Emerging Technology: RFID

1
Emerging Technology RFID
                    Courtesy of
Toshiba.com   Team 1
2
Overview

• Introduction
• RFID Technology
• Competitor Technology
• Industry Segmentation
• Inventory Management
• Supply Chain Management
• Return on Investment
• Public Policy
• Case Study Wal-Mart
• Conclusion

3
Introduction to RFID Technology

• RFID Radio Frequency Identification
• RFID System uses the electromagnetic in the radio
  frequency of the electromagnetic spectrum to
  uniquely identify any object or person
• Consists of three components
• A Tag
• Active Tag
• Passive Tag
• A Reader
• An Antenna

4
RFID TechnologyTypical RFID System
Courtesy of rfid.com
5
How RFID Works

• Tags starts emitting a signal
• Reader notices the signal
• Once the tag has decoded the signal as valid, it
  then replies to the reader, indicating its
  presence by affecting the reader field
• Collision might happen if many tags are present
  and they all reply at the same time
• The reader manages this by using Anti-Collision
  Algorithm so that tags will be individually
  selected and sorted
• Once a tag is selected, the reader is able to do
  a number of operations such as read the tags ID
  number, or write information to it

6
RFID Tags

• Tags are attached into/onto objects
• Each tag has an internal memory in which it
  stores information about its
• Objects
• Serial number (unique number)
• Product composition and Manufacture date
• When a tags passes through a field, which is
  generated by a reader, it transmits the
  information back to the reader to identify the
  object

7
Active Tags

• Active tags
• Powered by internal battery
• Memory size varies and it depends to its
  application requirement
• They are larger than passive tags
• Have longer read range
• Have limited operational life

8
Passive Tags

• Passive tags
• They dont require batteries
• Powered by the reader
• They are lighter and less expensive than active
  tags
• They have shorter read range
• Have longer operational life

9
RFID Reader (1)

• Provides the means of communicating with tags and
  facilitating data transfer
• Functions of a reader might include
• Signal Conditioning
• Error Checking
• Error Correction

10
RFID Reader (2)

• Once the signal from a tag is received and
  decoded
• Algorithms is applied to decide whether the
  signal is a repeat transmission
• This algorithm is known as Command Response
  Protocol and is used to avoid the problem of
  reading multiple tags in a short time

11
RFID Reader (3)

• Operating frequencies of a reader
• HF and UHF
• Multi-frequency readers
• Hand-held readers are used to manually check or
  update tags offline
• The communication process between the tag and the
  reader is controlled and managed by one of
  several protocols, such as the ISO 15693 and ISO
  18000-3 for HF or the ISO 18000-6 and EPC for
  UHF. LaranRFID

12
RFID Standards (1)
13
RFID Standards (2)

• Tags are categorize by their ability to read and
  write data
• EPC (Electronic Product Code) is used to classify
  and categorize tags
• It is very similar to UPC (Universal Product
  Code) used in Barcodes
• Ranges from 64 bits to 256 bits
• It has four distinct fields

14
RFID Standards (3)

• Header is 8 bits, indicates the tags
  classification whether it is class 0, class 1,
  class 2 etc
• EPC Manager contains the manufacturer information
• Object class refers to the exact type of the
  product like SKU
• Serial Number provides the tags unique number

15
RFID Antenna

• RFID antenna emits radio signals to activate the
  tag and write and read data to it
• It acts as a conduit between the tag and the
  reader, which controls the systems data
  acquisition and communication
• Antennas are available in a variety of sizes and
  shapes

16
RFID Antenna (2)

• An antenna produces electromagnetic field which
  are constantly present when multiple tags are
  expected continually
• If constant interrogation is not required, a
  sensor device can activate the field

17
Technical Safeguards/Security

• Integrity
• Availability
• Authentication
• Confidentiality

18
Competitor Technologies

• Barcodes
• IButton
• Smart Dust

19
Barcode

• Improve Operational Efficiency
• Save Time
• Reduces Errors
• Barcodes requires direct line of sight between
  the readers and the barcode tags
• Reader has to scan each item individually

20
RFID vs Barcode

• RFID have many advantages over Barcode
• Multiple items can be read at the same time
• Ability to change or add data after creation
• Tags can withstand hostile environments
• Data can exist in the tag and this eliminates the
  need to access a database
• Tags are much smaller than barcodes
• They can be reused
• Data can be read and embedded without visible
  exposure

21
IButton

• Computer chip enclosed in a 16mm stainless steel
  can.
• Can withstand tough and rigged environment
• It can hold larger memory than RFID

22
IButton

• IButton is not wireless. It requires the reader
  to physically contact the "button" in order to
  read or write
• Each IButton Costs between 2 and 53 depending
  on the implementation

23
Smart Dust

• Example Solar powered mote with bi- directional
  communications and sensing
• 11.7 mm3 total circumscribed volume

24
Smart Dust

• Small micro-machines fitted with wireless
  communication devices. When clustered together,
  they automatically create highly flexible,
  low-power networks.
• Power
• Vibrations in the wall
• Solar light
• Changes in barometric pressure

25
Industry Segmentation of RFID

• Medical and Pharmaceutical
• Fuel and Oil
• Airlines
• Merchandise
• Banking
• Automobile
• Access Control
• Other

26
Inventory Management

• Functions related to the tracking and management
  of material. This would include the monitoring
  of material moved into and out of stockroom
  locations and the reconciling of the inventory
  balances.
• What is Successful Inventory Management?
• Maintaining a wide assortment of stock
• Increasing inventory turnover
• Keeping stock low
• Obtaining lower prices by making volume purchases
• Having adequate inventory on hand

27
Inventory Management Cycle
28
Supply Chain Management

• The process of how products are designed,
  sourced through an often complex network,
  manufactured, and distributed from raw material
  to the end customer
• Many companies do not use automated procedures
  instead, they use e-mail, fax or phone to
  communicate with suppliers.
• Old systems usually dealt with information that
  was not current.

29
Supply Chain Management Cycle
30
The Need for Change

• 40 billion (about 3.5) of total sales are lost
  each year due to supply chain information
  inefficiencies
• In 2002 out-of-stock products cost supermarket 6
  billion in lost sales
• Lack of cooperation within the supply chain
  activities
• Lack of information sharing within the supply
  chain activities
• Lack of integration in behavior and functions
• Lack of accurate forecasting
• Must automate process to avoid the above
  situations!

31
Return on Investment (ROI)

• The driving factor for change in the market is
  profit.
• The profit or loss resulting from an investment
  transaction, usually expressed as an annual
  percentage return.
• ROI will not happen right away.
• ROI will benefit larger firms due to the cost of
  chips.
• Chips currently range from 1835 cents, making
  more affordable by larger firms.
• Currently chips are expensive for smaller firms.
  Perhaps once the chips go down to 8 cents smaller
  companies will be able to benefit from RFID and
  have high rate of ROI.
• Smaller companies want to wait until prices drop
  to avoid negative ROI.

32
Value proposition for using RFID

• For suppliers, RFID will achieve the following
  (Zebra Technologies)
• Lower inventory levels by 5-30
• Lower transportation cost by 2-13
• Higher sales by 1-5
• Reduction in lead times by 10-50
• For the retailer, RFID will achieve the
  following (Zebra Technologies)
• Better availability on shelf by 5-8
• Lower inventory levels by 5-10
• Higher sales by 2-10
• Lower logistics cost 3-4

33
Public Policy

• Why public policy needed?

Proponents
Opponents
Conflicts
34
Proponents

• Benefits
• Reduce Cost
• Improve Supply-chain management
• Improve Inventory Management
• Wal-Mart
• Top 100 Suppliers
• Save 16.7 Billion/Year
• Deadline January 2005
• DoD
• 20,000 Suppliers
• Close to 24 Million/Year (Food, Paper, Cleaning
  Products)
• Deadline January 2005

35
Opponents

• Privacy Advocates
• American Civil Liberties Union (ACLU)
• Consumer Action
• Consumers Against Supermarket Privacy Invasion
  and Numbering (CASPIAN)
• Electronic Frontier Foundation (EFF)
• Electronic Privacy Information Center
• Junkbusters
• Privacy Rights Clearinghouse

36
Opponents Arguments

• Threats
• Hidden placement of tags
• Hidden readers
• Data aggregation
• Individual tracking
• Misuse/Abuse of RFID
• Monitoring Consumers
• Embedded into Human-Beings
• Tracking Cash
• How do you resolve such conflict?

37
Proposed Policy

• Individuals must have a right to know that
  products contain RFID tags.
• Individuals also must know when, where and why
  RFID tags are being read.
• Individuals have the right to have RFID tags
  removed or permanently deactivated when they
  purchase products or otherwise obtain items
  containing RFID tags.
• Merchants must be prohibited from coercing
  customers into keeping the tags live on the
  product.
• The default option, at checkout, must be to
  disable it.

38
Median Path

• Median Path
• Compromise between the Proponents and
  Opponents
• Technical Safeguards
• Implementation of strong policies and procedures
• Benefit the proponents and Protect the opponents

39
Case Study Wal-Mart

• Wal-Marts initiatives
• Business Process Analysis
• Value proposition to use RFID
• Outstanding issues

40
Wal-Marts Initiatives

• Stated publicly in June 2003
• Carton, case pallet tagging
• Top 100 suppliers
• UHF EPC RFID to be used
• Be compliant by 1/1/2005
• Meetings in Bentonville 11/4/03
• 130 top suppliers
• More than 40 solution providers
• All learnt what Wal-Mart expected
• Source Zebra Technologies

41
Wal-Marts Initiatives

• Requirements
• Accepting UHF Class 0 or Class 1
• 96 bit EPC current GTIN as the base
• Keep barcode technology
• Performance
• 100 pallet read at receiving
• Conveyor100carton tag (540fpm)
• All product types
• Source Zebra Technologies

42
Wal-Marts Initiatives

• Scope of Operation
• More than 100 distribution centers
• More than 3000 stores
• Over 3 billion cases and cartons per year
• Nearly 100 million pallets per year
• All suppliers compliant by end of year 2006
• First Phase of Deployment(1/1/05)
• 3 regional distribution centers
• 150 stores
• All products from top 100 suppliers
• Source Zebra technologies

43
Business Process Analysis

• Current business process

• Identify
• needs

• Identify
• sources

• Select
• supplier

• Place
• orders

Buying process
Buy Inventory
Receive Resource

• Move to Staging
• area

Enter Pallets in WMS
Affix Barcode to Pallet
Move Pallets to Storage
Stages in Inventory Management System
44
Business Process Analysis

• Business process with the use of RFID

Buy Inventory
Receive Resources

• Read EPC in
• RFID system

Send data in WMS
Move pallets to storage
Stages in Inventory Management System using RFID
tags.

• Legend
• WMS Warehouse Management System
• EPC Electronic product Code.

45
Value Proposition to use RFID

• Estimate of Wal-Marts savings
• 6.7 billion Eliminating Scanning
• 600 million Reduce out-of-stock
• 575 million Reduce shrinkage
• 300 million Better tracking
• 180 million Reduce inventory cost
• 8.35 billion Pre-tax saving
• SourceEweek

46
Outstanding Issues

• Supplier may not be able to meet the 1/1/05
  deadline
• Invasion of Privacy for consumers
• RFID tags expensive for small suppliers
• Compatibility issues

47
Conclusion

• Revolutionary Technology
• Benefits
• Supply-Chain Management
• Inventory Management
• Issues
• Privacy
• Cost
• Median Path
• Benefit the Proponents Protect the Opponents