China drafts RFID standards, but compatibility expected
By Staff -- Manufacturing Business Technology, 12/1/2004 12:00:00 AM
The dream of tracking goods in retail supply chains via RFID technology faces a distant but significant roadblock: China, the source for many manufactured goods, hasn't finalized its RFID standards. That translates into inefficiencies for suppliers to major retailers like Pacific Cycle.
Chinese contract manufacturers make many of the bicycles sold by Pacific, a Madison, Wis.-based supplier of popular Schwinn, GT, and Mongoose brands. Ed Matthews, IS director for Pacific, says that ideally the company would like its contract manufacturers to place RFID tags on the products, but that's not possible because China's standards aren't set.
For now, says Matthews, Pacific is applying RFID tags at a stateside facility that meet the electronic product code (EPC) standards, initially to satisfy RFID requirements from Wal-Mart Stores, Bentonville, Ark. Workers in the facility, however, must remove shrink wrap from pallets, apply the tags to cases, then wrap the pallets again—all before verifying shipment data with readers from SAMSys Technologies.
Matthews says tagging at the manufacturer would be ideal, but Pacific's Chinese partners say RFID frequency standards need to be settled. But Matthews adds that the current tagging method is worthwhile, since bicycles come one to a case, making tagging an avenue to real-time inventory management at the item level.
"Down the line, we are hoping for better efficiencies in the tagging," says Matthews. "But even now, we see RFID as a big positive. We'll have a better, more detailed picture of where our products sit at the store level. We'll also be able to start using RFID for event management around our shipping."
In early 2004, China established a working group to develop national standards for RFID, according to New York-based consulting firm Deloitte. John Greaves, lead for global RFID technology integration at Deloitte, says he expects the standards—which involve multiple areas, including frequency band—to be final "within months." However, Greaves adds that while the level of business that Chinese manufacturers have with U.S. OEMs and retailers likely will lead to standards compatible with EPC, "the challenge is no one knows for sure [if they will be compatible]."
According to EPCglobal, the nonprofit organization overseeing EPC standards, there is progress being made. In October 2004, Chris Adcock, president of EPCglobal; and Miguel Lopera, CEO of the Uniform Code Council and EAN International—parent organizations to EPCglobal—met with Chinese officials about RFID standards. A source with EPCglobal characterizes those meetings as "productive and positive."
El Segundo, Calif.-based research firm iSuppli Corp., which tracks IT developments in China, also expects the Chinese RFID standards to be compatible with western standards. Nancy Dang, an iSuppli analyst, says the draft standards should be ready by the end of 2004, and launched in 2005.
According to iSuppli, China faces market pressure for compatibility, but by having its own standard, its integrated circuit manufacturers would be able to avoid paying royalty fees to overseas owners of RFID specifications.
Web sites to reference:
EPCglobal Inc. http://www.epcglobalinc.org/
U.S.-based EPCglobal: www.EPCglobalUS.org
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