Five RFID Myths Exposed

In our previous article, RFID Primer: Where the WLAN Hits the RFID Fan, we
described what RFID technology is and what it can and cannot do. In this
article, we continue our exploration of RFID technology by extrapolating that
knowledge into actual deployments.

We’ll look at where the money is, what people expect from the technology, and
what it can, at present, deliver. Much hyped, RFID is the subject of several
myths.

Myth 1: RFID will replace bar code
In reality,
these are two complementary technologies. While RFID can store more data than
bar code, bar code is much cheaper. Most consumers are familiar with linear (one
dimensional) bar codes. Many industrial applications employ a denser rectangular
(two dimensional) bar code which can contain a significant amount of data.

Bar code is so reliable and cost effective that it will continue to provide a
better ROI than RFID in many new deployments. Bar code is synergistic with RFID,
and serves as a useful backup to RFID. In fact, all Tech Center RFID
implementations to date also employ bar code technology.

RFID tag inlays may be affixed directly behind bar code labels, and
programmed by new Intermec and Zebra Bar code label printers equipped with the
RFID tag write ability.

The real savings from RFID comes not from simply deploying the technology,
but from improving the entire business process. It’s therefore no accident that
many early implementers of RFID, like Tech Center, have experience implementing
CRM and ERP, which are other technologies whose true value can only be realized
after significant changes in business processes.

Compared to bar code, RFID enables greater automation of
the data collection process. With RFID,
non line of sight (NLOS) interrogation is possible. With circular polarized
antennas, the beam does not need to be oriented manually, as it may have to be
with a linear bar code. It enables the reading of multiple tags at the same time
and even allows the reading of selective tags, as determined by identification
data residing on the tag.

RFID (and bar codes) allow data to be securely
transmitted from one company to another. Many companies use independent
suppliers. Data from those suppliers can be carried on tags and uploaded
automatically to the receiving company’s ERP system the moment a component is
delivered.

Most companies are accustomed to knowing what’s in their warehouse, but RFID
promises to enable them to drill deeper, tracking
each pallet, lot, or even each unit.

In turn, an RFID tag will allow companies to track each pallet, lot, and unit
long after it has left the factory or warehouse. Manufacturers will be able to
track product genealogy, understanding better the
creation of successes and defects. Product recalls could be far more focused,
saving massive amounts of money, especially in the health care and automotive
industries.

Companies will therefore have better data about
post-production product performance. Taking the automotive industry as an
example, a car would consist of individually tagged components. The car body,
engine, each tire, and each air bag would have a separate tag. Data could be
collected at repair shops or accident sites.

Even within the factory, tags could enable foolproof
manufacturing. An auto body tag could tell a factory person or robot,
“please install a red steering wheel on me.” If a mistake is made, the unit can
be tracked and fixed later without stopping the assembly line, or it can be
fixed immediately.

A global UHF tag could reduce tag manufacturing
costs. In general, the UHF frequency varies by continent (although more granular
differences exist). The Americas use 915 MHz, Asia uses 950 MHz, and Europe uses
869 MHz. Companies like Intermec and its peers will have to develop frequency agile interrogators and tags to realize this
dream, but it promises products that can be used globally, and that can be
shipped from one continent to another.

Within a warehouse, tags could improve logistics,
helping the industry use oldest components first. A tag would say, “I’m right
here. I am #35 of the December 2003 batch of steering wheels.”

Just in Time logistics (JIT) is a manufacturing
process imported to the U.S. and Europe from Japan several decades ago. The
essential idea is that if components are used when delivered, and delivered
immediately before they are needed, both manufacturers and their suppliers can
realize substantial cost savings by reducing lost and destroyed inventory and
also by reducing warehousing costs. RFID technology should
eliminate the out of stock problems that JIT can create.

The eventual aim of RFID in retail and manufacturing is an aim once touted
for the Internet itselfeliminate the intermediary. A
perfect supply chain would require no distribution center. Products would be
delivered directly from the factory to the retail center.

The two dimensional bar code label can realize some of these goals. It can
enable unattended fixed reading or attended wireless reading, providing many of
the warehousing and manufacturing improvements described above. In many
implementations, it also complements the RFID tag, providing backup information
if the RFID tag is damaged.

Myth 2: The simple RFID application
As
mentioned in the previous article, RFID works in the RF environment, which is
effected by moisture, weather, radiation, invisible RF interference, and even by
the material of the building in which it is used and the materials stored in
that building. It also varies depending on the material to which the tag will be
affixed.

The read/write range is not adjustable but may vary with environmental
conditions (and will certainly vary if RF interference varies).

The invisibility of RF, as those who deploy it in WLANs know, makes it
difficult to find the source of problems, even with sophisticated RF mapping
tools. The issue of polarization further complicates troubleshooting.

The RFID command language is not intuitive and anyone creating an application
for it needs to learn to use it and should also have previous RFID deployment
experience. The language can change over time, requiring continuing education.

One example of the complexity of RFID is the case where you pull the trigger
of a handheld interrogator and read the tag behind you. Experienced WLAN
managers know that the propagation path of an antenna’s signal is not intuitive.
Many antennas propagate to some extent behind them as well as in front of them.
In the case of handheld RFID readers, users have to be told to hold the reader
in front of their body because humans, filled with water, are perfect RF
barriers. This will prevent the reader from reading a tag behind them.

Of course, the above example doesn’t take into account other common RF issues
such as reflection, diffraction, attenuation, and interference. The reflection
of a circular polarized signal is particularly complex, too complex in itself to
describe in this article.

In short, each individual RFID application requires unique programming and
customized database software. Each class of items to be tagged requires a unique
tag designed for that item’s material composition and usage environment. There
is therefore no universal tag. Instead, tags are application specific.

Of course, some applications, like car tires and cardboard boxes, could
consume hundreds of millions or even tens of billions of the same tag. These
applications could command and create the equivalent of a universal tag.

Myth 3: The 5 cent tag
Sorry, but there is no 5
cent tag today. Tech Center estimates that a 5 cent tag is possible todayfor a
single purchase order of between 700 billion and 1 trillion tags! In 2003, Tech
Center was able to provide a price of just under $1 for an inquiry request of 25
million tags, which is (at present) a more common large order size.

Next year’s biggest order could be the 200 million to 300 million tag inserts
that will be “cured” into tires if automotive companies and tire vendors succeed
in that quest. That order could produce tags at prices of $0.35 to $0.50. But
that’s not $0.05.

Lower prices will only be possible on larger orders. The good news is that
larger applications are emerging.

Retail and government customers will soon want to label cardboard boxes,
pallets, plastic containers, and even some individual items. In the case of
cardboard boxes, it should be noted that market may be larger than you think.

Four of the largest U.S. manufacturers of cardboard boxes are Georgia
Pacific, International Paper (which is already famous for a warehouse RFID
deployment tracking its own inventory), Weyerhaeuser, and Smurfit-Stone. The
industry produces between 15 billion and 20 billion cardboard boxes each week!

Larger orders will be more possible when international standards bodies
complete the specification for a frequency agile UHF reader and tag, as
described above.

Larger orders are necessary because of the economics of manufacturing tags:

• RFID IC chips are made on wafers, and each wafer yields about 25,000 chips.
  
• One wafer lot, consisting of 25 wafers, yields about 1.25 million chips.
  
• A manufacturer may produce 50 to 70 million chips per day, about 48 wafer
  lots.
  
• Therefore an order of 1.25 million chips could take about 2 hours to
  manufacture. An order that uses more of a plant’s annual production will be
  cheaper.

Orders of millions of chips may seem large, but for today’s chip makers, even
millions of chips can requires only a minimal amount of time on the assembly
line.

Manufacturers invest a great deal of money in each plant. A typical plant
costs $1.5 billion to $2 billion. An order covering a significant portion of a
years’ production would garnish discounts. No orders are yet of that magnitude.

Myth 4: RFID is all proprietary
This used to be
true, but it is no longer true. In fact, one reason large customers are becoming
interested in the technology is that standards bodies have been working on open
standards, which include the ISO 18000-6 standard, the proposed ePCglobal
specification (which covers an item numbering application, not hardware), and
the global frequency agile UHF tag.

Nevertheless, the major manufacturers, including Alien Technologies, Matrics,
Intermec, Philips, and Texas Instruments, do still have their own proprietary
air interface protocols. A universal tag reader using existing technology would
have to be compatible with each, licensing protocols from many different vendors
in much the way that dialup modems makers used to do.

As larger customers come to the RFID market, standards will evolve. Standards
will drive product development, and product development will drive application
development. For example, ANS AIAG B-11 is an application standard for tire and
wheel identification, and ANS MH10.8.4 is an ANSI application standard for RFID
on reusable plastic containers.

The RFID standards do more than the bar codes ever did. For example,
ePCglobal is proposing a specification for an application method to identify
individual product items with an ePC serial number to be carried on a RFID tag.

Where a Universal Product Code (UPC) might identify a product such as
Coca-Cola or Coors Light, the Electronic Product Code (ePC) number would, when
referenced in the appropriate database, identify Coors Light Bottle, serial
#12334455, brewed on 12/1/2003, at the Denver brewery, batch 12, bottle filler
3.

ePCglobal is not a simple process. It is a joint venture between EAN
International, creator of the European Article Number, and the Uniform Code
Council, creator of the U.S. UPC. The ePCglobal venture acquired the previous
work of the Auto ID Center and is creating the new specification.

Myth 5 (and our conclusion): RFID’s not
ready
RFID is ready now! It’s been used for years. It’s tracking
animals in animal tags, it’s collecting tolls, and it’s been improving car
assembly since the early 1980s.

Each industry and even each company will find a different opportunity. In
general, retailers will reduce out of stock no sales, which cost billions of
dollars each year. Manufacturers seem more interested in perfecting the
production process, eliminating errors, and in making recalls easier and better
focused.

Wal-Mart is already on board. On August 18, 2003, the RFID Journal
reported Wal-Mart spokesman Tom Williams saying, “we have asked our 100 top
suppliers to have product on pallets employing RFID chips and in cases with RFID
chips. By 2006, we will roll it out with all suppliers.”

But a much bigger customer, the U.S. government, is converting to RFID. In
“The Tipping
Point” published on October 6, 2003, Mark Roberti, editor of the RFID
journal, said that the embrace of RFID by the Department of Defense (DoD) would
have an even greater effect on the industry than Wal-Mart.

He noted that the DoD buys consumer goods such as cola and cakes in addition
to expensive military hardware, and that manufacturers that sell to the federal
government will have to embrace the technology. Their suppliers will then have
to embrace the technology. Finally, America’s allies, including NATO, will also
have to embrace the technology. The ripple effect from the DoD endorsement will
be huge. It starts now.

The RFID wave starts in 2004. The RFID wave will wash across America in 2006.
Watch for it.