Dan Gilmore, Editor-in-Chief of Supply Chain Digest, wrote a column that looked back over the past year to see what companies were doing with RFID technology [“RFID – Who did What in 2009,” 4 June 2010]. His analysis involved scouring a “variety of web sites and communication sources” for news about RFID technology. In doing this research, his staff avoided press releases and product announcements. To make the analysis, “the news had to be about a pilot, deployment or system expansion from a using company, organization or government entity, or be what [he] called a ‘market offering’ from a non-RFID-based company using RFID to improve what it brings to market. For example, Finnish dental supplies company Plandent brought to market a system that makes it easy for its customers to reorder their supplies using RFID.” This is what Gilmore and his staff found:

“Observations from working with the research and data are as follows:

• Versus 2007, we had much fewer ‘pilot’ announcements. This doesn’t mean there aren’t still pilots, but rather, I think, that the need to publish news about pilots is diminished as there are more actual deployments to write about today.

• There is clearly a lot more going on with RFID outside of real supply chain applications than most of us may know – and that is fueling overall growth in the industry. As just one example, during the research we found this announcement: ‘Alanco Technologies, which provides RFID-based inmate tracking systems, announced sales increased 42 percent to $19 million for the fiscal year ended June 30, 2009.’ Who knew?
• Investors are still bullish on RFID. Even during the miserable economic year that was 2009, when venture capital investing came almost to a halt, there were a number of RFID-related investments announced: Kovio, developer of printable RFID chip technology, raised $20 million in a fifth round of funding, bringing total funding in the company to $80 million; SMARTRAC Group, a Dutch company that manufacturers RFID inlays used in passports, announced it closed a €65 million credit facility with several European financial institutions; AeroScout, a real-time location system provider, raised $13 million from VCs, on top of $10 million received earlier; RFID middleware vendor GlobeRanger received an additional $8.3 million.
• Clearly, there is a lot more going on, especially in supply chain, outside the US than in the US. Overall, as just one example, China’s roughly $1 billion in RFID spend in 2009 might have been some 20% of the world total, mostly related to massive transportation and ID system projects. But the vast majority of the most interesting supply chain announcement came outside the US, from such companies as Volkswagen, Sergio Blanco (apparel), G&P Net (retail) and others.

While 75 of the 157 announcements were for US based deployments, strip out the healthcare related ones … and the number becomes much smaller. As our source material was largely US-based, it undoubtedly misses many announcements that were reported locally outside the US but not here.”

I found it interesting that China is such a big player in RFID technologies. It demonstrates how fast China’s economy is becoming a leading edge system. It doesn’t surprise me that Europe is a big player. The more borders you have to cross with your merchandise the most useful RFID tags become. I also found it interesting that investors continue to be sanguine about the future of RFID tags. Gilmore goes on to report that multinational corporations are also heavily involved in RFID technologies. He continues:

“It is interesting that many US-based RFID technology companies, from Alien to IBM and more, are often involved in these international deployments. From a US-centric perspective, should we be concerned that we appear to be creating an ‘RFID gap’ versus Europe, Asia and even to some extent other parts of the world? It is noticeable as well that many international projects have a strong level of government financial and research support to them.

• Healthcare is the deal in the US. Just over 30 of the 75-US based announcements were healthcare related, usually for asset-tracking, which seems to now be totally mainstream or even a mature area of the business.

• For better or worse, ‘people tracking’ with RFID is coming. We already noted the growth in inmate tracking above, but we were surprised by the number of ‘people tracking’ applications we saw this year in other areas. Hospitals are a big focus area for this, where administrators want to know where patients and staff are in real-time. One South American agriculture company is doing the same for temporary workers. The Iditarod is now tracking its racers with RFID and GPS. Louisiana State University has a new system to monitor how people move through museum exhibits.

All these and more make logical sense. Still, it seems to me to be there a bit of a start of a slippery slope that will end with all of us being tracked all the time at some point, in the name of business efficiency, safety, etc., and that to me frankly is a bit creepy.”

I agree that the big brother aspect of RFID technology “is a bit creepy”; but, it seems to me, that by the time we get to the big brother stage we’ll be talking about implants and not bracelets. Hopefully, that day remains well over the horizon. Gilmore, however, is much more interested in supply chain applications for RFID tags. He concludes:

• “There clearly is real supply chain action, especially abroad, in item-level retail apparel tracking. Expect more news here in the US soon. The basic ROI seems very strong, and RFID can have other benefits, such as being used to track the pedigree of where ‘gray market’ channel products may have come from and/or combat counterfeits.

• As with 2007, the lack of news of RFID action in the core consumer packaged goods to retail segment that started the EPC movement was stunning. The only real news there in 2009 … was the collapse of the Sam’s Club program and Procter & Gamble calling it quits with its ‘successful’ test of tracking promotional display execution with WalMart, apparently after WalMart wouldn’t act on the data.

• Walgreen’s, however, did announce a national roll out of a promotional display execution system, which supplier Revlon said was providing big benefits.

• There were some but limited action in using RFID for distribution center management. We only list ‘DC Operations’ as the primary applications in three of the 157 items, and a couple more as secondary applications. There were a bit more deployments that were focused on Shipping automation, but which did not reach further back into the DC.

My final thoughts: RFID hardware is being increasingly commoditized and routine, thought tags and readers selection in industrial and oddball applications still need a lot of work to perfect; perhaps obviously, for any new auto-ID related project, you would be silly not to look at RFID as a strong candidate; for regular asset and logistics assets (re-usable containers, etc.), these will all be tracked before long using RFID – you might want to take a look right now; that said, it has been hard to find the RFID ROI for well-running bar-code based manufacturing and distribution systems; however, that may be because companies aren’t digging deep enough into the real costs from missed scans and other glitches, as my friend Toby Rush from Rush Tracking System has well pointed out on these pages; I think that RFID in non-supply chain specific applications will become so  prevalent soon that it will naturally migrate from there to the supply chain.”

It was not long after Gilmore wrote his article that Walmart announced that it was going to use RFID tags to track clothing [“Wal-Mart Radio Tags to Track Clothing,” by Miguel Bustillo, Wall Street Journal, 23 July 2010]. Bustillo reports that clothing is just the beginning of a broader program to incorporate RFID technology. He writes:

“Wal-Mart Stores Inc. plans to roll out sophisticated electronic ID tags to track individual pairs of jeans and underwear, the first step in a system that advocates say better controls inventory but some critics say raises privacy concerns. Starting next month, the retailer will place removable ‘smart tags’ on individual garments that can be read by a hand-held scanner. Wal-Mart workers will be able to quickly learn, for instance, which size of Wrangler jeans is missing, with the aim of ensuring shelves are optimally stocked and inventory tightly watched. If successful, the radio-frequency ID tags will be rolled out on other products at Wal-Mart’s more than 3,750 U.S. stores.”

If Walmart follows through with its plan, investors will be even more keen to put their money into RFID technology companies. When it comes to the supply chain, Walmart is a recognized trend setter; but, past attempts by Walmart to utilize RFID tags haven’t always gone as planned (see “Will WalMart get RFID Right this Time?” Supply Chain Digest, 28 July 2010]. Bustillo continues:

“Before now, retailers including Wal-Mart have primarily used RFID tags, which store unique numerical identification codes that can be scanned from a distance, to track pallets of merchandise traveling through their supply chains. Wal-Mart’s broad adoption would be the largest in the world, and proponents predict it would lead other retailers to start using the electronic product codes, which remain costly. Wal-Mart has climbed to the top of the retailing world by continuously squeezing costs out of its operations and then passing on the savings to shoppers at the checkout counter. Its methods are widely adopted by its suppliers and in turn become standard practice at other retail chains.”

In commenting on Walmart’s decision, supply chain analyst Bob Ferrari notes that “the article brought out the tensions between the pro-tracking community and the consumer privacy advocates” [“Two Viewpoints: RFID Enabled Inventory Tracking- Boom or Bane?,” Supply Chain Matters, 23 July 2010]. He writes:

“This article notes that this high-profile retailer is once again going to roll out an RFID tracking initiative, but this time, there is a well defined target, that being apparel, and more specifically, underwear and jeans. The article brought out the tensions between the pro-tracking community and the consumer privacy advocates. Interesting enough, the cable news and financial networks highlighted underwear tracking as their news byline, and that, too, provided plenty of fodder for viewer reactions. The really interesting aspect to this story is the reactions that can be derived relative to the implications of RFID based tracking of inventory. That actually occurred in our household, where my wife was the first to read the Journal. She and I both had different viewpoints and perspectives to this announcement, as mirrored in the Journal article.”

To read Ferrari’s pro-tracking perspective and his wife’s privacy concerns perspective, click on the links found in Ferrari’s post. The big challenge for the RFID technology sector is bringing costs down; especially if RFID tags are going to be used in sectors like agriculture. A Supply Chain Digest article notes, “Even the MIT vision of the ‘5 cent RFID tag’ would be a non-starter for basic consumer packaged goods, taking a huge toll on margins versus the free package-printed bar codes.” [“Cheap, Printable Tags a Step Closer?” 21 July 2010]The article continues:

“The goal of a ‘printed tag’ using special inks that could serve as the antenna and possible the chip. There have been several promising technologies, such as BiStatix, that have never really achieved commercial success. Now researchers from Suncheon National University in Suncheon, South Korea as well as Rice University in Houston, Texas say they have created an RFID tag that can be directly printed onto consumer goods packaging, at a cost of about 3 cents per tag. The tags are made up of an ink laced with carbon nanotubes so that the codes can be printed onto a plastic or paper substrate. The researchers are aiming to fit 96 bits into a tag the size of a business card. While even 3 cents per tag is likely too high for the grocery industry, the research says they believe they can drive the costs even lower.”

That same article indicates that an Indian Construction Company is using RFID to Eliminate “Ghost Workers” and “the EarthSearch Communications Division of East Coast Diversified Corporation announced this week the launch of a new trailer padlock that will combine several technologies meant to improve visibility and control of containers and inventory.” I previously discussed RFID technology’s future in a post entitled Traceability in Global Food Supply Chains. In that post, it was stated that printable RFID tags would take about five years to perfect. I also noted in that post that technology may not be the long-pole in the tent. One of the things that could hold up widespread implementation of RFID is, ironically, standards. Right now there aren’t any. If RFID tags are to become as ubiquitous as barcodes, those standards must be forthcoming.