On The Path To Deliver Pervasive Enterprise Efficiency

With RFID tagging becoming more common, this article explores how industry is just beginning to climb the ladder of exciting uses and benefits for RFID in the enterprise.

RFID tagging in the enterprise has grown increasingly prevalent over the last two years with the endorsement by Wal-Mart and its key suppliers. Passive EPC-compliant RFID tags have promised great results from increased efficiencies and visibility within the organization. And now, Wal-Mart as well as other consumer packaged goods and supply chain providers have publicized the benefits from their passive tagging initiatives. In the process, passive tagging has shown it is limited by the laws of physics in its applications. The majority of “things” have yet to be tagged in the enterprise. We are just beginning to climb the ladder of exciting uses and benefits for RFID in the enterprise.

The origins of RFID put this in perspective. RFID became most well known in the retail sector with electronic article surveillance (EAS) tag systems, which identified goods leaving the storefront without proper payment. One could credit the security industry, Sensormatic (now part of Tyco) in particular. Security companies then improved and enhanced RFID in the 1990’s with proximity-based access control cards. These have gradually taken the place of magnetic stripe cards. By 2000, RFID was in wide-spread implementation, certainly in the security industry.

Early in this decade, the Auto-ID industry, also known then as AIDC (for Automatic Identification and Data Collection), began tagging everything from cars to cows. It was the Wal-Mart mandate in mid-2004 that shifted the RFID industry focus into one recognized for driving business productivity.

Today, passive systems are designed for the high volume, controlled passage of goods through the dock door. The visibility provided by this labor-free identification and box counting operation helps the consumer package goods provider reduce the number of incidences where products are out-of-stock, etc. But, the laws of physics related to passive tagging continue to present some issues. Tagging certain cases of liquids or anything with a metal content, (e.g. barbeque sauce and shampoo or any canned goods) impacts the performance of these systems. The reliability of tag reads today is roughly around 85 percent, which means the real visibility is limited as are other uses. It is reasonable to assume there will be improvements in the reliability of the dock door solutions, but the physics issues still remain.

Controlled entry ways with extensive portal reader antenna that have minimal read distances and are intolerant of the environment limit the uses of passive RFID tagging in the enterprise. These limitations don’t affect the wildfire growth of consumer applications such as credit cards, cell phones, and car key fobs. But for the enterprise, these systems are limited to the dock door. What remains is the vast balance of the enterprise, which includes assets, personnel, vehicles, payloads, and sensor monitoring, which is now ripe for tagging. Bringing handheld solutions to those items offers only marginal benefits over bar coding, as labor costs remain high.

Areas of productivity improvement in the enterprise include: automatic inventorying; automatic location determination; automatic tracking; automatic condition monitoring, and automatic theft protection. These require a flexible (and sometimes invisible) infrastructure and tags which can autonomously transmit on demand. Indeed, the real promise for enterprise productivity remains in labor-free operations, as well as delivering real-time business intelligence on virtually all enterprise assets, including people. Extensive tagging throughout the enterprise requires power onboard the tag and a flexible infrastructure. Both are characteristics of semi-active and active RFID tag operations.

It’s now apparent from these tagging trends and documented benefits that literally everything in the enterprise will be tagged: some with passive tags, the rest with active tags. Today, the labor-free tagging of assets means critical and costly items such as hospital equipment are automatically located, counted and protected. Active tagging means the securing of intellectual property and customer lists on corporate laptops. All valuable assets in the corporation can be dynamically located, counted and protected. Tagged personnel are given convenient access to doors throughout the organization without having to manually present an identification card and they can be automatically identified in the case of an emergency evacuation. They are automatically linked to the tagged assets they are responsible for, such as their laptop, test equipment, a vehicle, etc.

Vehicle payloads can be automatically identified and accounted for prior to being unloaded. Containers are automatically located, tracked, and managed for compliance to inspection regulations. Critical data from sensors (e.g. temperature or chemical fumes) are automatically transmitted and managed in a real time condition monitoring environment. Published business cases show savings from efficiencies ranging from 10 to 44%. Fewer assets and strategically applied labor resources are the benefits that are available today. Tomorrow’s solutions will involve real-time data, feeding automated resource allocation routines and operations. That’s real business intelligence.

How pervasive will it be? Today, in the hospitality industry, cocktail waitresses wearing active tags are now automatically tracked and measured for their beverage service performance so a critical customer service metric can be managed in real-time. And, they have embraced the solution because they can maximize their tips by having an optimal area to service. Contractor labor used by the US Department of Defense is now automatically accounted for to support accurate billing, saving tax dollars for us all. Scientists’ use of expensive labs is tracked to determine the optimum allocation of equipment so they can do their job better. Tagged trade show visitors are automatically given a tailored message specific to their needs as they walk up to an exhibit to enhance their trade show experience. In the hospital, critical personnel and assets are located as needed to quicken procedures everywhere, including the operating room.

Is active tagging more expensive than passive tagging? Yes, but the real cost of RFID is in the total cost of ownership. Active tags cost from roughly $10 up to more than $50 each, depending on their function. The infrastructure can be as minimal as $.30 per square foot of coverage. An active tag solution will cost less than $1 per month per tag in total. And active tags are re-usable. The ROI for active tagging includes the labor savings from their labor-free operation as well as security savings. Only active tags can provide protection from asset theft and can wake-up and transmit on-demand as they move through a doorway (called semi-active operations). The device also protects against thievery, a pervasive problem throughout many organizations (which can’t be solved by passive tags). Only active tags can provide an automatic alert when tampered with. Only active tags can provide automatic notification of a sensor alarming to an out-of-compliance condition. The ROI for active RFID is about the total cost of ownership and the myriad of savings categories. Recent customer case studies, for example, include a payback ROI on IT asset tagging of 3 months and a payback ROI on payload container management of 2 months. And as with passive tags, from this point forward the costs will continue to decline.

Active RFID is the catalyst for driving pervasive enterprise efficiencies based on the delivery of real-time and complete business intelligence. The software world has evolved through ERP and CRM systems to providing business intelligence dashboards for executives to make more informed decisions with the data generated by these enterprise solutions. RFID dramatically extends the boundary of this data collection machine out to all moving items, as well as all static ones in and around the enterprise. Data now represented as being displayed in real-time will actually be collected, processed, and presented in real-time. Operations research models will be able to optimize and allocate resources automatically, ultimately automating the enterprise like never before. As we move up the RFID enterprise ladder, we will eventually look back and wonder what it was like before RFID technology became embedded in our society.

By Allan Griebenow,
CEO and President, AXCESS Inc.

Reprinted with permission from the publisher at Wise Research Ltd and author Allan Griebenow, CEO and President, AXCESS Inc.


Originally Published: June 1, 2006