Immense interest has been generated around radio frequency identification (RFID) technology over the last several years. Though the technology has been in existence for decades, its early applications were limited. But thanks to newfound and revolutionary applications such as supply chain management and asset tracking, it is currently one of the most promising - and problematic - technologies available today to business and industry.

The hype surrounding RFID began in earnest about five years ago. In that time, numerous surveys, studies and reports suggested that massive adoption of RFID solutions was on the horizon. In fact, RFID remains a niche technology whose broader deployment has been stymied by the usual suspects: high equipment costs, low return-on-investment and a workforce skills shortage.

Despite these challenges, the trend arrow for RFID usage is pointing upward. While growth is not occurring at the rates many have predicted, it's growing at a modest, steady pace.

Research firm Frost & Sullivan projects that the total North American RFID market for manufacturing and logistics will grow at a compound annual growth rate of 19.6 percent through 2012; growing from a $74.8 million market in 2005 to $261.8 million in 2012.

U.K.-research firm IDTechEx estimates that item-level RFID tagging will grow from $160 million in 2006 to $13 billion in 2016. In 2006, an estimated 200 million items were RFID-tagged in the world. By 2016, 550 billion items may be RFID tagged, according to IDTechEx projections.

Meanwhile, ABI Research reduced its 2007 market forecast for RFID software and services revenue by about 15 percent from its previous estimate, to $3.1 billion. The firm notes, however, that the lowered revenue expectations were the result of the current direction of RFID's evolution, and not from any decline in the industry.

So which view is more accurate? Several factors that are altering the RFID market suggest that the double-digit growth is possible even if revenues don't reach levels previously anticipated. These changes include the adoption of technology standards; consolidation among product vendors and solution providers; greater availability of collaborative solutions and "off-the-shelf" commercial RFID packages; and improvement in RFID planning and implementation skills. Each of these factors should be welcomed by current and prospective users of RFID.

RFID standards have come together around the second-generation Electronic Product Code (EPC Gen 2). This has allowed product manufacturers to develop hardware that is more interoperable, making it easier for users to mix-and-match equipment.

Most manufacturers of RFID tags and equipment are capable of meeting customer demands that would accompany 20-percent annual growth.

Prices of RFID tags are coming down, though not as fast as some industry observers anticipated - or hoped. Generic RFID tags cost between eight and ten cents each today. That's less than half the price of five years ago, but nowhere near the one- to five-cent per tag level that many say is necessary for RFID deployment on a broad scale. So while a ten-cent RFID tag may still be too pricey to use on a $2.49 tube of toothpaste; it might be priced just right for a $249,000 piece of medical equipment.

Consolidation among RFID product vendors and service providers will eliminate overlap, resulting in solutions that are better managed and more efficient. As RFID becomes more standardized, we're also likely to see greater emphasis on partnering and delivery of collaborative solutions.

More and more, developers are offering off-the-shelf software packages that are, by their commercial nature, typically available at a price lower than their customized counterparts.

Finally, companies today have more experience with RFID deployments, which leads to better planning, less waste and lower total cost of implementation. In 2006, a large number of organizations engaged in pilot tests of RFID, typically deploying the technology in a specific location with a limited number of products. These pilot tests have allowed organizations to get a better understanding of how the technology works; the factors that can affect its performance; and to identify sources of return on their investment.

Manufacturing and supply chain applications are at the forefront of current RFID adoption, driven in large part by mandates from customers. Some estimates suggest as many as 100,000 U.S. companies are under some form of RFID-adoption mandate.

Companies may not be deploying RFID throughout their supply chain, where a high level of cooperation among partners is required for success. But the number of RFID pilot programs, tests and "closed-loop" deployments designed to address specific business problems continues to grow.

One success story is at Best Buy, which implemented an RFID test project aimed at reducing the number of movies and game DVDs that were out of stock. Best Buy has reported 18 percent higher sales in departments with RFID-tagged DVDs.

In another test case, Procter and Gamble found that tagging display cases for Wal-Mart with shared information led to a sales increase 19 percent of Fusion razor blades, the result of timelier arrival of product to restock empty shelves.

Beyond better inventory visibility, RFID is a technology that is well-suited to address other business problems, such as fraud reduction, faster business processes, brand protection, and lower labor costs or cost of sales. Among areas where RFID usage is taking hold are:

• Industrial automation and maintenance in industries with heavy capital equipment costs, such as energy companies.
• Automotive, where active RFID tags are used in line management and quality check applications.
• Health care providers who use RFID tags to track assets used in in-patient and home health care monitoring.
• Physical security and control applications.
• The aerospace industry, which is actively pursuing asset-based RFID applications, including solutions for asset management and spare parts tracking and authentication.

 

Businesses are gradually waking to fact that RFID technology is more than just the next step from barcodes or another data generating sensor-based technology. Apart from supply chain management, there are a large number of other potential RFID applications like electronic toll collection and physical access control that are gaining interest. In any market with a high need to track items in real time there is strong potential to benefit from RFID deployment. By using RFID in conjunction with global positioning systems, logistics and transportation companies can provide their customers with information on exact location of containers. Such ability would, in certain cases, help their customers optimize their supply chain.

A word of caution: RFID is not a plug-and-play technology. Each deployment is unique; and within each deployment, any number of variables can affect success or failure. Consider this fact: Every reader or interrogator adds another device to the organization's overall enterprise network. As information is collected and transmitted from various locations around the physical facility, data must be processed and incorporated into existing and new databases.

Consider the route a single piece of RFID-tagged merchandise travels in its lifetime:

• Tagged as it leaves as a finished good from its point of origin.
• Transported via road, rail, sea, or air to its destination.
• Arrives at a dock door.
• Travels through a warehouse.
• Arrives in a stockroom
• Moves to a retail shelf.
• Purchased by a customer.

At each stop on this journey RFID readers can conceivably register the presence of the tagged product and report on its whereabouts in real time. Conversely, something can go wrong at any of these points to compromise or render useless the RFID-transmitted data.

RFID systems are complex and difficult to install and integrate. From the physics of the hardware installation to the challenges of integrating RFID-generated data with existing business processes, a broad base of expertise is required for successful implementation. Professionals working in RFID installations, operations and maintenance must have proficiency in areas such as radio frequency (RF) technology; RFID hardware (antennas, tags, readers); how to properly tag pallets, cartons and products; and RFID standards.

The radio technology skills necessary to implement RFID solutions are not widely present among IT professionals today. This includes both the understanding and skills on radio technology as well as the software, business process and data architecture skills.

The RFID industry is coming together on several fronts to address the skills shortage.

Today there are a variety of "boot camps" teaching basic RFID skills. RFID vendors are offering product-specific product training to their partners. In many cases, however, these vendor-specific training courses do not reflect common foundational knowledge of RFID technology.

Academic institutions and commercial training providers are offering introductory and advanced RFID training courses.

The industry has also come together to develop an industry accepted credential that validates an RFID technician's knowledge and skills in the areas of installation, maintenance, repair, and upkeep of hardware and software functionality of RFID products.

CompTIA RFID+^TM is a professional vendor-neutral certification that is addressing the need for technicians knowledgeable and skilled in areas such as the installation, maintenance, repair, and upkeep of hardware and software functionality of RFID products. The curriculum built to support this certification has become an industry standard of foundation-level skills for the RFID technologist.

A certification will help enable the industry to deliver more RFID implementations, producing more revenue for the industry as a whole and the companies using the certification. The skilled workforce will be capable of delivering a greater number of implementations and there will be higher customer satisfaction with the delivered solutions.

As an industry, the certification will help avoid the "valley of disillusionment" associated with the adoption of many technologies. The onus is on us as an industry to educate end-users on the basics, the challenges, the process requirements, standards and the returns from RFID.

Customers looking for assistance with an RFID deployment would be wise to seek out a solution provider with specific vertical marker expertise that's relevant to the customer's business. These solution providers have demonstrated that they understand the specific market, which gives them an advantage over competitors who are new to that market.

Another indicator: Look for solution providers with experience deploying wireless networking technologies in enterprise situations. Knowledge and experience with data storage requirements is another plus.

Expect the unexpected when it comes to RFID deployment, because unpredictable variables can occur at any stage of the deployment. But however imperfect RFID may be, it's not going away. The more experienced, trained and certified your RFID team, the better they will be able to overcome any challenges.

David Sommer is vice president of electronic commerce for the Computing Technology Industry Association (www.comptia.org), the leading trade association representing the business interests of the global information technology (IT) industry. He is responsible for developing and implementing worldwide initiatives by working with IT leaders to develop and promote collaboratively-defined business and technology standards for business-to-business transactions in the computing and electronics industries.

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