EPC network is an ambitious concept and is a dramatic change from the way inventory data is currently handled. I am doubtful that the full vision of the EPC network can be achieved within the next few years so expect to see some compromising here. This is certainly an area to watch closely. Currently (December, 2003) I do not beleive Wal-Mart is intending to utilize the EPC network in its original theoretical form. My guess is that they will probably continue utilizing their current EDI structure and their internal databases.

Whether or not you are immediately affected by the upcoming EPC mandates, there are a several things you should be thinking about. You should gain an adequate understanding of the technology so that should it become a requirement for you, you are at least minimally prepared. You should also watch the technology to see if there are advantages of using it within your operation or industry (especially as costs drop). But finally, you should realize that despite the term “mandate” being used related to EPC, the fact is this is still a test (though a significant one). The EPC vision is a bold one and there are still many technological and financial hurdles to overcome. Though I don’t want to be too pessimistic here, there is the possibility that it may simply not work as well in the real world as it does in the theoretical world. Hey, someone had to say it.

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Why are retailers and consumer goods suppliers so interested in RFID?

Despite the frequent references to “supply chain efficiencies” that would lead you to believe there are enormous amounts of money to be saved by replacing bar codes with RFID chips, I think the reality is somewhat less momentous. Certainly RFID does have some advantages over bar codes that can increase efficiency and provide higher levels of visibility as products move throughout the supply chain. But I’m having a hard time believing these efficiencies are great enough to justify all the added costs associated with RFID. The fact is, the retail industry has already made significant gains in efficiency through the use of bar codes, EDI, and advanced shipment notifications (ASNs). The incremental gains by RFID are simply not that significant.

The larger benefits to RFID (and the EPC network) are associated with a couple of issues that have been plaguing the retail and consumer goods industries for decades. That is, theft and product counterfeiting. Theft, in the form of shoplifting as well as larger scale theft occurring during transport and storage, is costing retailers and suppliers billions of dollars each year. On top of that, product counterfeiting is costing suppliers billions more.

The costs of theft are not limited to the product loss alone. When theft is an ongoing problem (as with shoplifting), planning systems are crippled because the inventory numbers are always suspect. In addition, shortages created by theft often result in lost sales because consumers can’t buy what is not on the shelf. The obvious use of RFID would be to have readers at the exits (as is currently used for higher priced products) to catch shoplifters. But, even if you don’t do that (or shoplifters find a way to disable the chips) the ability to utilize a “smart shelf” or other in-store RFID reading technology to tell you that the product is no longer on the shelf allows you to plan correctly and avoid the out of stock condition (as well as the frequent physical inventory counts currently necessary).

The ability to quickly perform detailed reads of cargo as it moves through the supply chain is another way RFID could help to prevent theft. This would allow you to more easily narrow down the source of the theft (to a physical location). In addition, it would make it much more difficult to sell the stolen product since it could be more easily identified (since each product would have a unique ID).

Similarly, counterfeit products would be easier to identify. If counterfeit products make their way into a legitimate retailer’s inventory (as is sometimes the case) the EPC network database would be able to identify them. In addition, all you would need is a portable computer and an RFID reader, and you could walk down the aisles of a suspect retailer and ID counterfeit or stolen merchandise.

Unfortunately, some of these benefits will not be realized without unit level RFID tracking. Case level tracking could provide some help with large-scale theft and some counterfeiting, but unit level tracking ultimately shows the most benefit. So why is unit level tracking not part of the upcoming Wal-Mart mandate? In my opinion (I have no inside info on Wal-Mart) Wal-Mart is taking the first step of a larger plan that will ultimately include unit level tracking, and that is where they expect to see the payoff. Despite their claims, I don’t believe the payoff exists in their currently stated plan. In fact, I think the significant payoff is so far down the road that I am still amazed this Wal-Mart RFID thing is happening at all. Either they have an exceptionally strong commitment to the future or someone sold them a very optimistic ROI calculation.

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RFID Privacy Concerns.

As interest in the use of RFID for consumer goods grows, privacy concerns are also hitting the headlines. Industry magazines are pretty much summing it up as overreaction by consumer groups (I specifically recall one article that blamed it on ignorance and paranoia). Now I am neither ignorant or paranoid (at least I don't' think I am, but I'm pretty sure the gub'ments been stealin my shoes and lettin the air out of my tires . . . . or maybe its them UFOs), nor do I have any inclination to hang out with members of a consumer privacy group. But the fact is, RFID technology is capable of doing what they fear. Advancements in information technology do raise many legitimate privacy concerns and to think there are not people in the corporate world salivating over the possibility of profiling potential customers is naive. Five years ago, mention of corporate sponsored spyware sneaking into your personal computer would likely have been thought to be paranoid, but today is a reality.

As for RFID, how would you like to walk into an auto dealership and have an RFID reader automatically read an RFID enabled credit card in your pocket or purse, notifying the salesmen of your credit rating and the fact that you overpaid for your last new car purchase? What kind of a deal would you expect to receive? Or say you just left a movie theater at the mall and stopped in a department store to buy a gift for a friend. Suddenly a salesperson is stalking you trying to sell you a leather trench coat and dark sunglasses because an RFID reader read the ticket stub in your pocket and determined you just saw the fifth sequel to the Matrix. Or maybe, while in the same department store, an RFID reader reads the tags embedded in your clothes and suddenly an electronic voice is telling you your shirt doesn’t match you pants and it’s time to buy new underwear.

As silly or paranoid as these may seem, they are within the capabilities of RFID and information technology. The current discussions in the RFID industry related to unit-level RFID tracking and privacy are focusing on using technology to "disable" the RFID tags after the sales transaction has been completed. I think this brings up a whole set of new issues. Where and when exactly do you disable them? If they are disabled as part of the checkout process, what happens if something goes wrong during the checkout process? You can no longer start over since some of the tags no longer work. I have heard mention of making disabling the tags optional and creating a separate station where customers can go to disable their tags if they choose. I seriously doubt that is going to fly. In addition, disabling the tags takes away the ability to use them when product is returned, lessening the benefits of RFID.

Maybe we will all need to invest in personal firewalls. Not the kind of personal firewalls we have on our PCs, but real "personal" personal firewalls designed to prevent readers from accessing anything within our auras. I don't think so.

Update: after writing this, I came across a company that has designed (although I don't know if the product actually exists) a "Blocker Tag" that can be used to confuse RFID readers that are attempting to read RFID tags on a person.

The primary reason I am not too worried about this in the near future is more related to the incompetence of both the government and the business world when it comes to fully utilizing technology than it is to the capabilities of technology. I also believe it will be quite a while before RFID will be cost-effective for any widespread application of item-based tracking of consumer goods. Until then, pallet-level and case-level tracking seem to show a lot of potential without freaking out the privacy groups.

By the way, if you think RFID unit-level tracking of consumer goods is still a fantasy, you should realize that it is already occurring today. In the past couple of months, I purchased two small electronic devices that had RFID tags included with them. One just had a loose RFID tag in the box, and the other had a loose tag within the device itself. I don't know if the tags are active or what their intended use is, but they were there.

I should also mention that the primary reason we (the general public) do not have to worry about being spied on through the use of RFID is because the privacy groups exist. Sure, sometimes they get a little carried away, but they are looking out for our interests. Without them, I have no doubt that there would be serious abuses of this type of technology.

So who are these privacy groups? Go to Spychips.com  for more info.

Also check out my other site, AccuracyBook.com, for an additional RFID Update as well as an  RFID Links page.

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 Just For Fun

This is from my Lame List page. Since these "lame" examples are about RFID I thought I would included in on this page.  

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