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RFID pilots: towering solutions for global supply

10.01.2008
The once imposing barriers to mass implementation of RFID tracking solutions along global supply chains are starting to come down. Pilots are under way in some of Europe’s most important industry sectors that should prove the business case for a number of RFID radio-tracking solutions and promote implementation of standards.

The mass implementation of electronic, internet-based systems to track products along global supply chains in real time comes a step closer following a series of pilots involving companies in the pharmaceutical, textile and other major European industry sectors, including the so-called fast-moving consumer goods (FMCG) sector.

The tracking of individual items, cases or pallets relies on tiny radio frequency tags (RFID tags) that can supply an Electronic Product Code to a reader specifying not only the product’s ingredients but also information on its maker, place and time of origin.

“The technology has evolved dramatically in terms of performance, quality and costs,” says Henri Barthel of GS1 Global Office and coordinator of ‘Building Radio Frequency Identification for the Global Environment’ (BRIDGE), the EU-funded project that is behind the latest pilots.

As the technical, commercial and political barriers to RFID implementation are removed, the total number of tags purchased annually in Europe is expected to increase from 144 million in 2007 to 86.7 billion in 2022, according to a BRIDGE survey.

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.

BRIDGE participants see RFID as the route to some fundamental supply chain improvements. One pilot aims to provide a benchmark for traceability systems for the European pharmaceutical market, supporting a range of applications including product authentication and financial reconciliation systems.

Dispelling myths

One of the biggest barriers to the uptake of RFID in the FMCG sector has been the belief that retailers will see all the benefits while suppliers will carry all the costs. One BRIDGE pilot should dispel that myth. The confectionery manufacturer Nestlé UK is prototyping an RFID system for tracking assets, such as plastic crates and roll cages through their production process. They have identified more than 20 areas where they believe RFID will, in fact, deliver cost savings.

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

“BRIDGE will document the business cases achieved in these pilots as examples to other companies so that they can gain from the initial [lessons] and roll out the technology,” says Barthel.

Kaufhof, the major German department store, is sharing RFID-generated information with garment supplier Gardeur and testing the benefits of in-store applications, such as ‘smart’ shelves – fitted with RFID readers. With BRIDGE support, the Austrian clothing retailer Northland is also using RFID to improve inventory management on the sales floor.

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.

There is more to BRIDGE than these pilots. It is also supporting the development of hardware, software and standards that make it cheaper to implement RFID solutions and share electronic product code (EPC) information over the EPCglobal network of the future.

Because much of the information about product flows is commercially sensitive, it is essential that access to it is strictly controlled. Another group of researchers within the BRIDGE project have developed a ‘Discovery Service’ software prototype. It will provide the searcher with data on the movement of goods along a supply chain and predict its likely destination. But it is more than a search engine: the prototype identifies the searcher to each information provider and helps to authenticate the searcher’s right to view that information.

Three steps to mass implementation

Each RFID-EPC solution proven by the BRIDGE project helps the movement towards agreed standards and lower cost implementation. Taking cost out is key to mass RFID implementation, according to Barthel. 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.

“The standards have to be in place, EPC and RFID solutions have to be plug & play, and the return on investment has to be calculable,” stresses Barthel. “When these three parameters converge there will be massive adoption compared to what we see today.”

Christian Nielsen | alfa
Further information:
http://cordis.europa.eu/ictresults/index.cfm/section/news/tpl/article/BrowsingType/Features/ID/89409

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