A RECENT US study into the effect of RFID technology on retail-inventory accuracy demonstrated that an automated, RFID-enabled inventory system improved accuracy by about 13% in test stores.
The investigation, conducted by researchers in the RFID Research Center, a research unit of the Information Technology Research Institute in the Sam M. Walton College of Business, also revealed that manual inventory adjustments by store personnel significantly declined in test stores due to the automated, RFID-based system.
The study shows RFID technology can significantly reduce unnecessary inventory, with the potential for savings for major retailers, with numerous suppliers, measured in millions of dollars.
However, while the retail industry gets the majority of the headlines regarding the use of RFID technology, particularly those applications in the US and Europe, that’s not to say this exciting technology can’t be used elsewhere.
As Chris Kelley, director of RFID for Intermec, explained on his recent trip to Australia, RFID technology has a wide range of applications within the supply chain, especially with reusable containers.
“For example, we’ve seen a high uptake of RFID technology in the automotive supply chain, where a part is manufactured by a supplier, loaded onto a part specific container, then that container gets transported to an OEM, and then routed back,” Kelley told Manufacturers’ Monthly.
“In this case the tag is on a specialised metal container, the size of a truck trailer. Technologies like barcodes have not done a great job, mainly because of the intrinsic nature of barcode optical which rubs off. Whereas RFID is much more durable and can stand up to the life of that asset as it traverses the supply chain,” he said.
But Kelley warns manufacturers not to think of RFID as a replacement for the barcode.
“That would be a mistake, for a couple of reasons.
“From a planning horizon point of view, at the item level, for most categories of items, the bar code will for a good for a while. If not indefinitely, it will be much lower cost than an RFID tag.
“In fact, I have a hard time seeing that cross over point. It isn’t so much the ink that goes on that label as much as it is the real estate it consumes.
“Certainly there are some categories of items such as apparel where RFID offers some intrinsic benefits. But if you look at RFID simply replacing barcodes, you’re missing the opportunity.
“What RFID offers enterprises, in this case consumer goods or a retailer is the ability to step back and evaluate their processes and find new ways to improve their processes. If you just put RFID tags wherever you’re using barcodes, you’re not getting any benefit; you might as well continue using barcodes.
“The benefit comes from stepping back and saying, okay, what are my real business issues? How might RFID enable me to refine or improve my business processes to get better efficiency or better customer service or reduce costs or whatever it might be?
“For example, we’ve an automobile manufacturer here in North America called Chrysler.
“If you could imagine a circular assembly process which the vehicle goes through, with the vehicles built on carriers as they go around.
“But these carriers need to go through preventative maintenance, periodically. Welds need to be checked and bolts need to be tightened and the like. But they had no good way of ensuring that these carriers were going through preventative maintenance, they couldn’t identify those carriers.
“They’d tried doing it with barcodes but these carriers work in a pretty nasty, dirty grimy place and visual barcodes didn’t work.
“A partner of ours went in and put RFID tags on each one of the carriers and RFID readers in strategic locations along the process so they could identify each carrier against a database.
“When needed, the carrier was diverted over to preventive maintenance. They saved over a million dollars in the first year, just in overtime avoidance. They had a return on investment of over 200%,” Kelley said.
“This is just one example of using RFID in a novel way that they couldn’t do with other technologies.”
RFID in the warehouse
Kelley said Intermec has being working closely with Cisco Systems, RedPrarie and Cascade Corp, to develop ‘the forklift of the future’.
Through its use of RFID technology, the forklift can identify and track products on it when loading or unloading.
The prototype forklift incorporates RFID readers built into the forklift’s infrastructure, replacing today’s bolt-on approach to data collection, and features Cisco’s Wireless Location Appliance and RedPrarie’s open Mobile Resource Management software integrated with the forklift RFID reading system developed by Intermec and Cascade.
With the complete system, drivers can conveniently read and encode RFID tags without leaving the vehicle, and managers can get real-time data on vehicle locations and activity.
The Cisco Wireless Location Appliance provides location tracking for devices on a Cisco 802.11 wireless network. With the RedPrarie software, it can be used to provide the X, Y coordinates of an RFID-enabled forklift, report movements, monitor dwell time and collect other data useful for security, employee performance auditing, maintenance and asset management applications.
Kelley says mounting the RFID readers on the forklift offers users a number of advantages in a warehouse or a distribution centre.
“Early deployments of RFID readers were in fixed portals, at choke points, dock doors and doorways, for example. But you’re tying up a fair amount of capital in an inflexible infrastructure, plus you are limiting yourself to capturing RFID data just at that point. “
Kelley suggests a typical warehouse/distribution centre has a ratio of one forklift to four dock doors. While admitting it costs a little more to equip a forklift, he says clearly the savings are there.
“While there are lower capital costs by putting the readers on the forklifts, more importantly now you’ve got the flexibility. You’ve got the potential for many more read points, capturing more data in your operation.
“It will pick up when you are pulling pallets out of the warehouse or building pallets, case picking for example, or taking pallets to a shrink wrap station, or putting pallets on or off a truck.
“So you can gather a lot more information about where your goods are, the state of your goods and what they are.
“And rather than welding and drilling to equip and re-engineer each forklift to have RFID on it, we are working with companies like Cascade, a major manufacturer of forklift back rests, to make retrofits easy.
“We are working with them to design back rests and RFID equipment from us that allows users in the field to rapidly install RFID equipment flexibly to their specific requirement, with cable routing, antennae placement, in all the right places to make it happen very quickly.
“But with the forklift of the future we’re working on, users will be able to order a forklift already RFID enabled. When you call up your forklift distributor, in addition to saying ‘I need LPG, I need a double high mast’, I will also say ‘I need RFID’. And it comes to you from the dealer already equipped with RFID and mobile computing and wireless networks.”
Kelley says there are a number of truck manufacturers who see the value and see the differentiation they can provide to their markets by providing RFID. “I believe it will happen relatively quickly.”
Original RFID thinking
One UK company has certainly thought outside the square when it comes to RFID in the supply chain.
If you’ve ever owned a cat, you know the problem. The cat flap that you bought to let your beloved feline in and out of your house has suddenly become a portal for every other moggy in the neighbourhood too.
However, thanks to the ingenuity of engineers at Sureflap (www.sureflap.co.uk), who have teamed up with RFID company Cambridge Resonant Technologies (www.cambridge-resonant.co.uk), all this is a thing of the past.
The engineers have developed a battery- powered cat flap with a built-in high-performance RFID reader. And that reader can be ‘taught’ the unique ID code of a standard microchip implanted in your pet, allowing your cat – and only your cat – to pass through the flap.
Of course, first of all your pet has to be chipped. But since microchipping is now common for pets as a form of permanent identification, that shouldn’t be such a big deal.
So if your cat hasn’t already received an implant, all you need to do is take it down to the local vet where a small tag the size of a grain of rice will be injected under its skin.
Intermec 03 9867 9300.