RFID Enabled Supply Chain Networks: The Next Network Build-Out

Remember the go-go days of the 1990s ? The stop-the-world-I-want-to-get-off network infrastructure building frenzy. Industry could not build the developing computer, telecommunications and wireless networks fast enough. Well, here comes the next big one -- RFID enabled supply chain networks. Radio frequency identification (RFID) technology teams around the world are collaborating with retailers, distributors and manufacturers to create supply chain networks based on RFID technology. Building these networks represents significant challenges and sizable commercial rewards. Building RFID networks will, in many ways, mirror the themes we saw in computer, telecommunications and wireless networks.

Dallas, TX (PRWEB) April 3, 2004 --Remember the go-go days of the 1990s ? The stop-the-world-I-want-to-get-off network infrastructure building frenzy. Industry could not build the developing computer, telecommunications and wireless networks fast enough. Well, here comes the next big one -- RFID enabled supply chain networks. Radio frequency identification (RFID) technology teams around the world are collaborating with retailers, distributors and manufacturers to create supply chain networks based on RFID technology. Building these networks represents significant challenges and sizable commercial rewards. Building RFID networks will, in many ways, mirror the themes we saw in computer, telecommunications and wireless networks.

RFID uses wireless technology to transmit information from small microchip tags attached to objects in order to automatically identify and track those objects. Many automobile tollway systems and ExxonMobils Speedpass payment system use RFID technology. These applications are early adoptions of RFID technology.

But a big prize in RFID applications involves the supply chain - tracking products from the manufacturer, through distribution, on to retail channels and finally to the consumer. Supply chain RFID technology promises optimized inventory, real-time visibility, improved efficiency and increased control. Supply chain implementations are coming of age with the advent of the Electronic Product Code (EPC). EPC is the next generation of product identification similar to the UPC (Universal Product Code) or barcodes. The EPC is standardized information written onto RFID enabled microchips called tags. Enterprises can electronically track goods by attaching a RFID tag to those goods. RFID enabled electronic product codes are leading to what some call an Internet of Things"

Computing and telecommunications networks have many similar elements as compared with an RFID enabled supply chain networks that make possible an Internet of Things". Here a few structural parallels:
    
Computer/Telecom Networks...............RFID/EPC Networks

Email or Computer File........................Object, Thing, Product
IP Address or Electronic Header...........Electronic Product Code (EPC)
Domain Name Server (DNS)................Object Name Server (ONS)
Extensible Markup Language (XML).......Product Markup Language (PML)
Computer or Network Node..................RFID Reader or Supply Chain Network Node
Router/Switch.....................................Distribution Center
Content Producer/Media Company........Manufacturer, Object Producer
Network Operator...............................Third Party Logistics Provider (3PL)

But RFID enabled supply chain networks differ from computer/telephony networks. Supply chain networks not only push information (electrons), but also push objects around the world. Machine and human interactions required for transporting objects pose unique operational challenges. If you havent lived" in a warehouse, cross docking facility or truckload consolidation depot where interactions occur between machines, humans and objects, you cant fathom the complexities. Firms who frame RFID enabled networks as merely a technology challenge" will be surprised and may learn from experienced supply chain network operators like FedEx and UPS.

John Baker understands warehouse operations. He is president of Dallas area firm Venture Research, a supply chain systems integration business with an RFID interoperability lab. The lab is filled with the latest equipment from all the current big names in RFID -- RFID tags from Alien, Matrics, Rafsec and Texas Instruments; RFID readers from Alien, Matrics, AWID, Tyco, Omron, ThingMagic and SamSys along with a variety of RFID printers from Zebra, Printronics, TEC and SATO. Next to the lab a computer hums, its screen filled with active graphics. Baker explains, This system is monitoring live distribution operations, performing fault management and correcting operations and applications problems for a large consumer packaged goods manufacturer. The network manages over 100 distribution centers, each warehouse containing multiple pieces of equipment and operational complexities."

In the telecommunication industry this kind of system is called a NOC (network operating center). A NOC is a computer system showing live data feeds from network nodes, the purpose of which is to keep the network up and running 24/7. Venture Research is wired into the customers supply chain network. Its NOC sends initial alert dispatches to in-plant and remote support personnel when the fault management software cant auto-correct an identified problem. The system performs escalations to key personnel when operating thresholds, such as warehouse data delivery, operator usage errors or equipment downtime, are passed.    

Venture Researchs NOC is just one illustration of supply chain network technology for a large scale business. Challenges abound for RFID enabled networks; determining optimal network architecture, sorting through equipment plug and play" interoperability issues, network monitoring, real time data challenges dealing with large volumes of live data" and managing data volume with data filters to prevent information overloads.

The challenges are great and so is the opportunity. Through the years, computing, sensing and network intelligence devices continue moving towards the outside edge of the network. These devices have moved closer to operations -- where real business happens. Compared to the 1 billion computers and 2 billion smart devices like cellphones, PDAs and GPS devices, an estimated 100 billion sensor devices (RFID tags and other tiny sensing devises, like smart dust) will dwarf the volume of those familiar electronic devices. A majority of those sensing devices on the outer edge of the network will be part of supply chain applications.    

To put the opportunity into perspective, Wal-Marts ships 2 billion cases of product a year through its 100 plus distribution centers. Wal-Marts RFID mandate calls for those shipments to be RFID tagged at the pallet level and at the case level. Building an RFID enabled network comes at no small price for RFID tags, readers, software applications, middleware and integrators. The cost to implement the Jan 2005 Wal-Mart top 125 vendors is estimated at over $500 million according to a January 2004 Bear Stearns report on supply chain technology. This is a first phase RFID implementation for just one retailer.

While the RFID opportunity is great, the young RFID industry is forming and learning. Like the computer and telephony networks, there are a huge number of RFID technical challenges to be solved. And the need is great. Players are scrambling to find the answers and are forging technology alliances in this formative market. All the signs of a forming market exist -- market fragmentation, emergent standards, players faced with technology challenges, disruptive technologies, market entrants chasing market share opportunities, players making technology alliances and retailers making announcements regarding RFID initiatives. Todays RFID industry resembles the early days in the computing and telecommunications industries. Many have hyped RFID technology and understated the potential setbacks that are inevitable for this emerging technology.

Building and operating networks takes teams who understand the pitfalls - scientists, engineers, entrepreneurs, operators, venture capitalists and an educated, technical workforce. Look for the stars who built the telecommunications and computer networks to build RFID enabled supply chain networks. Add to those teams supply chain operators who know the guts of warehouses, distribution centers and transportation hubs. Concentrations of network building teams and supply chain operators are found in metropolitan areas throughout the world. London, Brussels, Boston, San Francisco and Dallas are just a few of the hotspots for RFID network technology.

Network build-outs create winners and losers. We all remember the winners of the computer and telecommunications network build-outs - Intel, MicroSoft, Cisco, Oracle and Verizon. Many firms see the potential for RFID and are scrambling to establish market positions. It is early in the game. Those who apply lessons from building and operating computing/telecommunications networks will be winners at building RFID enabled supply chain networks.

About the Author:
Mark Johnson, RFID Tribe leader, has served in leadership roles as CFO and COO for software, information technology, consumer electronics, telecommunications and supply chain businesses at Texas Instruments, Alcatel and Exel.

About RFID Tribe:
RFID Tribe is a radio frequency identification (RFID) collaboration forum. The group collaborates on RFID and sensor technology, standards, venture capital, legislation, products, solutions, industry trends, people and events.

CONTACT INFORMATION:
Mark Johnson
RFID Tribe
214.808.1352
http://www.rfidtribe.com

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