Hunter Campbell’s Specialist Supply Chain, Operations and Procurement recruiter Wayne Fry recently spoke with Paul Plester, Brian van Ginkel and Jos Kunnen Committee Members of the New Zealand RFID Pathfinder Group, to understand more about RFID, its uses, how the technology is being utilised in New Zealand and benefits on offer.
The NZ RFID Pathfinder Group is a not-for-profit, Incorporated Society established to provide vendor neutral, independent advice, education and guidance about Radio Frequency Identification (RFID) technology based on the electronic product code (RAIN) suite of global standards.
What is RFID?
Radio Frequency Identification is a technology where digital data is encoded into an RFID tag or smart label and is captured by an RFID reader via radio waves. Unlike other technologies, RFID does not require line-of-sight to scan items and many items can be read at one time.
How does RFID work?
RFID systems typically consist of several components including an RFID tag, RFID reader (or scanning device) and an antenna. An RFID tag consists of an integrated circuit (or chip) and an antenna. The tag is encased in a protective material that holds the tag together to shield it from environmental conditions. For example, an ID badge containing an RFID chip and antenna is encased between thin layers of protective plastic.
RFID tags are either passive or active:
- Passive RFID tags are the most widely used in global supply chains. They are small and lightweight with a small antenna and can be attached to goods as stickers or labels. They usually can only store a small amount of information – usually a unique identification number for an item or product, and they can typically be read over a distance of several metres. Passive RFID tags do not have their own power supply but are energised by radio signals sent to them from an RFID antenna/ reader combination.
- Active RFID tags have their own power supply (e.g. a battery) and can store much more data. Even without a reader, they are able to send and receive data. Active tags can be quite large (i.e., as big as a book) and have a large antenna. The signal can extend over several kilometres.
Benefits and uses of using RFID
The ability to tag virtually any item for easy tracking and access to more detailed information about the item, means that RFID can be used in many ways to provide business benefit – irrespective of industry sector. From broad use and application in open supply chains, to inventory management, transport and logistics, asset management and health and safety applications, the potential application for RFID is almost limitless.
The benefits of RFID Include:
- Potential for 100% inventory management captured efficiently and accurately.
- Up to 80% reductions in out-of-stocks and 40% faster order processing through real time event processing.
- More efficient and accurate materials management, work-in-process tracking, asset management; particularly relevant in manufacturing operations.
- Significant increase in productivity outputs and labour cost savings through ‘hands-free’ scanning.
- Numerous items can be scanned at one time saving time and money.
- RFID tags embedded with sensors (e.g. temperature) can monitor environmental conditions quickly and accurately mitigating potential damage and claims.
How is RFID currently used in New Zealand?
There are many implementations of RFID in New Zealand although many are not widely known. Common examples include:
- Livestock identification and tracking
- Inventory control in horticulture packhouses
- Identification and monitoring of healthcare goods in refrigerated cabinets
- Stock management and inventory control in manufacturing processes
- Theft detection in retail environments
- Laboratories for sample identification/control
- Authentication of milk samples collected by milk trucks
Misinformation about RFID
RFID is too expensive to implement and performance is unreliable
- In fact, RFID can be very cost effective – especially where other technologies are not able to provide a solution to a business issue/ problem. RFID implementations need to be designed and implemented for a specific purpose or application. RFID is a ‘data capture’ technology and its use is limited by the software supporting the implementation. As with any uptake of technology, effective training and coaching is required to get the most out of it.
- The international RFID community has established global standards and are in place to regulate many aspects of RFID hardware and software. Standardisation, coupled with a significant increase in the number of RFID manufacturers (i.e., tag, reader, antennas etc) globally, has seen a significant drop in RFID equipment prices, especially over the past five years.
- RFID Tag and reader performance has enhanced significantly in recent years to the point where close to 100% tag read rate accuracy is an expectation, including in challenging RFID environments
RFID is widely used in Europe and the US but not in New Zealand
- There are more RFID implementations in NZ than many people realise – you just don’t hear about them! RFID is seen as a competitive advantage, so broad announcements of implementations are not common – and for legitimate reasons. There are exceptions however, such as Eastpack’s Kiwifruit packhouse operation in the Bay of Plenty, who have been using RFID for inventory control and logistics for over 15 years very successfully.
- RFID Awareness – To date, promotion of RFID in NZ has been sub-optimal. Pathfinder’s purpose is to educate and champion to businesses about the benefits available in the use and implementation of UHF RAIN RFID[1] – and they’re seeking to ramp this up.
- Business Case Development and Poor RFID Advice – Many companies find developing a robust, well researched business case difficult to craft for management approval. This in the main is because of a lack of reliable, informed local expertise and/or experience. This is an area where Pathfinder can add significant value as a provider of high quality, impartial local support and assistance.
- Implementation in NZ may come down to scale – In manufacturing and supply chain applications in particular, RFID is most effective in managing large volumes of items. Companies with the larger scale operations are more placed to gain maximum benefit from using RFID. This is not to suggest however, that implementations for SMEs is impractical; on the contrary, there are many successful SME RFID implementations in NZ where ROI is easily demonstrable.
What is the downside, risks to NZ businesses of this low adoption /Evolution of RFID?
In 2004, Walmart was one of the first fortune 500 companies to implement RFID, spending up to US$50m on RFID initiatives and pilot programs. This is one of the key initiatives that gave RFIDs its “high cost” image. Over the past decade in particular however, the prices for RFID components (tags, readers etc) and implementation costs has plummeted to a point where ROI is easily articulated – and in some cases substantially so!
It’s clear that NZ is lagging behind our international competitors in RFID adoption, and we run the risk of being left behind to the spoils and benefits that RFID offers, including improved process automation and efficiency, enhanced supply chain visibility, increased productivity outputs and others. RFID use is widespread in many industry sectors overseas including retailing, the healthcare supply chain, transport and logistics and the new entrant, the quickly-evolving (and lucrative) omni-channel marketplaces. Adoption in this channel is being driven in the main by the need for high fidelity, accurate inventory management. It is in these new marketplace frontiers that is contributing to exponential growth in RFID adoption and investment globally – projected to grow to a US$24.5B market by 2022.
RFID has the potential to deliver significant benefits to NZ companies in many industry sectors. The question is, whether or not NZ companies want to step up and enjoy the benefits on offer or be left behind?
For more information visit New Zealand RFID Pathfinder Group.
[1] RAIN RFID is a global alliance promoting worldwide adoption of Ultra High Frequency (UHF) RFID technology. RAIN uses the GS1 UHF RFID standards.
