Is RFID ready for a reinvention?

RFID can automatically capture item-level inventory data without extra handling, leading to improved visibility for many types of goods. Here’s a look at how companies are looking to make the most of that visibility.

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Back in the early 2000s, the tech term radio frequency identification (RFID) became much better known to people in business because big players in supply chains including Walmart and the U.S. Department of Defense were piloting RFID technology to track inventory. The thinking then was that with such major players pushing RFID, it would soon become a mainstay method of tracking goods in supply chains, perhaps even eclipsing the bar code.

As it turns out, the bar code is alive and well, and RFID, while steadily evolving in use and capabilities, has not taken over as the de facto technology for data capture. SML Group, a supplier that provides RFID solutions for the retail industry, estimates that only about 5% of the retail sector has adopted RFID.

So, can RFID finally break through to wider adoption? While much has been made about the higher cost of RFID tags versus paper bar codes, the cost of the tags is only one factor to weigh. The real question is: How can organizations fully leverage the visibility they can get from RFID? While part of RFID’s benefit is that for many types of goods it can make data collection less labor intensive, the bigger factor that will spur RFID adoption may turn out to be what companies can do with that precise, item-level visibility once they have it.

Device and solution vendors say that RFID use will evolve and spread in the retail sector, spurred by the potential of using item-level visibility to transform the in-store experience for consumers, while also keeping better tabs on inventory for omni-channel fulfillment. Meanwhile, in other sectors such as manufacturing plants and distribution centers, as well as hospitals and clinics, RFID has been used to track work in process (WIP), improve order accuracy, and provide tighter control over item-level traceability and inventory replenishment.

Evolving use
Many of the most successful RFID deployments have been “closed-loop” systems aimed at efficiently and accurately capturing material flow and inventory position within an enterprise, according to Mike Beedles, president of SATO America and SATO Global Solutions. “With a closed-loop system, companies are using RFID primarily for their own internal benefit, as opposed to trying to meet a mandate,” he says.

Kimble Chase Life Science, a manufacturer and distributor of culture tubes, vials and other glassware for pharmaceutical testing, is an example of effective closed-loop use of RFID, says Beedles. The company uses an RFID-enabled warehouse management system (WMS) from SATO called iTRAK to manage the movement of goods and shipments in its Rockwood, Tenn., plant and distribution center.

Before implementing iTRAK, Kimble Chase used paper-based processes in the warehouse with order data coming from an enterprise resource planning (ERP) system.  It was taking up to two days to get finished goods into the warehouse so they could be allocated and picked for customers’ orders. While the old process was supported by bar code scanning to verify outbound shipments, it was a laborious process.

With iTRAK, cases now have a passive RFID tag affixed to them in the plant, making the receipt of finished goods into the warehouse an almost instant process as finished goods pass through a RFID portal-style reader station. Likewise, in the shipping area, pallets that have been picked and are ready to ship are moved by lift truck into a reader portal, where all the case-level data is automatically captured and cross-referenced against the order data in iTRAK.

Kimble Chase’s products ship in cases, but some of them ship with smaller “inner packs,” which also need to be tracked for order accuracy. Some orders might have 1,000 different cases or inner packs on each pallet. The previous method of verifying outbound orders was to hand scan and repack each case or pack on outbound pallets, which made the process time-consuming and error prone. With RFID, the picked pallet is simply moved to an RFID portal reader, the scan captures the data for all the cases and smaller inner packs within seconds, cross referencing it against the order data in iTRAK. As a result, the RFID-enabled WMS has dramatically improved the accuracy of outbound orders and of finished goods in the warehouse pick bins.

A key driver of internal benefits is RFID’s ability to accurately and quickly scan many items at once without having to institute processes such as picking items to a conveyor and passing them through a fixed-position scanner. “The more touches involved in data capture, the more inefficient the process is and the more potential you have for errors and damage,” says Beedles.

RFID’s accuracy also leads to fewer stock outs in retail supply chains, notes Beedles, but in the retail industry, RFID use is evolving to allow retailers to provide a better customer experience and drive additional sales. For example, he says, SATO is working on an RFID-enabled store application that can track the items a shopper is trying on in a dressing room.

The tablet app is interactive for shoppers and store associates, explains Beedles. If the fit or color for an item isn’t right, the customer can access a screen in the dressing room to see optional sizes or colors which are in stock in the store and select to have that item brought to the dressing room by a store associate. Such store applications could also let a customer know about accessories or other garments that complement an item, or that are on sale and related to the items the customer is trying on.

Such next-generation apps will build off the potential value of having RFID tags on most items, and reader infrastructure within the store that pinpoints where everything is, says Beedles.  “So now that I have all the garments in a store tagged, it’s about adding value through upselling and cross-selling, and providing a better customer experience,” Beedles says. “Retailers will be able to provide a concierge-type of shopping experience.”

Retail reinvention
RFID will continue to catch on with retailers and in other sectors such as health care and manufacturing because of its efficiency in supporting pinpoint visibility, says Mark Wheeler, director of supply chain solutions with Zebra Technologies. Wheeler calls the trend “pervasive visibility,” and says RFID technology is well suited to the challenge of controlling inventory in stores, right down to knowing what is on each shelf on a daily basis.

The challenge is that stores are a much “less controlled” environment for inventory locations than a warehouse, says Wheeler, where bar code rack and bins, WMS pick instructions, and bar codes to verify locations give users a high degree of confidence that cases and items are going to be where the system says they are going to be.

“I don’t have that level of confidence in a store because I have customers coming in every day, moving things around, buying items and point of sale might not be 100% accurate,” says Wheeler. “All of that contributes to a situation where I really don’t know what I have on hand in the store.”

Store associates using handheld RFID readers can quickly scan racks and shelves to capture data from tagged apparel or other tagged items, keeping track of where all the items are on the store floor without having to handle each item. “What item-level RFID allows the retailer to do, in effect, is take a full physical inventory of items every single day, and it’s simply not practical to do that with any other technology,” says Wheeler.

To give more options to retailers and other businesses for RFID hand scanning, Zebra has recently developed a sled that fits over Android and iOS devices to allow a consumer type device to perform RFID scans. Zebra also provides industrial handhelds with integrated RFID scanners.

Initially, observes Wheeler, the push for RFID in the retail sector was more about the big retailers wanting to know what’s in the backroom and in the store to avoid stock outs. Now, Wheeler says, there is a shift toward using RFID’s item-level visibility to transform the customer experience. Because items are tagged, applications can be built to better market specific goods of interest to consumers while they are in the store.

The other benefit of knowing the precise location of items in the store is that retailers who have an omni-channel strategy that involves fulfilling some e-commerce orders from stores have a much better knowledge of where items are at the store level. “As omni-channel continues to grow, some retailers want the option of filling orders in the most cost-effective way,” says Wheeler. “That might be from a store, or it might be from a distribution center,” says Wheeler. “With RFID, you can get to that greater level of inventory control in stores that is needed to support online inventory allocation and fulfillment.”

Conventional passive RFID does not work flawlessly in all situations. Metals can interfere with the RFID data capture, while liquids tend to absorb signals, explains Mike Burnham, president of Panatrack. What’s more, the core strength of RFID—its ability to capture data about many tagged items at once—can be seen as a detriment if you want to isolate one item and collect data about it in close proximity to other tagged items. “It is difficult to isolate individual items in an RFID situation,” Burnham says.

Panatrack has helped companies deploy RFID solutions, including a program with Best Buy. “When Panatrack did its work with Best Buy and piloted the use of passive RFID on DVD cases, we used a handheld device to go up and down the retail store aisle and read as many tags as we could so we could to confirm the inventory on the shelf,” says Burnham. “The problem is that when you wanted to remove a single piece of inventory from the shelf, we wound up having a hard time reading a single SKU or pallet in an open environment full of tagged items. You are better off with a bar code to take individual items out of inventory, fulfill orders, transfer inventory and perform other essential transactions.”

In the Best Buy pilot, there was some special tuning of the RFID solution needed, says Burnham. Panatrack worked to configure and control the readers, he says, and put some heuristics in the inventory management software to allow a degree of “forgiveness” in the event that a tag was not found. “We were basically going down the aisle, reading as many tags as possible, and allowing a grace period in the event an item was not found,” he says. “The software would then check again in a few days, and if it was not found by then, it would assume it was really gone.”

What to expect
RFID can make perfect sense in situations in manufacturing plants or other environments where there is the need to keep constant, close track of high-value items or equipment. Active RFID, a form of RFID in which the tags have battery power and are intermittently sending out a signal so that location status can be updated, can be a suitable solution to closely monitor the location of expensive, mobile assets, says Burnham.

Passive RFID has been used successfully in manufacturing settings for WIP tracking, adds Wheeler. RFID chips on vehicles on an assembly line, for example, can trigger WIP updates and trigger work instructions in a manufacturing system.

RFID technology itself continues to evolve. SATO, for example, offers a form of RFID called phase jitter modulation, which is optimized for capturing data on closely stacked items, and it has deployed the solution in the health care market, for tracking items such as the parts in kits for joint replacement surgeries.

Suppliers also have been working on ceiling-mounted readers for retail stores so tagged inventory can be monitored without relying on store associates performing handheld scans. The evolving use of RFID in retail stores also may be boosted by complementary technologies such as Bluetooth Low Energy, or “BTLE,” a wireless communication standard with low power consumption.

Wheeler says Zebra has a solution called MPact that uses BTLE and small beacons dotted throughout the store to enable real-time positioning of where consumers with smart phones are in a store, and how long they dwell in a spot. The idea is that consumers would opt-in for apps that would allow a retailer to offer them a better shopping experience, based on this real-time positioning.

The MPact solution isn’t RFID, but would be complemented by item-level inventory visibility with RFID. It fits in with what many vendors see as one of the next frontiers for RFID—transforming the way retailers can serve their customers and market to them while they are in the store.

Companies mentioned in this article
Panatrack
SATO America/SATO Global Solutions
Zebra Technologies


About the Author

Roberto Michel
Roberto Michel, an editor at large for Modern Materials Handling (MMH), has covered manufacturing and supply chain management trends since 1996, mainly as a former staff editor and former contributor at Manufacturing Business Technology. He has been a contributor to MMH since 2004. He has worked on numerous show dailies, including at ProMat, the North American Material Handling Logistics show, and National Manufacturing Week. He can be reached at [ protected]

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