Why RFID is nearing its tipping point

The implementation of RFID tracking could revolutionise supply chain logistics. With a lack of cohesive standards, many industry sectors have been slow off the mark, but new schemes being piloted at the moment could lead to far wider application.

RFID tracking is a great idea. Stick a tag on any item, and you can check wherever it is in the world. The potential benefits to the supply chain all around the world are enormous. Some major roadblocks have slowed mass adoption of this panacea– in–waiting, but the technology may finally have reached its tipping point.

RFID allows a company to scan and track radio frequency tags on inpidual items, be they packing cases, pallets, CDs, books or even clothing.

The tags carry Electronic Product Codes that describe what’s inside, who made it and where it has come from. A lack of agreed technology standards has up until now slowed the widespread implementation of RFID. But these barriers are gradually coming down.

There are pilot schemes underway in some of Europe’s most important industry sectors, and the results look promising. The comprehensive roll–out of RFID is starting to look inevitable.

“The technology has evolved dramatically in terms of performance, quality and costs,” says Henri Barthel, coordinator of a European Union–funded project called Bridge, which has been organising pilots. Barthel says that as the technical, commercial and political barriers to RFID come down, the total number of tags purchased annually in Europe will rocket from 144 million in 2007 to 86.7 billion in 2022.

The total number of locations with RFID readers in Europe should increase from a little over 2,500 to around 450,000 during that 15–year period. And the number of RFID readers should increase from a few thousand to more than 6 million, Barthel says.

What’s needed to tip RFID to mass adoption?

1 Agreed standards on how the technology works

2 Scanners and chips that are “plug–and–play” – no thinking required

3 Clear evidence of return on investment “When these three parameters converge there will be massive adoption compared to what we see today,” says Barthel.

Taking cost out is key to mass RFID implementation. Even where pilots show a good return on investment, companies, particularly multinationals, often baulk at the massive investments they would need to deliver a comprehensive RFID–enabled operation.

French retailer Carrefour and its supplier Benedicta are two of the companies involved in pilots. They are tracking a range of reusable assets, including pallets and crates with RFID tags and sharing the information between to increase their efficiencies.

Kaufhof, the major German department store, is sharing RFID–generated information with Gardeur, its garment supplier, and testing the benefits of in–store applications, such as “smart” shelves fitted with RFID readers.

In another pilot, electronics giant Sony is looking for cost– savings and efficiencies in its service operations, using RFID tags to track products and parts between its Spanish factory, its Dutch warehouse hub and its German store and service centres.

Barthel is confident the technology will prove itself and that RFID will reach a mass market. Each RFID solution that the Bridge project nails down helps the movement towards agreed standards and lower cost implementation, says Barthel.

RFID hasn’t got there yet, but it might not be long now.