RFID Implementation Challenges Persist, All This Time Later

Sure, RFID is useful--but problems and costs associated with it continue to cause frustration, even among true believers

Laurie Sullivan, Contributor

October 7, 2005

5 Min Read

Most often, it's faulty or damaged antenna inlays inserted into RFID packaging labels that cause about a fifth of 500 labels on a roll of tags to fail. "Reading RFID labels shouldn't be about reliability," complains Kevin Ashton, VP of RFID tag reader manufacturer ThingMagic. Problems can occur at the reader level, too, when two or more readers are positioned close enough that the signal from one interferes with the signal from another.

While RFID chipmakers work on quality, many companies continue to look for the best combination of tags, label printers, and readers. Pacific Cycle has spent nearly $1 million on RFID since 2003, including three combinations of readers, tags, and printers. IS director Mathews expected perfect read rates by now, but the best it gets is 70% to 80% for cases. RFID tags that adhere to the new Gen 2 higher-frequency standard that sends data at up to 640 Kbps should help read rates, but he doesn't expect to see them in use for three to six months.

Ah, standards: Finally, there's some good progress to report. EPCglobal approved specifications for Generation 2 tags in December and just last month issued Gen 2 conformance certifications for some readers and chips from Alien Technology, Applied Wireless Devices, Impinj, Intermec Technologies, MaxID Group, Symbol Technologies, and ThingMagic. The group had its share of infighting over RFID-related standards, including which intellectual-property patents would be royalty-free.

Yet things are easing. Action groups within EPCglobal last year started developing standards to define reader management, a reader protocol, and tag-data translations. In 2006, EPCglobal will begin rolling out specs for more than 50 business processes to simplify transactions. Its first software standard, the Application Level Events, was released in September. It defines the process to collect, filter, and route raw data and translates it into a consistent format that multiple parties can share over the EPC Information Services network. The network will give more companies access to "clean, shareable data," promises Mike Meranda, EPCglobal's U.S. president.

Cost Factor

Now, if only unexpected deployment costs didn't continue to bedevil RFID adopters. Annin originally budgeted 20 cents for each RFID tag. VP Beard says he based that on a conversation with an RFID chip vendor, but the vendor was vague about what he would get for that price. He then learned the 20 cents didn't include the label, which adds another 20 or 25 cents to the price.

RFID doesn't work well in Gallo's distribution model, CIO Kushar says.

But chip prices are falling, at least in large batches. Alien Technology last month unveiled a 44% price cut to 12.9 cents a tag for 1 million Class 1 EPC UHF tags. And UPM Rafsec says it's making available Gen 1 and Gen 2 inlays at less than 10 cents, for an order of just 50,000.

For FedEx, the costs and the error rates still are too high. "Why would I want to spend 28 cents per package to put on an RFID label when I'm already getting all the information I need to route and ship packages off the bar code?" Ainsworth says. RFID may have limited potential in the future, such as on returnable containers or shipments that require extra security, he adds.

Some companies face unique challenges. E.&J. Gallo Winery points to problems that occur in a three-tiered distribution model, which liquor vendors by law must use, VP and CIO Kent Kushar says. Gallo's distributors consolidate products from multiple vendors on one pallet, making it difficult to standardize tags and readers for all products they distribute. Gallo has joined with 24 companies, including Campbell Soup, Microsoft, and Wal-Mart, in creating the Information Technology Research Institute's RFID Research Center at the University of Arkansas to help fix RFID's problems.

There have been difficulties in the pharmaceuticals industry getting RFID tags small enough for pill bottles. It's "nearly impossible to print information on the tags because they're too small to go through an automated label applicator," says Randy Dunn, director of RFID at ADT Security Services Inc., the Tyco division that provides services to Mallinckrodt Pharmaceuticals, a Tyco health-care unit that ships RFID-tagged drugs to Wal-Mart.

Wal-Mart execs know all the problems its suppliers have had to tackle. And they remain confident that championing RFID was the right thing to do. "If we would have waited for all the numbers to prove RFID, we might not have taken a stand, and it might not have moved in 10 years," CIO Linda Dillman said at the InformationWeek Fall Conference in September.

Thirty years ago, many in retail and consumer goods considered bar codes costly, technically flawed, and unnecessary. It's a perspective RFID opponents point to often. "Today, bar codes are on 87% of the items in supermarkets, and the adoption rate of RFID has already proven to have caught on faster," says Peter Regen, VP of global visible commerce at Unisys Inc. Skeptics counter that it took 10 years for bar codes to be fully accepted, and they weren't trying to unseat an established technology.

Even for those who fully believe in RFID's potential to revolutionize supply chains, the intense interest can be wearing. With a smile, Wal-Mart's Dillman told InformationWeek conference attendees that she was "tired of talking about RFID." But considering the questions that still swirl around deployments, it's unlikely the conversation will be over any time soon.

Illustration by Andy Lackow

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