Where is RFID technology today?
FKI Logistex looks at RFID technology through our customer focus, which operates in four broad vertical market groups -- baggage handling and security; freight and parcel, including postal; distribution, including the retail market; and manufacturing component and package handling and distribution. With the exception of the baggage handling and security sector, the postal sector, and specific library applications, most of FKI Logistex customers'' RFID projects are currently in the testing and planning phases.
What have you done to-date in RFID planning and implementation?
In baggage handling and security, FKI Logistex leads the industry in the application of RFID for selectee identification, track-and-trace, and baggage sortation, screening and security. Recent installations include Jacksonville International Airport (JIA), where FKI Logistex implemented a 100% hold-baggage-screening system for all outbound baggage. At Las Vegas'' McCarran International Airport (LAS), a new FKI Logistex project will make LAS the first in the world to utilize UHF (ultra-high-frequency) RFID-embedded baggage tags exclusively for the auto-identification and tracking of all outbound baggage in the sortation and explosives detection process.
FKI Logistex is on the cutting edge in applying RFID technology in airports around the globe as they address their needs for security and safety in the wake of 9/11. In the U.S., FKI Logistex has worked closely with the Transportation Security Administration (TSA) and our customers to help them meet new government mandates for airport security.
In the freight and parcel, distribution, and manufacturing markets, FKI Logistex has been working to meet the RFID needs of specific customers. These three markets appear to be at the earliest stages of early adoption, as the economic and logistical cost/benefits of RFID implementation are still in question for many organizations. We see the early adopters in these markets generally as organizations such as manufacturers and distributors whose total supply chain is already automated or in the case where the costs of RFID technology are relatively small in comparison to margins or unit costs. For those organizations in markets with thin margins in which to operate, FKI Logistex sees the cost as still a barrier to RFID implementation. FKI Logistex is currently testing "proof-of-concept" implementations and technology compliance issues for some of the largest retail enterprises in the world. Data gathered from these test loops is assisting both FKI Logistex and its customers to shape their final RFID systems. One of the primary concerns of these customers is the seamless overlay of radio data with existing laser scanned data and manually entered data.
Outside its core vertical markets, FKI Logistex is also active in RFID implementation in the library market, where FKI Logistex now provides solutions for item return and sortation. FKI Logistex is now working with library customers to provide end-to-end RFID solutions that enable these organizations to "close the loop" of the library item return-and-sortation process. FKI Logistex sees RFID implementation in the library market as a way for these organizations to closely monitor and manage their holdings while reaping labor efficiencies and cost-savings and better serving their patrons. The business case for these applications rests on the need for reliable track and trace capability, the relatively high worth of each tagged item, and the ability for multiple-use.
Where is RFID going in the next 5 years?
FKI Logistex sees similar application of RFID technology coming to different verticals in the next five years. To address this coming wave, FKI Logistex has initiated an RFID team and created an RFIC center of excellence, which will coordinate RFID solutions across the company and its brands.
At this point, FKI Logistex sees RFID implementation emerging in a few early markets. They include retail, pharmaceutical, food and produce, casino gaming, and markets with government directives for RFID, such as health and consumer protection, antiterrorism, and the food chain.
In retail, including the grocery market, early adoption of RFID appears to be gaining a foothold as a tool for tracking inventory in the supply chain from the manufacturer/producer to the store floor and beyond. Retail operations of the future might be RFID-enabled to make the idea of "checkout-free" checkouts a reality. Another potential use for RFID in retail is as a security tool in the retail store setting, specifically as a less obvious security tag than present security attachments. RFID in retail may also be used as a demographic tool, identifying purchasers and their purchases to enhance the shopping experience and the retail selling process. This last use may run into hard opposition as a privacy issue.
In the casino gaming market, RFID may see similar use, especially as a security device. Some casinos are looking at putting RFID chips into their casino chips as a way of ensuring their identity and as a way of preventing theft. The tagged chips would allow casino operators to keep tabs on the fortunes of every gambler on their premises, recording the stakes placed by each player along with their winnings and losses. Casino operators routinely use security cameras for this now in similar fashion to how retailers monitor their operations.
Several present applications of RFID have been driven by government directives, such as the Health & Consumer Protection Directorate in Europe, and the Bioterrorism and the Country of Origin Labeling (COOL) Acts in the U.S. In the world since 9/11, mad cow, and other food and terrorism scares, each of these measures are efforts by the governments of the E.U. and the U.S. to control the food chain, solve food chain problems quickly, and prevent bioterrorism. Animal tracking was, in fact, one of the first applications of RFID technology. The first million-unit order ever placed for RFID tags was a European order to track Danish pigs from the farm through slaughtering and processing. Today, additional plans by the U.S. government include efforts by the Food & Drug Administration (FDA) to use RFID as a tool to combat the counterfeiting of prescription drugs.
Technologically sophisticated tradeshow organizations are also applying RFID tag technology to automatically enable lead tracking and booth attendance, both key issues in pricing and attendance justification for exhibitors.
How will RFID change the face of manufacturing and distribution?
FKI Logistex believes the impact of RFID technology depends on how well the technology is able to meet cost-benefit requirements and on how well the technology can be integrated by companies in these sectors. Right now, the adoption of RFID technology is in its infancy, with a handful of organizations employing it in their supply chain and others in the early stages of testing and vendor compliance issues; whether this spreads across the board in the manufacturing and distribution sectors remains to be seen. RFID has the potential to add another important level of control to the supply chain but without wide adoption across entire sectors, it may not have the momentum to bring down its present economic and logistical costs. FKI Logistex is watching the market with our customers and is ready to assist them as market and company demands and needs change. FKI Logistex sees RFID technology as an enhancing technology rather than a paradigm-shifting technology, a continuation in the evolution of the supply chain from product management to information management. We therefore see RFID technology as having the potential to add value to aspects of the manufacturing and distribution. There are many more fundamental advances currently occurring in the material handling industry that will play a larger role than RFID.
What are key issues that early adopters should be prepared to confront?
FKI Logistex sees the key issues for early adopters to consider in evaluating RFID implementation as whether and how to approach the implementation. Since the technology is in its nascent stage, early adopters face the problem faced by early adopters of any new technology -- will adopting the new technology now only mean having to have to change it or throw it out later to meet upgrades to the technology that appear in later stages of adoption. This is a classic problem we have seen in the past few decades in the software market; early adopters take the plunge, the market and products change, and they''re later left behind. FKI Logistex believes that early adoption of RFID must be evaluated in context of a market and products that may change radically over the coming five years.
Perhaps the major technology challenge will rise from the continued evolution from a product management supply chain to an information management supply chain. In most markets, RFID will appear as a third tier of information, supplementing manual and laser scanned data with radio data. The ability to handle all three tiers of information simultaneously and discretely within the control, WMS and ERP applications presents many challenges. Just as today''s lack of 100% bar code compliance requires manual data entry capability, so too will tomorrow''s lack of 100% RFID compliance along the supply chain demand similar overlay of data entry technologies and retention of existing bar code and man-readable technologies.
Other looming issues for early adopters, and perhaps, for future adopters, include public relations and legislative concerns. Early use of RFID has brought controversy by the public and media as a privacy issue. In California, Utah, and Missouri, pending legislation would limit the use of RFID as a potential threat to individual privacy. These and future government limitations could pose a limitation on the use of RFID technology and its broad adoption in the market. FKI Logistex is monitoring and will continue to monitor these changes for our customers as we work together to make best use of this technology.
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