On the Cover

RFID stands to revolutionise the logistics, supply chain, retail, asset-tracking and even fleet management spaces, by reducing costs and increasing visibility. However it faces three major stumbling blocks before it can change our lives forever. WE`VE ALL HEARD the marketing babble about RFID the increased visibility into end to end supply chains, the effortless tracking of stock and high-value assets it enables and the relative simplicity with which these solutions can, in theory, be implemented.

Some companies have gone a fair distance down this road, only to discover the technology is either too immature, the conditions in the market prohibitive or the manufacturers cannot supply sufficient tags and readers.

A story posted in RFID journal earlier this month (www.rfidjournal.com) reported that UK-based retailer Tesco had halted its RFID rollout and to date had only rolled out 40 stores and one distribution centre, as opposed to the 1400 stores and 30 distribution centres it had initially planned.

"There have been significant challenges with regard to EU standards and operating in dense-reader environments," says Deborah Watson, Tesco`s press officer, "but we are working with standards bodies and our partners to deliver the right solution."

Andy Brown, director of Tenacent, a local customs provider using RFID, says his company went through its fair share of pain when adopting RFID.

"On first hearing about RFID, we were promised the world by the industry pundits. On closer inspection we found it not only inappropriate for our needs, but in many cases inappropriate for what it set out to achieve in the first place, due to prohibitive market conditions such as limited spectrum. We felt the RFID space was a `train smash` waiting for a place to happen," he says.

"We had to find a partner in the market to develop a customised solution for us, since our core business is tracking and securing containers in the import and export space, dealing closely with customs and excise.

"Where Electronic Product Code (EPC, the industry standard) is simply designed for product identity, we wanted a solution that was secure, offered us authentic audits trails and made the originator culpable.

"Today, although we have a solution, had the standards been appropriate it would likely have cost a great deal less," he says.

These examples aside, it`s not all doom and gloom. In some applications RFID is reaping rewards - whether it will in fact end up delivering all that the `spin doctors down in marketing` testify to, remains to be seen.

PROBLEM 1 - LIMITED `AIRSPACE`

The biggest problem revolves around spectrum, or in layman`s terms, the available volume of radio space the European Union, Asian and African markets allow RFID to operate in. It`s just too small.

In the US this problem does not apply because of the larger volume of spectrum available. Since the majority of software and hardware vendors pushing RFID seem to come from the North American market, the assumption is that it will work the same elsewhere in the world, and this is where things have gone horribly awry.

"There`s just not enough spectrum available," says Hendrik van Heerden, CTO of iPico, a South African-based RFID solutions company with offices around the globe.

"Locally and in Europe, most of the spectrum we could use has been allocated to cellular phones. In the US, because there isn`t a high penetration of GSM devices, there`s a portion of spectrum set aside for RFID and other radio based technologies in the ISM (industrial, scientific, medical) band.

"The US has a total of 26MHz," he says, "while South Africa only has 200KHz of spectrum. As we speak, however, there`s a proposal on the table to expand this to 5MHz. It`s still not the 26MHz the Americans have and unfortunately, 5MHz is the most we`ll ever be given here."

says that in Europe things were similar. "The EU had previously only set 250KHz aside for RFID and similar applications. That was recently expanded to a total of 3MHz, 2MHz for high-power applications and 1MHz for low-power. In some Asian countries the grand total available spectrum can be as low as 2MHz.

"The problem is that American RFID developers are developing solutions assuming a greater volume of available spectrum. These solutions are often not viable elsewhere in the world."

And quite frankly, Van Heerden says, there`s no `standardised` solution to the problem for Europe and South Africa, "other than for readers to be multiplexed, meaning they cannot be operated simultaneously and will need to share timeslots in which they will be permitted to operate."

In a multiplexed environment, readers can operate for four seconds at a time. "After that, the reader has to shut down and `listen` to ensure another reader is not in operation, all the time looking for a free channel. If it finds a free channel, it can once again operate for another four seconds," he explains.

TAG TALKS ONLY

Van Heerden says iPico has a solution to this issue, although its approach or protocol is not yet a standard. "Using the iP-X protocol (iPico`s X protocol) only the tag `talks` and not the reader. Because the readers only listen, they can share a channel," he says. With the standardised EPC protocol on the other hand, Van Heerden says there`s a great deal of data going back and forth between the reader and the tag. "Because this is not the case in the iP-X protocol, it also delivers much higher speeds than EPC."

Thus far he says the solution has been piloted in the South African `s Electronic Vehicle Identification (EVI) project. "Currently, we have readers in operation on the Ben Schoeman highway between Johannesburg and Pretoria, and the solution is showing promise."

This he says is a `closed loop` solution.

"An open-loop solution comprises numerous separate and independent parties, much like the dream of implementing RFID across an entire supply-chain, right from manufacturer, through to logistics, retailer and the customer.

"A closed-loop environment on the other hand consists of an internal system used by one party or a small handful of very closely cooperating parties."

Closed loop seems to be where the most promise for RFID adoption lies today. "We have already implemented several solutions in the mining market, to track equipment and to ensure that workers are wearing the right safety gear when they go into a mine. Our next big solution will be for a fish factory," he says.

BUILDING A NEW STANDARD

Van Heerden says that iPico believes that iP-X is the way forward. "We`re currently pushing for it to become a standard with ISO (International Standards Organisation)," he says. "We have launched a new work item at ISO and hope iP-X will become the ISO 18000-8 standard.

"With customers such as UK-based retailer Marks and Spencer already using the iP-X protocol, and rolling out tens of millions of tags during the course of last year," he adds, "iP-X is currently outselling EPC by a factor of two, worldwide."

Van Heerden says iPico is also pushing iP-X as a Chinese standard and has support from both the South African and Chinese governments to foster closer relations between the two nations. "The South African government is in fact trying to push this as an African standard.

"Thus far, we are offering the intellectual property inside iP-X royalty-free to the Chinese and South African market. The same will happen should it become an ISO standard. With iP-X standardised as ISO 18000-8, it should in theory be possible to run an open-loop environment based on it, from one end of a supply chain to the other," he opines.

PROBLEM 2 - LINE OF SIGHT

The second stumbling block in the greater of scheme of things, says Van Heerden, is the fact that ultra-high frequency (UHF) systems don`t work for all applications. "It is successful in applications where the environment is controlled and line of sight with tags can be maintained, but since UHF does not propagate through liquids, metal and flesh, it rules out use in many industry verticals.

"Right now, it can be used within the textile industry, which is why the large rollouts at Marks and Spencer have predominantly been focused on clothing," he explains.

"The only time UHF can be utilised in the fresh produce space is where pallets and crates are being tagged and not individual stock items."

Once again, iPico has a solution to this issue. Van Heerden says by using a dual-frequency approach in unison with iP-X, as well as duplicating the number of readers in an environment, the line of sight problem can be solved.

"One set of infrastructure is UHF-based and the other uses an approach known as magnetic inductive coupling, an extension of the kinds of tags used to track livestock and manage time keeping at sports events.

"You quite simply need to use these two complementary technologies if you`re going to solve the retail supply chain," he says. "Because you can use the same protocol, it`s transparent to the back-end."

PROBLEM 3 - NOT ENOUGH ASSEMBLY CAPACITY

The third major issue, says Mike Marsh, MD of TrolleyScan, is the world`s inability to manufacture enough tags and readers.

"Let me make this clear, however, the problem is manufacturing capacity and not from an electronics perspective, but from rather an assembly perspective, namely placing a chip on an antenna.

"At current capacity, the world`s RFID players cannot satisfy the world retail market`s demand for tags. Last year, the market produced 230-million tags, and here we`re talking about capacity that was built up over the past 20 years.

"To pull off RFID at a retail level, the world needs expansion to the tune of one-million-fold," he says.

"For this reason, the only place we`ll see any adoption in the retail market is in very high-value items. On items such as these, it doesn`t matter how cheap the tag is, ensuring that there`s sufficient margin for manufacturers and that there`s a good enough reason for big players to get into tag manufacturing," he says. "With big players in the game, it`s the only way we`ll ever meet the demand.

"Currently, the entire world`s capacity for tags would only satisfy one third of Fed-Ex`s requirement - that`s how short the manufacturing capacity is," he confirms.

SENDING IT AWAY

Marsh believes that South Africa is strongly positioned in RFID, but is doing nothing about it.

"We are the home to RFID," he says, "and we have good knowledge of the market, but roughly 98% of what we manufacture in this space is destined for export. And we manufacture a ton. A single factory in Alberton currently makes more tags than the whole of the UK market put together," he says.

"If our own IT companies simply expressed an interest in RFID and decided to take that knowledge to the rest of the world, the country could profit from the fact that it`s ten years ahead of even the US market," he concludes.

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