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Rectangular gray readers chart the course of components tagged with RFID smart labels as they become part of the
The Return
RFID technology promises increased amounts of
information about a shipment or factory equipment
Wal-Mart has become a major driver of RFID tagging for supply chain management.

Today, RFID is all around you. You see ...
options, and let our Director Steering   of 55 antennae deployed in the           the time. Another 35,000
team determine ...
RFID      continued from page 13

                                          there comes a time with every            sup...
• Project how the cost of the
understand the financials surrounding      to Rush. For consumer goods, RFID
the implementation of RFID and             wi...
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RFID: Opening Eyes in Asset Management


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RFID: Opening Eyes in Asset Management

  1. 1. Rectangular gray readers chart the course of components tagged with RFID smart labels as they become part of the aircraft shown above in Boeing's Wichita plant. RFID: Business Driver When shipping goods, a company is blind, to a degree, as to what happens to the cargo after it goes out the door. A number of bad things can happen. Opening They can be lost or stolen, tampered with or replaced with counterfeits. And frozen items can be allowed to thaw. Similarly, a company may be blind to Eyes in Asset the exact location of its on-site assets, which is crucial to productivity on a factory floor, in a healthcare facility or virtually any company with a big Management investment in tools, equipment and machinery. BY J. SHARPE SMITH For example, workers would lose the equivalent of a 40-hour workweek if EDITOR they spend only 10 minutes a day for a year searching for needed items. Scanning barcodes is the current answer to tracking needs. And that system works very well at locating a shipment, although it is a manual process. But there are limitations on how much information can be gleaned from scanning a barcode. Solution What is the answer to opening the eyes of today’s companies when they are managing assets or shipping goods? RFID smart labels, which are embedded with a microchip and an antenna, are all about visibility. An RFID system has three primary components: the tags, the readers and the backend system. “The backend systems have been there awhile. Nothing makes a backend system run better than good quality data in a timely manner,” says Toby Rush, president and founder, Rush Tracking Systems, LLC, Kansas City, KS. “To get that data, you have to have the infrastructure: that is where the tags and readers come in.” ISSUE 2, VOL. 1, 2005 EWM 10
  2. 2. The Return RFID technology promises increased amounts of information about a shipment or factory equipment location/status through an automated reading process, Enterprise helping make the supply chain and those who handle Wireless assets more accountable. Individual cases or pallets can be MAGAZINE processed at a rate of one to seconds per unit. The RFID tags may have read/write capabilities for real-time updates. PUBLICATION STAFF These could come in the form of updating a maintenance Mark E. Crosby, Publisher log for a piece of machinery. The systems are non-line of J. Sharpe Smith, Editor sight, and the tags can be read from up to 100 feet away. Elizabeth R. Sachs, Esq., Regulatory Editor Karen Portik, Production Director Additionally, multiple RFID tags can be read at one time, and the tags can record time, temperature and other ENTERPRISE WIRELESS MAGAZINE is factors as they move through the supply chain. published 4 times each year. The publication is free to EWA members and is included in the annual membership dues. A Little History RFID has been around for about 50 years. In World War II, ADVERTISING/CLASSIFIEDS using RADAR, radio waves would be sent to the aircraft For advertising rates and media information, and a transponder on the plane would respond with an contact J. Sharpe Smith Phone: (515) 279- identification code. It was a challenge/response system. 2282 That was the first example of radio waves being used to e-mail: identify an object. The same principle is used today, Enterprise Wireless 2005 although the technology is more complex. Gaylord Opryland Hotel & Conference Center Nashville, Tennessee October 18-21, 2005 Elaine Baugh Walsh, Conference Director 520.620.0063 ENTERPRISE WIRELESS MAGAZINE ISSUE 2, VOL. 1, 2005 ©2005 Enterprise Wireless Alliance, Inc. (EWA) All rights reserved. Reproduction in whole or in part without permission is strictly prohibited. Third class postage paid at Alexandria, Virginia. POSTMASTER: Send address changes to EWA, 8484 Westpark Dr., Suite 630, McLean, VA 22102. About the Enterprise Wireless Alliance, Inc. EWA is devoted to assisting enterprise business users, dealers, service providers and technology manufacturers in the deployment of wireless communication solutions that promote corporate productivity and business results in the enterprise wireless space. Its offices are located at 8484 Westpark Drive, Suite 630, McLean, VA 22102. For more information about Enterprise Wireless Alliance membership and programs, contact Karin Norton at 703.528.5115 or On the web at ISSUE 2, VOL. 1, 2005 EWM 11
  3. 3. Wal-Mart has become a major driver of RFID tagging for supply chain management. Today, RFID is all around you. You see utilization, operational compliance system to be constantly updated as to it on toll roads where a transponder is and improved inventory management. the progress of each work order. The attached to the windshield of the car. According to Rich Hardt, vice computer system uses the progress of The system identifies the car and president of technology research and existing work orders to help planners debits the amount of the toll from its development for Yellow Roadway to know which production order account. Many entry cards for Corporation, “It can provide us with needs to be released next. Every time entering secured areas are equipped better information to run our day-to- an operation is complete or materials with an RFID microchip. RFID tags are day operations,” Hardt says. “Any are received, the “transaction” is even implanted in car keys with the time you can improve access to reported back to the computer reader in the steering wheel. information in a more automated, system. efficient manner, it always sparks our Point-of-Sale, Closed-Loop interest.” During 2000-2001, the Wichita and Open-Loop Systems RFID team performed three pilot Closed-Loop RFID Systems tests with active tags and three RFID can be separated into three and Tracking Works-in- with passive tags. In passive tags, categories: point-of-sale cash progress the reader initiates the collection (Mobil SpeedPass), closed- communication with the tag, loop and open-loop. Closed-loop User Profile while an active tag (sometimes systems are used internally where only Boeing Commercial Airplanes, Wichita known as real time location system) one company is reading the tags, Division, is a Kansas-based is continually transmitting its location. usually for asset tracking. Open-loop manufacturer that produces part of “The active system was well liked, systems, as the name suggests, are every commercial jetliner except the but the infrastructure and active open to multiple companies to read 717, including 75 percent of the tags were more expensive than the the tags. Supply chain management, airframe of the 737. It also designs passive system and were deemed for example, must operate in an and builds engine nacelles and nose to be too costly at that time, says open-loop environment. Closed-loop sections for the 747, 757, 767 and Debbie Fogg, RFID project manager systems, on the other hand, can get 777 jetliners. The company has around for Boeing-Wichita Commercial. by with a proprietary standard system, six years of experience with RFID. while open-loop must be standardized, at least with the other Business Driver Solution companies that are involved in In 1999 Boeing-Wichita looked to After choosing a passive tag, the reading the tags. RFID for more efficient methods for team had to decide which process tracking and visibility. Boeing’s interest would receive the new technology. Benefits in RFID coincided with its “Everybody wanted to use the system The potential benefits of RFID include implementation of Enterprise and there are a variety of things that improved shipment visibility, improved Resource Planning, a comprehensive, can be tagged: work-in-progress, service and reliability, reduction in time-consuming material planning tools and equipment,” says Fogg. freight claims, improved asset process that requires the computer “So, we put together 30 different ISSUE 2, VOL. 1, 2005 EWM 12
  4. 4. options, and let our Director Steering of 55 antennae deployed in the the time. Another 35,000 team determine the best fit.” facility and there are 18 more ready transactions are made to legacy to be implemented in its 1,100-acre systems unique to Boeing Wichita. It was decided to deploy RFID in a campus, which includes a 12 million Boeing uses a closed-loop system for work-in-progress system. In 2003, square foot covered area. “Antennas 90 percent of its RFID. About 10 the initial system was implemented are in a variety of places on the shop percent of the company’s RFID is into production. It comprised floor. We use an incremental devoted to receipt tracking of raw internally developed software and implementation strategy that allows materials and purchased parts where vendor hardware to support 20 us to work with each shop floor the readers must acknowledge the antennae. It was used to track work- team to ensure that our antenna tags used by the suppliers in an in-progress, raw material receipt, placement supports their long term open-loop system. loading of an Automated Storage process goals, enabling a reduction in and Retrieval System, Order Tracking, manual tracking of each order,” says “It is harder to establish ROI for Order Closure, Location Updates and Fogg. open-loop because determining who automated feeds of data to multiple contributes to the costs and who legacy systems. The process begins The Return benefits may not be well defined. It is when the production paperwork for RFID is now an integral part of much easier to develop the ROI for a an order is generated; a tag is Enterprise Resource Planning and it closed-loop system, because we are attached to the supporting automates about 25,000 transactions in control of all of the components paperwork. This tag is read through a week, updating the computer and parts. Fogg says. “After the out the fabrication process. Upon system on the progress of the work initial implementation, Boeing’s ROI completion, the work order is closed, orders, which increases the for subsequent implementation areas and the tag is removed and reused. productivity of personnel. And that has been less than one year.” The infrastructure currently consists number of transactions is growing all continued on page 25 ISSUE 2, VOL. 1, 2005 EWM 13
  5. 5. RFID continued from page 13 there comes a time with every supply chain visibility and allow for RFID is not a silver bullet for the technology when someone has to improvements in available stock for manufacturing process. It takes a lot step forward and say the time has its customers and improved sales for of effort and certainly won’t solve come. The time to introduce RFID its suppliers, as well as for the every problem. It is simply a tool for solutions into the retail industry has retailer. Initially, for Wal-Mart improving processes and for fine- come,” says Christi Gallagher, Wal- customers, better product availability tuning the efficiency of a factory. As Mart spokesperson. is expected to be the number one a developing technology, early benefit. However, down the road, adopters battle product Wal-Mart believes RFID will enhance Wal-Mart sees benefits related to obsolescence, continual upgrades and evolution. “While there are points of frustration because it is an evolving technology, from a financial perspective it has been a worthwhile venture,” she says. Once the infrastructure in fabrication is complete, opportunities will open up for other types of tracking, as well. In the future, Boeing is looking at using RFID in the assembly process and asset tracking of internal transportation and equipment, such as forklifts. “When you have as large a campus as we have, knowing where all of your assets are can be a great advantage,” Fogg says. “However, the cost of looking for equipment is hard to quantify.” Open-Loop RFID Systems and the Supply Chain Management To develop an open loop RFID system for supply chain management demands the cooperation of a multitude of suppliers and even manufacturers. Setting in motion the domino effect in RFID was Wal-Mart’s bold requirement that its distributors, which number in the tens of thousands, use the technology. “We've been moving forward with advancing [RFID] technology in a retail setting since 1999 when we joined the Massachusetts Institute of Technology’s Auto-ID Lab. RFID has been around since the 1940s, and ISSUE 2, VOL. 1, 2005 EWM 25
  6. 6. • Project how the cost of the technology will drop in the next five to 10 years. • What type of effort will it take to roll out the technology? • What is the proper timing? You don’t want to be early but you don’t want to be late. Financial model Using financial modeling as a tool, Yellow Roadway is doing a full-blown cost analysis to gauge its entry into the RFID marketplace. It is looking at it from a capital expense perspective, returns, recalls, warranties and driving changes in the supply chain to which includes the cost of installing battling counterfeit products, reduce cost and enable companies to readers at the doors, computer including pharmaceuticals. both keep prices as low as possible servers, networks that will be needed, and deliver an improved service. software engineering, construction One of the biggest lessons for Wal- Recent ratification of the Gen 2 tags cost, on-going cost of tagging cargo, Mart’s suppliers has been that a single will allow the cost of the tags to come training on the usage of the type of tag (antenna design) does not down. This will, in turn, lower the cost technology, hardware/software necessarily fit all of their products, for our suppliers and create a truly maintenance upgrades and according to Gallagher. “However, we "global" tag. maintenance. haven't seen a product where we couldn’t find a tag that would deliver Is RFID for You? Then the company looks at the read performance needed to incremental value. This includes facilitate process improvements,” she Yellow Roadway Corporation, one of productivity improvement, asset adds. “In fact, many of our suppliers the world’s largest transportation resource allocation improvement and are working with their packaging service providers, ships industrial, savings on claims. “We live in a very suppliers to have the tag fixed or commercial and retail goods measurable world. There are key embedded prior to them receiving the domestically and internationally. Both metrics and key measures out there. packaging. Many packaging open-loop and closed-loop systems We are well engineered; we companies are carrying out lots of are being considered by Yellow understand our cost models, research in this area.” Roadway, which employs over 50,000, Hardt says. to achieve better utilization of its Crucial to the effort by Wal-Mart to equipment as well as applying RFID to Typically, Yellow Roadway targets a develop an open-loop system is the shipments. one-year ROI. With the current cost standardization of RFID tags, which of the readers, Hardt doesn’t believe allows interoperability between Here are the steps to use in he can get the ROI down to three different companies in the supply considering RFID: or four years. The company will chain. Late last year, EPCglobal Inc., conduct several iterations of the a standards organization, ratified the • First, you must understand the financial model to determine if the royalty-free UHF Generation 2 technology and its limitations impact of the new technology has standard for RFID tags. A standard for • What is the stage of the been accurately portrayed. Based tags also invites multiple technology: nascent or mature? on that information, the company manufacturers, which drops prices. How is it evolving? will then know when to start • Look at the cost of the technology investing in the technology and “Adoption is gathering momentum, and apply it to a rigorous financial when to begin pilots with customers and RFID is becoming pivotal in model. and internally. “We are trying to ISSUE 2, VOL. 1, 2005 EWM 26
  7. 7. understand the financials surrounding to Rush. For consumer goods, RFID the implementation of RFID and will provide inventory management studying the most beneficial and promotions management. For applications of the technology and retail, it will serve as a check on the needs of the customers,” what is out of stock and as a guard Hardt says. against theft and diversion of goods. In the pharmaceutical industry, it will RFID Versus Bar Codes be making sure that the right products get to the right place at the Perhaps one of the biggest barriers to right time and that they are not RFID deployment might be the counterfeit. embedded base of bar code tracking systems in the enterprise space. Not Conclusion only does RFID need to make business sense for a company but it As the standards process moves also has to be convincing enough to forward, the infrastructure is built out move them to throw out the bar and the prices of tags and readers code investment. begin to drop, the adoption rate of RFID will increase exponentially. The Yellow Roadway, for example, already future may bring new opportunities provides many mechanisms that allow in active RFID tag use, for example, at customers to track shipments, using Boeing Wichita. “We’ve already seen readers, barcodes and the Internet. the costs of equipment go down. As “We have a pretty extensive the popularity of RFID increases, we technology infrastructure in place expect to see that continue especially today. We scan more than 350,000 on the active tag side,” Fogg says. images a day and company-wide we do 30 million shipments a year,” Hardt With RFID you get the feeling that a says. “It has to make good business new application is going emerge sense to upgrade your current system every day. For example, I.D. Systems, if it is already working well.” Inc., a wireless RFID-based asset tracking and management solutions One of the factors that separates provider, announced in May of this RFID from bar codes is the year that it has a U.S. patent for a tremendous amount and types of fully automated wireless vehicle rental information that can be programmed and return system based on RFID to in and read from the tags. “For reduce operational costs and increase example, sensors will be integrated revenues for car rental companies. into the tags, and the object will not only be identifiable but it will answer “We are building out the several other queries, such as: How infrastructure for applications that we do you feel? Are you too hot? Are don’t even know about yet. We are you too cold? Have you been shaken just scratching the surface,” says or dropped?” says Rush. Rush. “Once the RFID infrastructure is deployed and it can support all the In heavily regulated industries, such as different tag types, it will become aerospace manufacturing, they need more useful and beneficial for more information, such as who everyone.” worked on what and when, according ISSUE 2, VOL. 1, 2005 EWM 27