Radio Frequency Identification (RFID) is a way to identify goods, components and even people via smart tags that emit radio signals and that don't require direct scanning as in a bar code. A growing range of applications are being developed to harness this technology and tie it in to enterprise management systems in order to accelerate and streamline business processes.

"RFID will bring significant savings in material and logistics costs," says Robert Cresanti, United States Under Secretary of Commerce for Technology. "If you care about commerce, you care about RFID."

In this article, we take a look at the state of the RFID market, the technology behind it, the uses it can be put to, and the applications that are being developed to harness smart tags and tie them in to enterprise systems.

Booming Market

Although this market has barely gotten going, over a billion RFID tags were sold worldwide last year. Within a decade, that number may well multiply by over 500 times. According to European market research firm IDTechEx, this could represent a $25 billion market by 2017.

The current total comes to a little less than $5 billion. This consists of about 50 percent tags, and the rest split evenly between RFID readers, and software/ services. 80 percent of the tag market is relatively high-end tags used for tracing animals and in passports. Such tags, though, are relatively expensive. They each cost a dollar or two.

But the high end is expected to give way to the low end eventually, even in terms of overall sales volume. The future, then, is seen in mass-produced consumer tags that will cost less than a cent. This type of tag will have to be printed i.e. transistor circuits that are printed using special electronic inks. These might not be seen in widespread use for another five to ten years, though.

In the meantime, the technology behind RFID is relatively simple. A smart tag contains an antenna linked to an electronic chip which allows it to receive and reply to requests sent out from a receiver-transmitter. Tags can be powered or non-powered. The former are more expensive, whereas the latter cannot initiate a communication to the reader.

It takes more than a few tags and readers, though, to harness RFID in a business context. According to Wayne Kernochan, an analyst at Illuminata Inc. of Nashua, NH, tapping into the real value of RFID requires the right architecture, including hardware, software, and business processes. This architecture, he says, consists of three main levels:

Buffer level: cleansing RFID transmissions to eliminate bad data and filtering out unnecessary information such as "the pallet moved 5 inches."

Local level: this requires such elements as business process software, a database to input RFID at high speed, systems management software and analysis software. These help warehouse managers to optimize local operations.

Enterprise level: Existing enterprise solutions need to be extended to accommodate RFID, including communications between local RFID databases and enterprise systems.

"RFID can indeed pay off in the real world, but it also hints at the limits of today's technology," says Kernochan. "These limits make industries that involve large objects with relatively high prices, and strong inventory/distribution improvement needs, good candidates for RFID; other industries, not so much."

Fortunately, the current state-of-the-art isn't anywhere near what could be called RFID maturity. Other ongoing projects are seeking to create collaborative business items (CoBIs) - a combination of business intelligence, embedded smart tags and enterprise software systems. The idea is to take RFID and combine it with the power of Enterprise Resource Planning (ERP), supply chain and other top level management systems in order to utilize smart tags along with high-level business processes.

"The real long-term value of RFID is using it to improve business processes," says Kernochan. "With RFID, for the first time, you can track product components not only throughout your organization's production process, but also outside the organization throughout the supply chain-and then analyze that data to improve the process, in part or as a whole."

US IT Industry Slow to the Party

Despite the size of the RFID pie and its undoubted potential, US IT companies have been slow in arriving at the party. The industry is mainly dominated by overseas players such as Assa Abloy of Sweden, Gemalto (Netherlands), ERG (Australia) and Allflex (France). They represent the primary makers of tags, though each tends to cover a specific vertical within the RFID sector as a whole.

The largest American firm in the industry is Savi Technology. It does a lot of work on smart tags for the US Department of Defense as well as other governments around the world. It was recently acquired by Lockheed Martin.

The good news is that the IT community is finally becoming heavily involved in this emerging field. IBM, for example, works in collaboration with the European Union (EU) on several major RFID R&D projects. In the pharmaceutical field, DHL and IBM are working together on temperature-sensitive tags. The smart tag checks and records the temperature of shipments in transit and permits the sender, customer or shipper to verify the right temperature is being maintained.

"From fighting counterfeits to better healthcare, smart RFID-chips offer tremendous opportunities for business and society," says EU Information Society and Media Commissioner Viviane Reding.

IBM is also working on IT FoodTrace in conjunction with the German Federal Ministry of Education and Research and the University of Hohenheim. The concept is to track food from the field to the plate in order to monitor its proper use and disposal, and reduce red tape in regulatory reporting.

Automotive, of course, is a natural fit for RFID. Components can be tagged and tracked from the design phase right through the assembly line, sale and during its lifespan, even down to the point where it is resold, disposed of or recycled. All information is fed back to the manufacturer or vehicle fleet owner for quality control purposes. Trucking companies, for instance, could use this data to monitor component condition and schedule repairs.

Container shipment is another area of vast RFID potential. By tracking containers more closely, security of a shipment is enhanced, temperature and humidity levels can be maintained and unauthorized access can be detected. IBM is working on this with DaimlerChrysler. By tracking containers all the way along the supply chain, greater transparency and efficiency can be achieved. Container location is always known. Perhaps more importantly, the technology can be used to reduce customs delays and other red tape.

Other uses include shopping systems. An RFID-equipped shopping trolley with a built-in screen, for instance, could show information on product prices, ingredients and nutritional values. Toll payments, banking systems, entrance to leisure parks, home deliveries and inventory tracking are just a few more of the possible uses.

RFID-equipped containers, too, could report up if an unsafe mix of chemicals was present, or that hazardous material had been taken out of its approved area, or that non-qualified individuals were accessing it. This goes beyond individual RFID state into being able to reason with regard to their relationship with other aspects of the total system.

How about a bookstore or book chain that can take a snapshot at any time of stock in all stores or show customers where to find a book, even those which have mysteriously been misplaced in the wrong section?

Similarly, food and consumer good manufacturers or distributors could use RFID to tag pallets and cases. The military can tag soldiers and equipment to keep track of them. Tags on luggage could save a lot of time, and perhaps eliminate lost baggage. The list of possible uses goes on and on.

But this gives some indication as to why giants like IBM and SAP are now heavily involved in RFID. SAP, known as the world's largest ERP vendor, is working on the EU's CoBIs project along with Infineon Technologies (RFID vendor), Ambient Systems (hardware and communication platform), BP (sensors), and three universities - Universities of Karlsruhe, Lancaster and Twente. Eventually, such partnerships will yield complex systems with SAP providing the overarching software that ties everything together and unites it in an ERP-like framework.

Technical Barriers

Let's go back to the tagged luggage example. What if the tags worked great in London but couldn't be read in Los Angeles? Or they worked in Beijing but not Johannesburg?

"RFID tags have to function on luggage in Berlin, Moscow or New York," says Reding. "Therefore, we must have strong relations and must reach a world agreement on standards for RFID."

But such a world agreement is still a long way off. The primary issue at hand - the spectrum to be used for RFID. In most areas, the technology uses the ultra high frequency (UHF) range from 865-868 MHz. But there are wide variations from nation to nation and continent to continent. To make matters worse, this band is packed with many other users such as TV, microwave ovens, cell phones, wireless LANs, Bluetooth and various two-way radios.

The EU, at least, is providing a consistent RFID environment throughout its domain. But once you get into Eastern Europe, different frequencies might be used.

"RFID cards will need at least two antenna - one each for USA and EU," says Cresanti. "But you also have entirely different frequencies used in Russia and Asia. The problem is that as you add more and more antenna to deal with regional variations, you add cost to the RFID tag itself."

Thus folks like Cresanti and Reding are crisscrossing the planet attempting to find common ground that will simplify global implementation of RFID. Reding has been visiting Korea, China, Japan and Russia to discuss these issues. Cresanti hasn't been far behind.

It's unlikely, though, that EU and the U.S. will agree upon a unified radio spectrum. This barrier may well be as insurmountable as it is probably impossible now to have the USA, Europe, Russia, China and other nations alter their existing spectrum systems. Maybe a few will, but one global standard is probably beyond even the best diplomacy.

"It is vital to establish a set of international ground rules," he says. "I am sure we can get it right trans-nationally and prevent RFID dislocation."

Privacy Barriers

Technical barriers, however, are only half the story. The subject of privacy is another problematic area that could derail RFID success.

Take the automotive example above. Some consumers might object to "big brother" car manufacturer being able to track their every move; or nagging them every three thousand miles about an oil change; or canceling the warranty because they were late taking the car for a service.

And then there is the thorny issue of people tagging. The technology is already there to use tags to keep an eye on pets and children. It could also be used to tag criminals and those on probation. And China just invested billions in producing national ID cards with RFID inside. If you add a stipulation that it is illegal to go anywhere without your card, all of a sudden the state can literally track your every move.

Such uses of smart tags, therefore, could create a backlash from privacy groups. It already threatened to derail the EU program.

"We should stimulate RFID technology in Europe while safeguarding personal data and privacy," says Reding. "When used in a consumer context, the individual must be made aware of the tag and must have the option of removing it."

A year ago, she announced a Europe-wide review of RFID tags. Most people anticipated yet more EU legislation and the prospect of major roadblocks on the way of this mushrooming technological sector. However, result of the study proved to be largely positive - a proposal for an RFID strategy for Europe to address privacy and security concerns in conjunction with a firm stance against RFID legislation.

"We must not over-regulate RFID," says Reding. "The Commission's RFID strategy will seek to raise awareness, stress the absolute need for citizens to decide how their personal data is used and ensure that Europe removes existing obstacles to RFID's enormous potential."

The European Commission's report created an RFID Stakeholder Group to provide advice and assistance on policy concerning RFID applications. By mid 2007, proposed amendments will be made to the European e-Privacy Directive to take account of RFID applications. By the end of the year, a recommendation will be made on how to handle data security and privacy of smart radio tags.

"We were afraid the EU would mandate RFID legislation and would perhaps fail to understand where the technology was going," says Cresanti. "Instead, they took a step in the direction of monitoring the technology to prevent consumer harm. This is a reasonable and rational perspective. A cautious approach to this area of technology is appropriate."

He firmly believes it is best if technology is driven by market forces rather than regulation. Yet all it might take is one incident of misuse in North America to raise the profile of RFID and burden it with oppressive legislation that cripples its use internationally and pushes up the costs of tagging to the point where it is not economically viable for day-to-day uses.

"RFID is a major international commerce issue," says Cresanti. "If we don't get it right, it could put all kinds of kinks in the system that would seriously hamper trade."

Drew Robb is a freelance writer specializing in IT.

 

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