Bicycle manufacturer Pacific Cycle LLC has its reasons, including wanting to see a real return on the investment it's making in RFID to satisfy Wal-Mart's mandate for its top suppliers to use passive RFID technology on cases and pallets by January 2005. The bicycle maker has recently begun a pilot at its distribution center in Illinois. The company has set up SANSys Technologies Inc.'s MP9320 UHF portal readers at two dock doors, which accept data from Alien RFID tags, to test and tag cases and pallets as they go out the door. And Ed Matthews, director of information systems at Pacific Cycle, would like to take things a step further. "I would like to set up a system at our manufacturing sites in China," he says.
Some of Pacific Cycle's products currently are shipped directly to customer sites, without making a pass through the Illinois distribution center, including bicycles that wind up at Wal-Mart's Sam's Club stores. Wal-Mart has said that as many as 250 Wal-Mart and Sam's Club Stores, as well as five more distribution centers, will be live with RFID by June 2005, and Matthews wouldn't mind being able to continue the practice of shipping bicycles directly to some of them. While he could place RFID tags on the bicycles at the point of manufacture in China now, the lack of standards in the country currently means Pacific Cycle wouldn't be able to test that the tags were transmitting data before they left the country. So he's waiting out that idea for now, but adds that he sees even more possibilities once the company is able to tag and test at its China sites.
Pacific Cycle's bicycles are packed one to a carton, and it's Matthews' dream that he'd be able to fulfill Wal-Mart's mandate by putting the tag at the manufacturing site on the warranty material instead of on the box. That would gain him an extra level of information, because he'd be able to track and trace the product not only from the point of manufacture but all the way through Wal-Mart's back room where the bikes are assembled and then onto the store floor.
Beaver Street Fisheries, which imports seafood and exotic meat from approximately 50 countries, has tabled thoughts of implementing RFID at its China packing plants to concentrate on U.S. operations. But CIO Howard Stockdale does see an advantage in tagging items right at its overseas plants. "Imagine cases and pallets coming through your receiving door that are automatically logged versus using a bar-code or manual process," says Stockdale. "As we receive the inventory into our Florida warehouse from the China packing facility, it comes through the portal and the information on stock is automatically updated."
Stockdale intends to revisit the idea for Beaver Street's packing plants in China within the next six months. "We've done our pilots in the U.S., and the project is going well, but we need a little more experience before we try to manage it remotely," he says.
The need for RFID in China to track and trace product through the supply chain is real, says Sanjay Sarma, chief technology officer at OATSystems Inc., a maker of electronic product code software. "I've spoken with several companies supplying to U.S. retailers that take implementing RFID at manufacturing facilities in China very seriously," Sarma says. "Countries that open bandwidth for RFID offer a fundamental infrastructure advantage to improve global logistics over those that do not. It's similar to having a better highway system."
Beyond retailer initiatives, RFID will play a major role for suppliers in logistics, container security, and cross-border trade. Inquires into global supply chain management are up 500% in the past six months at research firm Meta Group. More than 50% of those phone calls fielded by VP of supply chain Dwight Klappich are related to moving, tracking, and tracing products internationally. "RFID related to supply-chain applications in the last six to nine months is way up, about a thousandfold," he says.
China is host to some of the world's busiest ports, and analysts see the use of active RFID tags on shipment containers, combined with passive tags on the contents, helping with everything from preventing loss or theft of containers to complying with U.S. security mandates. U.S. customs requires shippers to send manifests of shipping contents 24 hours before sailing or risk encountering delays. Visibility into the container could expedite the process, according to Bruce Hudson, analyst and program director for technology research services at Meta Group. "If suppliers tag in China, they gain visibility into their logistics chain before it gets to Wal-Mart," he says. And, "by combining the passive tags on the pallets and boxes with active tags for the containers, it provides security, something the Homeland Security folks love."
China's growing importance in the manufacturing sector is driving endeavors to influence global standards for RFID tagging. Efforts driven by Chinese policy makers to develop RFID standards are taking place alongside similar efforts by EPCglobal, a joint venture of Europe's EAN International Inc. and the Uniform Code Council.
Among the several pilots in the works in China is a project to track inventory from factories there to warehouses in the United States and Europe. Edward Zeng, a member of the China Auto-ID working group, and chairman, president and CEO at Beijing business-to-business trading company Sparkice Inc., believes that eventually China, Japan, Europe, and the United States will emerge with separate, yet interoperable, local standards. "We are lobbying the government to develop our own standard, yet make it interoperable with global standards," Zeng says. "China's RFID standards should follow EPCglobal's framework for those companies that import or export to China."