September 13, 2005
Understanding RFID tagging mandates before implementing RFID
An RFID tagging mandate demands that the tagging be done in a particular manner so as to best satisfy customer needs and improve the internal operational efficiencies. Before initiating the process of compliance tagging, a company needs to understand its implications on the existing operational procedures and also the benefits that it hopes to gain from implementing RFID.
The benefits include reduced costs of distribution, inventory management, security, and improved customer retention. Both RFID and bar codes are identification technologies, the main difference is that while RFID is a radio device that requires no line of sight, bar codes are optical devices that require a line of sight to function. RFID readers have the capacity to simultaneously process information from all the tags in their read range and they can do so at the speed of hundreds of tags in a second.
The major benefit of RFID is that it facilitates high-speed sortation, reduces manual intervention and increases throughput rates in activities that were earlier hampered by the need for employing extra labor, for example cross-docking operations. An interesting use of RFID tags is in reducing shrinkage in warehouses. In fact, according to a study conducted by Accenture, strategically placed RFID readers can help reduce shrinkage in warehouses and retail marts by as much as 10%. According to the International Chamber of Commerce, counterfeiting accounts for close to 10% of the global trade. RFID provides a means of authentication and of auditing the supply channels to check for any spurious goods or diverted shipments.
RFID can also help to reduce inventory levels by up to 30% for consumer packaged goods manufacturers and improve the accuracy of on-demand forecasting by up to 20%. They also contribute to improved sales by eliminating the instances of out-of-stock. The most widely used standards are those of EPCGlobal; they lay down the specifications for tag-reader communication and for producing unique ID numbers for automatic identification. The EPC system is based on unique identification at the item level and this is where it differs from the globally accepted EAN.UCC standards. Item level tagging facilitates itemwise tracking, returns, and warranty management.
It is important that RFID systems comply with the government regulations in terms of the frequencies allowed, emissions, etc. In the U.S, the regulatory body is the Federal Communications Commission (FCC). A company will need to ensure that its IT infrastructure can measure up to the immense data processing capabilities of RFID. The data produced by the readers will need to be sorted and filtered before one can arrive at any meaningful readings that may help to resolve any queries. There is specially available middleware that allows the existing software applications to accept the data passed on from RFID systems. Implementing RFID also requires changes in the labeling software and packaging procedures. Smart labels are best suited for RFID technology as they comply with most of the tagging requirements and they can be produced at short notice. The tags have to be encoded properly and placement of labels on the merchandise has to be decided to facilitate easy reading.
Smart encoders can program a tag at the time printing the label. This allows companies to avail the convenience of on-demand printing, which makes it easier to print tags with varying data. Changes in quantities, destination, and ASN data can be printed conveniently as per requirement. Placement of the tags is an important compliance issue as RFID is sensitive to metals that can reflect the signals and liquids that can absorb the signals. Marking objects with tags will have to be done keeping in mind the tag size, frequency, and placement of the tag. Pre-deployment testing procedures should ensure that the labels can withstand the kind of usage that they will be subjected to through the various stages in the supply chain. The labeling system should also be tested for production capabilities during peak-demand times.
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