Back in August of this year, I wrote a post entitled RFID Tags: Where They've Been and Where They're Going. The overall message of that post was that the future of RFID tag technology looked pretty good. I concluded, however, "One of the things that could hold up widespread implementation of RFID is, ironically, standards. Right now there aren't any. If RFID tags are to become as ubiquitous as barcodes, those standards must be forthcoming." Shortly after that post was published Dan Gilmore, Editor-in-Chief of Supply Chain Digest, wrote an article that supported the notion that the future of RFID tags looked bright ["Suddenly, RFID is Hot Again," 17 August 2010]. Gilmore began his article by providing some history about RFID tags:
"Well, it only took seven years. It was in 2003 when WalMart made its first announcement relative to a supplier 'mandate' for RFID-tagged pallets and cases, and then a year or two of mania as the RFID-industrial complex saw the potential for a few years of 'gold rush' style sales levels coming from the WalMart program. Then it didn’t happen. The WalMart program went sideways, then stalled, then almost completely went away. Other retailers and manufacturers waiting for WalMart to make it happen first found the whole consumer goods-to-retail RFID concept not only lagged, but ultimately retreated from where it was in 2003. People who were focused on RFID at their companies went on to other things. Venture capitalists and others who had bet big on a WalMart gold rush lost their shirts. RFID went from being like the main topic at many conferences and events in 2004 to less emphasis in 2005 to hardly on the agenda if at all by 2007."
Gilmore comments that "the original mania [for RFID tags] was clearly too much at the time." He excuses the enthusiasm, however, by noting that "there was something very exciting about the interest in a new technology that was thought to be a real game changer – and which would drive lots of spending for new technology and create many career opportunities in manufacturers and retailers." Apparently, not much has happened in the RFID tag arena in the past three years, but Gilmore insists that enthusiasm felt back 2003 "might be coming back." He explains:
"WalMart’s announcement of a new RFID initiative, this time focused on apparel, has RFID technology providers getting quite excited again – and this time on much more solid ground. ... The fact that this will be an item-level initiative is said to mean some 250 million tags will be required annually for WalMart’s needs alone, just in the men’s jeans and basics categories it is focusing on first. Billions more annually if the program expands. America Apparel is in the midst of a chain wide item-level roll out. JC Penny is soon jumping on too, and other apparel and footwear retailers are likely announce RFID programs soon as well. In fact, all this may cause a bit of a mad dash to not be the last apparel retailer in the boat. The value prop looks pretty darn good."
Growing enthusiasm for RFID tags is good for companies that manufacture them as well as good news for companies that produce "readers and printers and software both at the apparel retailers and their suppliers." Gilmore concludes:
"The good times for at least parts of the RFID industry may actually finally be here. Will this be the catalyst that then ultimately drives RFID back into the more basic consumer packaged goods area where EPC really started? Just maybe. But for the near term, RFID in retail is back, and this time it is sticking."
That optimistic view of the future of RFID tags is not entirely shared by Malory Davies. In a post entitled "Has it all gone wrong for RFID?," Davies recalls that "RFID was the technology that would turn the supply chain on its head," but didn't and she wonders why. [Supply Chain Standard, 21 October 2010] She writes:
"Forget paper systems, scrap messy error-prone barcodes - you would just need to wave an RFID reader at the warehouse to get a full and accurate reading of everything in there. The trouble is, of course, it hasn't happened like that, prompting the question: what went wrong for RFID? Terran Churcher, chairman of Codegate points out that RFID remains the most talked about, but least adopted, of all auto-ID technologies. Was it all just hype? 'It is quite evident to me that way too much hype was made around RFID,' says Clive Fearn, marketing director at The Barcode Warehouse. 'A lot of people spent a lot of money on the hype and it cost a lot of manufacturing companies millions of pounds in research and development.' But Pierre Bonnefoy, director of global RFID solutions at Psion Teklogix, argues: 'We should ask what went wrong with RFID in the supply chain sector? In fact, the RFID approach in the supply chain was wrong, because of very dogmatic statements. Just remember the Wal-Mart mandate. The logistics domain is used to working with 100 per cent proven systems. Proposing a non-mature technology was a big cultural jump, even if some ROI can be obtained with non proven technology. It is more or less the failure of marketing, having over communicated the benefits, and forgotten the culture of people working in warehouses and the diversity of the logistics processes. How could it have been successful, proposing a unique way of capturing the data?'"
It certainly comes as no surprise that a spokesperson for barcodes would diss RFID technology or that a spokesperson who favored the technology would defend it. What is interesting is that the defender of the technology points to poor marketing rather than shortcomings in the technology for its poor market penetration. Davies continues:
"The approach was far too dogmatic and monolithic, [Bonnefoy] argues. 'The automotive industry took the right approach to RFID, [the] supply chain did not. The automotive industry has been using RFID for more than 15 years, firstly for cycling pallet control and now for vehicle tracking along the assembly chain.' Arguably, what we have seen is typical of the path taken by emerging technologies."
Despite arguments that the technology was simply marketed poorly to supply chain managers, there is more to the story -- cost probably being the biggest drawback to widespread RFID tag implementation. More on that subject later. Davies continues:
"Kurt Mensch, RFID principal product manager at Intermec, says: 'RFID is gaining acceptance and growth within specific, focused applications because value-added resellers have built value-based solutions around the technology. Customers are no longer on their own to try to integrate a new technology and now have the components for a full system available to them, built around specific process improvements, including hardware, software, and integration tools.'"
With claims by Bonnefoy, Mensch, and Gilmore that enthusiasm for RFID tags is growing, Davies asks, "Is now the moment to go back and look again at the technology?" She answers:
"Well, opinions are split. Mark Dale-Lace, director of Mobexx, believes that organisations should look at RFID with an open mind. 'RFID and barcodes are in simple terms a means of positive identification. There will be applications where RFID is the best choice - high value items, items not in line of site, high-speed identification, and so on. And, there will always be applications where barcode is the number one choice.' And Martin Port, managing director of Masternaut Three X, says: 'Many organisations are beginning to see the value of RFID. Ringway Jacobs, for example, is using RFID as part of its wireless vehicle and asset management solution. This combines real-time, live online tracking of vehicles and RFID tagging of portable equipment with PDA-based service management software. This helps to manage the logistics for its emergency response teams.'"
Davies then turns to the matter I raised above -- cost. She asks, "Are companies ready to make large-scale investments in the technology?" Even supporters recognize that cost is a hurdle. Davies continues:
"Bonnefoy points out that it is quite difficult taking the investment decision of installing 20 dock doors in a warehouse when you are not sure of the benefits. 'Starting to integrate a few mobile readers, to your existing process, and within your existing team, is a more reasonable and easy decision, a realistic path toward RFID adoption. Then, when the RFID tags and mobile readers are in place, fixed readers can be used in combination, to optimise the data capture."
Supporters of barcode technology understand that as RFID technology costs decrease, use of the technology will increase. Some barcode supporters have therefore started promoting the idea that the two systems can live happily side-by-side. Davies explains:
"Matthieu Delporte managing director of Baracoda highlights the fact that there is now an understanding of what RFID can not achieve. 'More and more businesses are interested in solutions with richer information, or solutions using the reading/writing capabilities of RFID systems. Many businesses are also combining barcodes and RFID, with barcodes on the products and the boxes, but RFID tags on the pallets which can be used several times for transport. Another example in a warehouse, where picking is controlled by an RFID system and operators are preparing orders by scanning barcoded products placed in tagged basket. The mobile workforces, technicians, sales guys etc, are also more and more using mobile AIDC applications running on PDAs or smartphones. These types of applications are quite recent, unlike traditional applications for warehouses, and are not really mature yet. But companies understand the potential of these new applications and especially the new RFID ones as such kind of workers are more likely to use richer information.'"
One of the advances in barcode technology that may ensure it survives alongside RFID technology is its use in advertising. As an article in the New York Times reports, "Bar codes, the tiny black and white boxes that have been popping up in magazines, on posters and on some billboards, are arriving on television." ["Bar Codes Add Detail on Items in TV Ads," by Elizabeth Olson, 26 September 2010]. Davies agrees that "barcodes should not be written off." She continues:
"[Clive] Fearn, [marketing director at The Barcode Warehouse], says: 'Still today it is evident that the barcode can and is being used to drive a significantly higher return on investment for the vast majority of businesses. If you just take the logistics sector, we are working with companies replacing pen and paper systems with data capture solutions based around the barcode in the warehouse and now for the first time also getting rid of paperwork in the drivers' hands and giving them mobile computers for electronic proof of delivery, again based around the barcode.' Ultimately, of course, it is return on investment that will be the ultimate decider when it comes to choosing whether to use barcodes or RFID."
Davies goes on to point out that barcodes add little to no cost to a product, while passive a RFID tags can add anywhere from 3 to 8 cents to the cost. In addition, she points out that RFID readers can cost as much as ten times more than barcode readers. She continues:
"Terran Churcher points out, ... 'Barcodes require line of sight reading, you need to be able to see the bars to scan them, whereas RFID can be read by scanning within the range of the reader. The application may require information to be written to the tag at various stages of its progress through the process, which would preclude the use of barcodes.' ... [In addition,] Churcher highlights the fact that mobile phone and smartphone manufacturers are starting to include Near Field Communications [NFC]hardware into their models. ... 'By enabling potentially millions of mobile and smartphones to interact, assuming the mobile applications are written, will open the NFC floodgates. This consumer-led wave of adoption will undoubtedly spread to the commercial market giving huge cost benefits associated with this volume of use.'"
Of course, smartphones already have barcode scanning capabilities as well. So I'm not sure that adding RFID technology to smartphones provides RFID tags with a major competitive advantage. Nevertheless, Churcher claims that "NFC will be the biggest development to affect the auto-ID sector over the next five years." Davies concludes:
"Port agrees: 'The development of augmented reality and mobile apps for smartphones such as the Apple iPhone will no doubt drive further uptake of auto-ID. It will mean that more businesses will be able to take advantage of combined vehicle tracking and RFID solutions. Mark Dale-Lace also points to the development of web-based applications and the ability to transmit a wireless signal to and from the RFID tag. 'This will open up new possibilities for the technology,' he says. 'And RF tags with embedded location technologies can open interesting opportunities.'"
Although many of the supporting arguments for RFID technology sound like hype at the moment, the fact is that all of the potential advantages of RFIDs are already technologically possible. It is easy to see why enthusiasm for RFID technology is growing. The only thing that will temper that enthusiasm will be continued high implementation costs that prevent users from receiving a good return on investment.
