Mandates, supply chain security, anticounterfeiting to drive item-level tagging in 2007

Sales of RFID tags in China, South Korea, and Japan in 2005 reached $200.5 million, with projected growth at an annual compounded growth rate of nearly 13 percent to $469 million by 2012. This growth will serve as a catalyst for adoption in Asia, according to a recent report by New York-based analysts Frost & Sullivan.

Though Japan now contributes 45 percent of revenues, China has the fastest projected growth rate, pegged at 14.7 percent. Southeast Asia, New Zealand, and Australia lag in adoption.

"Governments in China, South Korea, and Japan are aggressively encouraging and promoting awareness by forming RFID information centers, and hosting conferences and summits [to highlight] the latest developments in RFID technology and applications," says Parul Oswal, senior analyst for the research firm. Relative high costs, overhyping, and lack of clear understanding of potential benefits are barriers that need to be overcome, she adds.

Symbol Technologies' new RFS7000 wireless switch enables companies to cost-effectively deploy and centrally manage multiple RF technologies in Symbol's Wireless Next Generation (Wi-NG) architecture, including wireless voice, RFID, and other RF spectrum devices.

"The RFS7000 allows the enterprise to use the same method for deployment, for configuration of security—the same look-and-feel for management across the full RF spectrum no matter what technology they deploy," says Chris McGugan, senior director for Symbol's Wireless Infrastructure Division. "Our approach allows us to have an 'RF agnostic view' of whatever technology happens to be deployed, for greater bridging and mobility, and greater density of coverage over a wide area."

Compelling ROI on tracking high-value product casts the pharmaceutical industry in the leadership role over the next two to three years in terms of item-level RFID tagging, says a report out of Natick, Mass.-based Venture Development Corp. (VDC). High-volume supply chain flows also make it easier to achieve economies of scale.

"Mandates, as well as a desire to address supply chain security and counterfeiting, stack up as benefits favoring item-level tagging," says Andrew Nathanson, director of RFID technologies for VDC. "The pharmaceutical guys focused on item-level tagging from the start, putting them far ahead of everyone else."

Other verticals are held back by various barriers, including the debate over UHF versus HF, and infrastructure configuration. "Other industries are getting efficiencies out of case and pallet tagging, and aren't likely to go to item-level tagging until pharmaceuticals work through to resolution of these issues," Nathanson says.

The China State Radio Regulation Committee (SRRC) approved use of Savi Network's ISO 18000-7-compatible active RFID products throughout China for five of the 433 MHz frequency products, including tags, readers, and signposts.

"Because it is active RFID technology—where the tag has a power source of its own to transmit a signal—it doesn't face the same challenges related to interference that passive technology does," says Fraser Jennings, Savi Networks VP of standards and regulatory activities. "The 433 MHz frequency band is recognized internationally, but Chinese organizations wanted to be sure it didn't create any interference problems for them. The approval process was very similar to that of the FCC."

The speed in achieving ROI on RFID depends greatly on the business problem, the commitment of the organization to leverage the technology, and the ability of the enterprise to turn RFID data into business intelligence, according to a recent report from Boston-based Aberdeen Group.

"First of all, identify opportunities for return in more than one area. Even if RFID is brought in to address a particular business challenge, looking for ROI in multiple areas is the quickest way to shorten time-to-benefit," says Russ Klein, author of the report.

"For manufacturing, the initial opportunity is to increase production efficiency on the shop floor, but as soon as the infrastructure is in place, you have the ability to manage raw material, tag reusable containers, and get some forward visibility to demand through the supply chain," Klein continues. "It goes back to the value of the data, and adding value to the line of business through immediate notification of some problem on the horizon so as to reallocate resources."

Klein is exploring ROI in the supply chain in greater detail, and encourages companies interested in participating and receiving study results to visit www.aberdeen/survey/rfidmfg.

Intelleflex, a supplier of battery-assisted—or semi-passive—RFID tags, recently received $15.5 million in second-round funding.

"The funding will be used for expanding our go-to-market plans, and bringing the first generation of product to market," says Richard Bravman, chairman and CEO. "We focus on applications not well served by other tags."

Battery-assisted tags do not rely on tapping the reader as a source of power, but have their own battery—which improves performance and extends range tenfold, he explains. Intelleflex tags also have 64-kilobit read-write memory allocated in 1-bit increments. This design was instrumental in Boeing selecting Intelleflex in April for tagging high-maintenance parts on its new 787 Dreamliner. The tags allow recording a full part-history life cycle.

IBM has licensed its Clipped Tag technology to Ontario-based RFID tag and label manufacturer Marnlen RFiD. The technology was developed by IBM's Watson Research Center as a means to address privacy issues around data contained on RFID-tagged consumer items. Marnlen's first prototypes are of RFID-enabled garment labels.

"The Clipped Tag works like a car antenna when you go into a car wash. When you retract the antenna, you can only receive strong, local radio stations," says Dr. Paul Moskowitz, an IBM researcher. At point of sale, the tag is "clipped" or torn, greatly restricting its read range. The tag can still be read when held close to a reader, and also can be used in the event of return or exchange of an item.

The U.S. again leads the world as a hotspot for cumulative RFID implementations in all industry sectors—leading the U.K., which is No. 2 by a 3-to-1 margin—according to a recent report by U.K.-based IDTechEx, an analyst firm that tracks auto-ID technology. In manufacturing, however, East Asia leads the world.

"It is in the East where they see huge benefit in tagging work-in-process," says Dr. Peter Harrop, IDTechEx chairman. "Hewlett-Packard has been using RFID throughout its plants in Taiwan and Singapore for six years."

Other countries with significant deployments of RFID in manufacturing include Korea, Japan, and now China. "Where labor costs have been low, [China hasn't had] as much full automation as elsewhere in the world, but it is moving up a notch with regard to RFID," says Harrop.

Coming in the next two years, Harrop asserts, are real-time location systems that enable constant awareness sensing. "A lot of things will have to happen for it to become widespread, but it represents a sea change that is becoming more economically feasible. We'll start to see it with more sensitive items like perishable goods in the next two years."