The multinational imperative for RFID in Australia

Craig Lennard
Radio frequency identification (RFID) has been one of the hottest issues in the global technology sector for the past few years. Despite first appearing in tracking and access applications in the 1980s, it is only in the past three years that the potential of RFID has been truly recognised. Using RFID tags, it is now possible to identify and track objects without time delays, without human intervention, and thus without variable costs. It is these benefits that have led leading industry commentator IDTechEx to forecast that 1.71 billion RFID tags will be sold worldwide in 2007 and to estimate the total RFID market value across all countries as being worth US$4.96 billion.
Unfortunately, here in Australia in 2007 we still appear to be waiting for the long predicted ‘take-off. Despite early innovative use of the technology, broad industry use of RFID is still sadly lacking.
The good news is that at long last there are signs that a change may be on its way. In the last twelve months in Australia there have been a small but highly diverse number of RFID implementations that are finally taking the technology beyond mere animal tracking into areas such as defence, supply chain, aged care, and correctional facilities.
Recent research by Frost & Sullivan shows that the Asia Pacific RFID supply chain market earned revenues of $170.3 million in 2006 and estimates that this figure will reach $646.3 million in 2013 . While most of this growth will initially occur in Asia, the factors influencing this uptake are expected to drive a gradual increase in RFID use in the Australian and New Zealand markets.
Those factors include maturing RFID standards, more capable technology at a lower cost, and a growing case-file of proven benefits such as process improvement and throughput, reduced asset loss and shrinkage, improved asset location, visibility and identity, and eliminating stock verification.
Possibly more than any other factor, however, it is the move towards RFID by large global organisations (such as major US and European retailers) that is driving market expectation.
By 2010 RFID is expected to have a major impact on most Australian business involved in the international production, movement or sale of physical goods. As business familiarity with RFID develops and a skilled local labour force emerges, a trickle-down effect will see RFID emerge in more and more industries, becoming an accepted and integral part of the Australian business toolkit.
The potential for the supply chain
With ever smaller, smarter and cheaper tags and readers, RFID is opening up amazing supply chain possibilities. Using RFID technology, companies can improve efficiency and visibility, cut costs, use assets better, produce higher quality goods, reduce shrinkage or counterfeiting, and increase sales by reducing out-of-stocks. In Europe, one of the earliest areas targeted for RFID was the large variety of Returnable Transport Items (RTI) in retail supply chains. RFID is helping to all but eliminate traditional complex and labour-intensive issues associated with the management, recording and administration of RTI.
For Australia, characterised by long shipping distances and relatively high labour costs, the supply chain is one of the areas of greatest potential for RFID and is likely to be one of the main influencers to widespread adoption. To date, the hurdle has been obtaining that first high-profile site. However, the international uptake of RFID is likely to help speed this process.
A sampling of other RFID applications that could readily benefit Australian business includes:
– Remote condition monitoring: Combining RFID tags with sensors to remotely monitor assets. Norwegian high-speed train operator FlytoGet had a problem with overheating of axle bearings, which could lead to wheel and track damage if not monitored regularly. Historically, monitoring was conducted manually at the end of each journey, a tedious and time consuming activity. With the introduction of RFID sensors, a system was implemented that uses active RFID tags on the axles to send temperature data back to a central collection point on the moving train, and then to back-end databases using GPRS wireless communications. The temperature of each axle on the moving train is visible in near real-time from anywhere in the world, via a web-based schematic user interface.
– Location of underground assets: Utility companies have major problems locating pipes and cables. The ability to accurately record the positions of buried assets and rapidly find them again has the potential to save utility companies significant amounts of time and effort.
– Location of underground staff: GPS location relies on line of sight to the overhead satellite network. In mines and tunnels this is not possible, but RFID provides a way for subterranean workers to find out their position whilst underground. RFID tags embedded in the walls of the tunnel at known locations provide reference points that can be identified via hand-held readers.
– Vehicle inventory management: Customer service delays caused by missing parts and equipment can be avoided by tracking the contents of the vehicles used by field representatives. This can be achieved by fitting vehicles with GPS receivers and recording what is put in and taken out of each vehicle. Central control then has an accurate real-time picture of where parts and equipment are located in the field, and can take appropriate action to minimise service delays.
– Tracking mobile assets: Mobile assets can be tracked in near real time to an accuracy of less than 3 m. This helps to maximise asset use, reduces theft and improves the speed of emergency response.
– Handling hazardous chemicals: RFID systems can be used to detect when illegal or dangerous combinations of hazardous chemicals are being stored in the same location. RFID-based sensor systems can trigger alarms when containers of hazardous chemicals are opened or moved without authorisation. NASA is using this technology to improve safety when handling hazardous chemicals at the Dryden research facility.
– IT inventory management: IT directors complain that they don’t know what IT assets they have or where they are located. Tagging equipment with either passive or active RFID has the potential to reduce theft and the administrative effort required to keep track of IT assets.
– Access control / permit to work: RFID tags carried by employees can be used to allow access to restricted areas. Access permission may depend on the employee having undergone specialised training and or wearing the correct combination of safety equipment.
Communication is critical
The good news for Australian companies is that by delaying their adoption of RFID until now, many of the teething problems of a new technology have been resolved. RFID has grown to become a stable and reliable technology. It is proven in numerous applications across the globe. Approaches to implementation have been widely discussed, studied and best-practices are already being established. A market for RFID skills exists, resulting in the growing availability of experienced staff for new projects. The cost of equipment has come down, with tags reaching commodity prices. And vendors have embraced standards, recognising that without them, the technology could not go forward.
Possibly the biggest challenge still facing RFID in Australia will not be seen until the first few high-profile supply chain implementations are ready and go live. Members of the supply chain will need to conform in order to transact with larger customers.
Craig Lennard is the managing director, industry, distribution and transportation, at LogicaCMG.
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