RFID And Bar Codes: Marriage Of Necessity

No one really knew for sure how the rollout of RFID technology would occur in the supply chain. Starting with mandates from larger customers – Wal-Mart and the DoD – lab work was supposed to flow into pilot projects that, in turn, would lead to full-scale production deployments of RFID. This migration path may still be accurate, but it’s clear that only a handful of suppliers have been aggressively traveling down it. Outside of a few notable exceptions, suppliers are largely in a holding pattern between pilot and production rollouts.

The typical supplier approach to RFID deployments has been to meet a minimum level of compliance while continuing to evaluate the technology and its potential widespread use. The result of this approach has been segregating products for slap-and-ship processes that are costly, but not as costly as full-scale rollouts of RFID. In these slap-and-ship applications, RFID tag data may not even be collected. Instead, suppliers simply apply the smart labels, verify they are working properly, and load the tagged goods on the back of trucks bound for designated DCs (distribution centers).

Regardless of the speed for deployment, most agree that the deployment path will hold true. Pilots will evolve into production deployments, and RFID will be pushed further back into the supply chain. Some suppliers may expand tagging at their warehouses and DCs. Others will push to have RFID tags applied during the manufacturing process and receive these tagged goods into their warehouses. In either event, RFID tags will be more widely deployed and data from the tags will be collected, analyzed, and used to optimize business processes. However, all agree that this is the future of RFID in the supply chain. Right now, companies are struggling to make business cases for RFID based on hard-to-find ROI models. The problem, however, isn’t with the technology itself, but how suppliers are currently looking to apply it. By looking beyond mandates and actually integrating RFID data into back end systems, suppliers can benefit from the technology. The mandates show no sign of abating, so suppliers have a choice: Bite the bullet and continue to minimally comply, or expand the use of RFID in applications where it makes a lot of sense.

RFID DEPLOYMENTS VARY IN SIZE, SCOPE

RFID was widely – and inaccurately – pitched as a replacement for bar code technology. There were a couple of fundamental problems with this assertion. First, bar coding technology is widely understood, reasonably priced, extremely mature, and nearly 100% accurate. How could it make sense to replace bar codes with a comparatively immature technology that is more expensive, more complex, and less accurate? Second, and maybe more important, businesses that have deployed bar codes have optimized their business processes around this technology. RFID comes with a lot of baggage, not the least of which is the real possibility that companies have to reengineer the process to leverage the technology.

With these factors in mind, companies have taken varied approaches to RFID rollouts. For instance, integrator PEAK Technologies is currently working with a supplier to RFID-enable one of its many warehouses. “The supplier wants to create a full-scale RFID environment for one of its facilities. They are tagging a limited amount of SKUs [stock keeping units], but the facility is using all of the latest RFID technology. They want to learn as much as they can about the technology and how it functions within their business. When the time is right in the future, they can take what they’ve learned and deploy it at their other facilities,” says Dave Perrine, VP of marketing at PEAK Technologies. “The strategy is one of full deployment at a limited number of sites with a limited number of SKUs.”

Other companies are actually collecting RFID data from cartons and pallets and integrating that data with back end systems. Collecting and analyzing this RFID data will ultimately lead to complete visibility in the supply chain. While this is the promise of RFID, some companies are taking steps right now to make this a reality. “Some of our customers are gathering data from the RFID tags as the product leaves their DCs and makes its way through the back room at Wal-Mart and onto the store floor. Ultimately, the last tag read comes when the carton is emptied and compacted,” says Larry DeAngelis, executive vice president of sales at Acsis, Inc. “Companies can analyze this data to see how long their product was sitting in a store’s back room or whether product promotions were handled effectively. This type of data provides visibility where currently it is sparse or nonexistent.”

Other suppliers still continue with slap-and-ship operations while constantly gaining hands-on RFID knowledge and continually evaluating additional uses of the technology. In many cases, suppliers are looking at RFID print-and-apply technology and determining the feasibility of such solutions. This automated tagging system might not make sense with just a few SKUs being tagged. As the number of RFID-tagged SKUs increases, automated print-and-apply solutions will move from feasible to necessary. As companies gain more understanding of RFID, closed-loop applications are gaining a lot of attention. Unlike open-loop applications of RFID that involve multiple supply chains, closed-loop applications use RFID to track goods within one company’s supply chain. In these cases, tags are applied to pallets, crates, and RPCs (reusable plastic containers). RFID readers are used to track the expensive carriers and totes as they enter and make their way through the supply chain.

USE RFID WHERE IT MAKES SENSE

While RFID is not a replacement for bar code technology, some companies have deployed RFID in place of traditional bar code technologies. In these greenfield environments, inventory currently is put away and picked using paper tickets and a host of manual processes. When an RFID mandate affects these companies, they don’t have to wrestle with how RFID will impact their bar coding processes and technology. “These greenfield environments would benefit from any type of auto ID technology. There’s no question about that. Because of the mandates, some companies are jumping right to RFID and skipping an entire generation of data collection technology [bar coding],” states Perrine. These first-time users of data collection technology also see a business case for RFID. In addition to meeting a compliance mandate, RFID does provide the companies with data that did not previously exist. For companies that already have invested in bar coding technology, the equation is much more complicated. “Moving from no data being collected to having data available to make decisions is a big benefit. RFID technology is driving this data collection in some greenfield applications. So, it makes a lot of sense,” adds Perrine.

Acsis’ DeAngelis agrees that greenfield environments can jump right into RFID solutions without having bar code solutions in place. However, he also sees RFID being deployed in applications outside of much-publicized mandates. “As companies gain more experience with RFID, we’re seeing it deployed in such applications as asset tracking in both manufacturing and distribution environments,” states DeAngelis. “Additionally, RFID deployments are moving forward in the pharmaceutical space. Track-and-trace and ePedigree are both RFID drivers in pharmaceuticals. Neither the asset tracking or pharmaceutical deployments of RFID are driven by mandates.”

RFID AND BAR CODES IN ONE ENVIRONMENT

RFID and bar codes will have to peacefully coexist in the supply chain for an indefinite length of time. It’s necessary for end users, integrators, and technology providers to develop cases that leverage the best traits of both technologies. For example, both RFID and bar coding are auto ID technologies; however, RFID does not require line-of-sight visibility to read tags. It makes sense that RFID would be deployed alongside bar codes in cases where line-of-sight reads are either impractical or impossible using bar codes. Other applications for bar codes and RFID to coexist include high-value goods and where serialized identification is important. High-tech electronic goods or expensive parts in discrete manufacturing applications are both examples of high-value goods that could be tagged using RFID.

For his part, PEAK’s Perrine offers that bar codes might be best used in most pick, pack, and ship processes. However, RFID could be introduced prior to outbound shipping and palletization. Handheld RFID readers could be used at this stage in the supply chain to ensure that compliance mandates are met and also validate the accuracy of shipments. The benefits of this type of deployment include the redistribution of quality assurance labor that is used to verify accurate shipments. Additionally, the data could be used to better manage the flow of goods at the dock door and stage goods at various parts of a distribution center. “Due to space restrictions, companies stage goods at different locations throughout their facilities. RFID allows these companies to know where their goods are in real time. This not only improves your management of these goods, but also increases the accuracy of the shipments,” says Perrine.

At this stage in the adoption of RFID technology, it’s increasingly clear that smart label technology will be deployed alongside bar coding technology for the foreseeable future. For this situation to change, RFID would have to become far less expensive (coming close to the cost of traditional bar coding) and far easier to deploy. Until that day arrives, end users should look to deploy RFID in applications where it is required or when bar codes simply can’t perform the task.