Executive Briefings

Debunking 10 Myths of RFID to Find the Real Promise Behind the Technology

Your unique logistics and supply-chain environment will dictate your RFID requirements, not the other way around. While news of RFID mandates, EPC standards and compliance requirements from industry-leading retailers have dominated world news headlines over the past year, it's time to set the record straight. RFID is a "moving target"-both literally and practically. Debunking the myths and misconceptions surrounding RFID will help you put it in proper perspective and reap realistic benefits for your business.

Myth #1: There are no set standards for RFID today.
Truth: GTAG? ISO 18006.A? ISO 18006.B? Gen 2 EPC? RFID standards have become a thick, murky and mind-boggling acronym soup, further complicated by some vendors' claims of "owning" the standards. The fact is that there are several RFID standards today. EPCglobal is helping to define the standards for the next generation technology as the big players-Wal-Mart, the Department of Defense and select Fortune 500 companies-aggressively move forward on the RFID adoption and implementation curve.

Myth #2: Replacing barcode processes with RFID processes will achieve ROI.
Truth: Implementing RFID does not instantly guarantee a fast path to ROI. In order to impact the bottom line, the decision to adopt RFID must be linked to a definitive business goal. For most companies, it's cost-prohibitive to convert to RFID on a broad scale. In some cases, it doesn't even make sense. For example, if your warehouse is reliably scanning barcoded cartons on a conveyor as they are loaded onto a truck, switching this process to RFID doesn't really buy you anything because the labor you save replacing an automated barcode scan with RFID simply doesn't amount to much. However, if you currently scan every carton manually, changing to automated data capture can reduce labor requirements and increase facility throughput. Greater ROI through RFID is not a time-sensitive issue so much as it is process-dependent.

Myth #3: RFID benefits only retailers, not suppliers.
Truth: While the RFID spotlight has clearly illuminated the major retailers (i.e., Wal-Mart, Target, Albertson's), several major Fortune 500 suppliers-including Procter & Gamble, Gillette and others-are also blazing a trail toward RFID implementation across the supply chain. Suppliers might not achieve incremental ROI, but they do gain benefits. To meet compliance with the Wal-Marts of the world, suppliers must be prepared to execute the right technology strategy to serve their own businesses. Suppliers should view RFID compliance as a means to capture more detailed inventory information, increase visibility throughout the supply chain and reduce claims.

Myth #4: RFID is the only way to automate manual warehouse receiving processes.
Truth: In certain cases, RFID may be appropriate for warehouse automation, but it is not the only solution. One of the biggest paybacks of evaluating potential RFID uses in the warehouse is that it can uncover big savings opportunities that don't require RFID technology. Manufacturing companies can experience significant savings by automating the receiving functions and eliminating labor-intensive, paper-based processes. Tagging cases using barcode technology can still yield tangible ROI because it eliminates the potential for manual intervention and human error. Another example is a manufacturer that barcodes pallets and scans them onto containers. An evaluation might uncover that it never sends the advanced shipping notice to the receiving warehouse. The identified gap, when rectified, can lead to improved customer service.

Myth #5: The EPC is an RFID replacement of the current bar codes (GTIN/UPC).
Truth: The Electronic Product Code (EPC) used in RFID tags and barcoding are considered complementary data capture technologies. Even with large-scale adoption of RFID, barcoding will still need to co-exist with RFID for the foreseeable future. While current barcoding offers the same number for every case of a given SKU, EPC is a standard way to serialize all inventory. The unique attributes of RFID enable improved visibility into supply-chain movements and history. With RFID technology, the level of information is deeper, allowing inventory to be tracked and data more freely shared between suppliers and retailers. While RFID has the potential to offer a closer technical fit and operational benefits in certain applications, it may not serve as the most efficient replacement for barcodes in some situations. Both types of technology have a place in today's business environment.

Myth #6: Adoption of RFID won't require facility, equipment and process changes.
Truth: Incorporation of RFID will necessitate a new look at existing business processes. As emerging requirements and technological evolutions arise, companies will be forced to revisit their standard practices if they expect to gain new efficiencies from RFID implementation. They will need to ensure that there is a high level of compatibility in the integration of RFID within the facility-how the physical layout is organized, how labor is deployed and even how the equipment itself is constructed. One example is a clamp truck-if it is blocking the RFID signal at the reader level, something must change in order to get the best point of read and trigger dock door verification onto trucks. A company may find better practices as a result of considering RFID.

Myth #7: Readability challenges are only for companies with metal and liquid products.
Truth: Although early use of RFID with metal and liquids posed obstacles, the technology is continuing to evolve, with more rigorous testing both in the lab and in the field. Companies are carrying forward lessons learned and best practices by continuously applying the science of physics to the art of RFID implementation. There's no substitute for testing RFID with your own products in your own environment. You need to make sure that you get a consistent, reliable read rate when RFID tags are applied to your specific products, packaging and pallets. Experiment up front and thoroughly test these applications before making a large investment in an RFID solution.

Myth #8: Consistently reading every EPC on a pallet is easy.
Truth: While using EPC tags beats scanning, it is not foolproof. So many variables can interfere with accurate and reliable read rates. These might include the sizes of boxes, the number of cases, travel speed, types of tags, tag placement, reader/ antenna placement and even the product mix itself (i.e. different substances). Another key consideration is where the actual tags are read. Avoid the need to physically break apart boxes to reveal the EPC label. The goal is to eliminate any inconsistencies and increase read rates, not dropout rates.

Myth #9: All RFID tags are the same.
Truth: All RFID tags are not created equal. There are different tags for different applications, depending on the environment and business processes where RFID will be applied. Pharma, food and emergency room RFID applications, for example, require pristine and sanitary conditions that are vastly different from those found in an automotive factory or steel plant. Here's a quick checklist to help your company determine which types of RFID tags are most compatible with your business needs:
• Read distance required;
• Frequency at which RFID tags operate/clarity of signal;
• Price (RFID tags range in cost from 15 cents to 70 cents);
• Compatibility with temperature, humidity, plant, storage, shipping facilities);
• Type of product to which RFID tags are applied (wood, liquid, plastic, metal, etc.);
• Orientation of building layout to maximize tag readability.

Myth #10: EPC technology can only be used for consumer goods.
Truth: While use of EPC technology by EPCglobal is focused on the consumer goods value chain, the technology was designed to allow for easy expansion into other industries. The EPC code, as designed today, includes a header section that instructs other systems on how to interpret the remainder of the data on the tag. There are 256 possible schemas with the current eight-bit header. Currently, only five are in use. This leaves significant room for the addition of different encoding schemas, from NDC codes in pharmacy applications to automotive parts.

This quick "reality check" should put RFID in proper perspective. It's better to look before you leap to make sure that your investment in RFID technology has a positive impact where it counts the most-the bottom line.

Greg Gilbert is director of RFID solutions and strategy at Atlanta-based Manhattan Associates. Previously, he worked at Accenture, where he specialized in RFID initiatives and supply-chain execution solutions.

Your unique logistics and supply-chain environment will dictate your RFID requirements, not the other way around. While news of RFID mandates, EPC standards and compliance requirements from industry-leading retailers have dominated world news headlines over the past year, it's time to set the record straight. RFID is a "moving target"-both literally and practically. Debunking the myths and misconceptions surrounding RFID will help you put it in proper perspective and reap realistic benefits for your business.

Myth #1: There are no set standards for RFID today.
Truth: GTAG? ISO 18006.A? ISO 18006.B? Gen 2 EPC? RFID standards have become a thick, murky and mind-boggling acronym soup, further complicated by some vendors' claims of "owning" the standards. The fact is that there are several RFID standards today. EPCglobal is helping to define the standards for the next generation technology as the big players-Wal-Mart, the Department of Defense and select Fortune 500 companies-aggressively move forward on the RFID adoption and implementation curve.

Myth #2: Replacing barcode processes with RFID processes will achieve ROI.
Truth: Implementing RFID does not instantly guarantee a fast path to ROI. In order to impact the bottom line, the decision to adopt RFID must be linked to a definitive business goal. For most companies, it's cost-prohibitive to convert to RFID on a broad scale. In some cases, it doesn't even make sense. For example, if your warehouse is reliably scanning barcoded cartons on a conveyor as they are loaded onto a truck, switching this process to RFID doesn't really buy you anything because the labor you save replacing an automated barcode scan with RFID simply doesn't amount to much. However, if you currently scan every carton manually, changing to automated data capture can reduce labor requirements and increase facility throughput. Greater ROI through RFID is not a time-sensitive issue so much as it is process-dependent.

Myth #3: RFID benefits only retailers, not suppliers.
Truth: While the RFID spotlight has clearly illuminated the major retailers (i.e., Wal-Mart, Target, Albertson's), several major Fortune 500 suppliers-including Procter & Gamble, Gillette and others-are also blazing a trail toward RFID implementation across the supply chain. Suppliers might not achieve incremental ROI, but they do gain benefits. To meet compliance with the Wal-Marts of the world, suppliers must be prepared to execute the right technology strategy to serve their own businesses. Suppliers should view RFID compliance as a means to capture more detailed inventory information, increase visibility throughout the supply chain and reduce claims.

Myth #4: RFID is the only way to automate manual warehouse receiving processes.
Truth: In certain cases, RFID may be appropriate for warehouse automation, but it is not the only solution. One of the biggest paybacks of evaluating potential RFID uses in the warehouse is that it can uncover big savings opportunities that don't require RFID technology. Manufacturing companies can experience significant savings by automating the receiving functions and eliminating labor-intensive, paper-based processes. Tagging cases using barcode technology can still yield tangible ROI because it eliminates the potential for manual intervention and human error. Another example is a manufacturer that barcodes pallets and scans them onto containers. An evaluation might uncover that it never sends the advanced shipping notice to the receiving warehouse. The identified gap, when rectified, can lead to improved customer service.

Myth #5: The EPC is an RFID replacement of the current bar codes (GTIN/UPC).
Truth: The Electronic Product Code (EPC) used in RFID tags and barcoding are considered complementary data capture technologies. Even with large-scale adoption of RFID, barcoding will still need to co-exist with RFID for the foreseeable future. While current barcoding offers the same number for every case of a given SKU, EPC is a standard way to serialize all inventory. The unique attributes of RFID enable improved visibility into supply-chain movements and history. With RFID technology, the level of information is deeper, allowing inventory to be tracked and data more freely shared between suppliers and retailers. While RFID has the potential to offer a closer technical fit and operational benefits in certain applications, it may not serve as the most efficient replacement for barcodes in some situations. Both types of technology have a place in today's business environment.

Myth #6: Adoption of RFID won't require facility, equipment and process changes.
Truth: Incorporation of RFID will necessitate a new look at existing business processes. As emerging requirements and technological evolutions arise, companies will be forced to revisit their standard practices if they expect to gain new efficiencies from RFID implementation. They will need to ensure that there is a high level of compatibility in the integration of RFID within the facility-how the physical layout is organized, how labor is deployed and even how the equipment itself is constructed. One example is a clamp truck-if it is blocking the RFID signal at the reader level, something must change in order to get the best point of read and trigger dock door verification onto trucks. A company may find better practices as a result of considering RFID.

Myth #7: Readability challenges are only for companies with metal and liquid products.
Truth: Although early use of RFID with metal and liquids posed obstacles, the technology is continuing to evolve, with more rigorous testing both in the lab and in the field. Companies are carrying forward lessons learned and best practices by continuously applying the science of physics to the art of RFID implementation. There's no substitute for testing RFID with your own products in your own environment. You need to make sure that you get a consistent, reliable read rate when RFID tags are applied to your specific products, packaging and pallets. Experiment up front and thoroughly test these applications before making a large investment in an RFID solution.

Myth #8: Consistently reading every EPC on a pallet is easy.
Truth: While using EPC tags beats scanning, it is not foolproof. So many variables can interfere with accurate and reliable read rates. These might include the sizes of boxes, the number of cases, travel speed, types of tags, tag placement, reader/ antenna placement and even the product mix itself (i.e. different substances). Another key consideration is where the actual tags are read. Avoid the need to physically break apart boxes to reveal the EPC label. The goal is to eliminate any inconsistencies and increase read rates, not dropout rates.

Myth #9: All RFID tags are the same.
Truth: All RFID tags are not created equal. There are different tags for different applications, depending on the environment and business processes where RFID will be applied. Pharma, food and emergency room RFID applications, for example, require pristine and sanitary conditions that are vastly different from those found in an automotive factory or steel plant. Here's a quick checklist to help your company determine which types of RFID tags are most compatible with your business needs:
• Read distance required;
• Frequency at which RFID tags operate/clarity of signal;
• Price (RFID tags range in cost from 15 cents to 70 cents);
• Compatibility with temperature, humidity, plant, storage, shipping facilities);
• Type of product to which RFID tags are applied (wood, liquid, plastic, metal, etc.);
• Orientation of building layout to maximize tag readability.

Myth #10: EPC technology can only be used for consumer goods.
Truth: While use of EPC technology by EPCglobal is focused on the consumer goods value chain, the technology was designed to allow for easy expansion into other industries. The EPC code, as designed today, includes a header section that instructs other systems on how to interpret the remainder of the data on the tag. There are 256 possible schemas with the current eight-bit header. Currently, only five are in use. This leaves significant room for the addition of different encoding schemas, from NDC codes in pharmacy applications to automotive parts.

This quick "reality check" should put RFID in proper perspective. It's better to look before you leap to make sure that your investment in RFID technology has a positive impact where it counts the most-the bottom line.

Greg Gilbert is director of RFID solutions and strategy at Atlanta-based Manhattan Associates. Previously, he worked at Accenture, where he specialized in RFID initiatives and supply-chain execution solutions.