Magazine Article | February 21, 2008

Item-Level Tagging Gains Momentum

Source: Field Technologies Magazine

Using RFID (radio frequency identification) to track goods at the item level requires specific industry and application expertise.

Integrated Solutions, March 2008

Every enterprise wants technology deployments that are straightforward. You listen to the sales pitches ... conduct your own research ... choose a packaged solution. After a few weeks, you're up and running and receiving all the benefits you expected. Occasionally, the scenario plays out just this way. You're deploying a pretty mature technology. Packaged solutions and off-the-shelf software and hardware are readily available. On the technology adoption curve, you're probably straddling the late majority and laggard camps. Under those conditions, technology deployments tend to be hassle-free and deliver what is expected.

None of the above criteria, however, would describe an enterprise embarking on deploying an RFID-based item-level tagging solution. The enterprise might want a canned solution that yields near instant benefits, but the reality is quite different. At this time, RFID solutions and deployments for item-level tagging vary greatly depending on the particular application environments. Tagging at the item level in an apparel application is vastly different from an item-level tagging solution in the pharmaceutical industry. The form factors of the items being tagged in each application are very different. There are also big differences in the environments, data requirements, and desired outcomes in application. And, the goals of item-level tagging in these applications are different from initiatives in manufacturing and CPG (consumer packaged goods) industries. In short, each item-level application of RFID varies depending on the industry. Enterprises should know this as they evaluate the smart-label technology.

Eventually, item-level tagging solutions will become less customized and progress to more packaged-solution deployments. In that way, it's not dissimilar from the evolution of bar coding, wireless technology and inventory management deployments. Even closer to the mark might be the evolution of portal-based RFID solutions in DCs (distribution centers). Only a few years ago, configuring an RFID portal was a pretty customized endeavor. Enterprises had to integrate antennas, readers, motion sensors, and light stacks into a single solution. Now, a variety of companies offer packaged RFID portal solutions that can be deployed in a clear-cut manner. "There's a great deal of understanding in portal applications, so solutions can be packaged," explains Dimitri Desmons, vice president of RFID marketing at Impinj. "For item-level tagging, application-specific solutions need to be developed. Compared to portal applications, item-level applications are kind of like the 'wild west.'" For item-level tagging applications, the area is still being discovered and charted. Guidelines and rules are being developed and outlined.

It's a distinction worth noting for enterprises that want to leverage RFID to tag at the item level. It's not to say that application-specific solutions are not available for item-level tagging. However, enterprises need to make sure that technology vendors have expertise in specific applications within vertical industries. Additionally, enterprises should know that any item-level deployment will require a degree of customization. No two enterprise environments or requirements will ever be identical.

The nuts and bolts of any item-level tagging solution include tags, readers, software, configuration, integration, and business process change. And, that list doesn't even take into account the application- and industry-specific expertise required to handle a deployment of any scale. Any vendors or solutions providers that enterprises work with will certainly have to integrate technologies from multiple providers. In some cases, multiple solutions providers may be involved in the deployment if they can provide application-specific knowledge.

For Sensormatic/Tyco, one of the company's primary value propositions is leveraging its industry knowledge to choose and integrate the best components of item-level deployment. "Antennas, readers, labels, and other accessories can be sourced from many locations and companies. We tie it all together for the client," states Karen Bomber, manager of solutions development at Sensormatic/Tyco. "Some customers want to be very involved in each aspect of the technology selection process. Others just want to discuss their particular pain points and potential solutions. In either case, it's our job to effectively deploy the technology." Bomber relays that Sensormatic/Tyco is working with retailers on a host of item-level initiatives. Each is aimed at application-specific needs, such as reducing out-of-stocks and price reductions and changes.

These item-level RFID deployments will most certainly involve a level of customization. Of course, there are common elements shared among deployments and customers. However, there is a significant list of requirements that will be unique to each customer, industry, and application. An obvious example would be the tags being used for each item-level deployment. Different products require different tags. The tags used for item-level tagging of DVDs are different from apparel which are different than pharmaceutical. Also, each application and industry requires different read rates depending on the goal(s) of the deployments. "The business processes need to be customized to optimize tag performance. And, reader placement and configuration also need to be customized to achieve the best result for the deployment," says Desmons. "You also need to consider how the technology will interface with the back end systems that enterprises have in place. That will involve a degree of customization as well." The level of customization required for each item-level deployment is tough to pinpoint. In any significant technology deployment (e.g. WMS [warehouse management system], ERP [enterprise resource planning], CRM [customer relationship management]), it's fair to say that the 80-20 rule applies — 80% of the solution will be standard from company to company, while 20% will be customized based on customer requirements. For item-level deployments, those numbers are probably on the conservative side.

As Bomber mentioned earlier, enterprises are looking at item-level tagging to address pain points in specific application areas. In retail environments, for example, reducing out-of-stocks and improving promotions management are both applications where RFID-based item-level tagging makes sense. In the latter case — promotions management — it's especially important to align product availability with particular promotion initiatives. According to industry statistics on DVD sales, for instance, 50% to 60% of the lifetime sales of a particular DVD happen in the first four to five days of its release. If the DVD is not properly stocked and available during this early promotional period, the sale is likely lost forever. Another fact to consider is that the retail industry averages an out-of-stock rate of about 18%. That means that there is roughly a one in five chance that a customer will not find a particular product on the shelf when they are ready to purchase. "This a big pain point for retailers and suppliers. There is a tremendous effort on the promotions side for particular products through television and newspaper advertisers," says Bomber. "But, you have to make sure that those products are on the floor and available for purchase. Item-level tagging has the potential to alleviate that pain point." She also adds that retailers are typically more concerned with addressing specific pain points than they are about knowing every detail of the technologies being deployed. Customers know their pain points. It's up to trusted technology providers to help eliminate them.

Addressing pain points in the pharmaceutical space is not much different from retail in that RFID-based item-level tagging technology has to be considered. Item-level tagging can address pending and future state and federal regulations. It also provides product security and can play a role in optimizing supply chain activities. Addressing pain points in the pharmaceutical industry, however, requires solutions providers to have specific market expertise. Production lines, for example, operate at high speeds and are also regulated. Item-level tagging can't affect the efficiency and rating of the operations.

Opportunities for item-level tagging applications can be found in a host of industries. Desmons points to using RFID to time marathon runners throughout a race as a case in point. The benefits were very real, and the deployment of the technology was fairly straightforward. Adds Desmons, "In other markets [like retail and pharmaceutical], enterprises have to make a bigger up-front investment. But, the potential payback for those companies is very significant."