Radio frequency ID allows you to collect data with the wave of a wand. It's here, and it's changing how businesses work - but IT managers need to do a lot of work before implementing it to make sure their back-end systems can deal with huge streams of real-time data, and that their business processes are geared to take advantage of it
It does make so much sense - a small tag, attached to virtually any object, that tells those needing to know what it is, perhaps where it came from, and even where it's going to. The tag can be a small chip, or just a slightly fat sticker on the side of the packaging. Radio frequency ID (RFID) is not even new technology - it's been around for years, in one form or another.
A primitive form can be found in the price tag on CDs at certain music shops, setting off the alarms if they're not deactivated. You can get them for your dog - a chip embedded under the skin, containing all sorts of useful information, which can be read with the correct device from a couple of feet away.
No - RFID is not new. But it's not had huge impact on most of our lives so far. The main problem with having intelligent RFID tags is cost... the devices cost very little, but slightly too much to make them viable in mass applications.
"The cost of the technology, especially the price of the tags, is constantly dropping," explains Kevin Simpson, Marketing Director at Safmarine Computer Services (SCS), which is involved in several major studies into RFID for commercial business usage in southern Africa.
A host of great possibilities has been lurking on the wrong side of the "commercially viable" event horizon. The most commonly cited one is the "cashier less check-out" at the supermarket, where you'd load up your trolley, walk out past a kiosk that picks up the items, flashes up the total amount and takes your money. It's not happened, because RFID tags would significantly add to the cost of our purchases. But the technology is catching up.
Some of the greatest scope is in transport and logistics. Spoornet is just one of the companies using RFID locally, having successfully implemented a pilot system for managing loss and theft of its Rolling Stock. Ultimately 120 000 rail cars and 2 500 locomotives will be tagged to reduce theft. Leading logistics providers are already launching an RFID service for clients in the US.
The technology is immensely attractive to customs departments around the world, as a container that is sealed and RFID-tagged can be tracked instantly and routed extremely efficiently, with less fraud and less "shrinkage of" excise revenues. A large-scale project for SARS is going to tender soon, and a project covering three of SA's major ports is in the pipeline.
Large-scale RFID projects are also under way in the retail space. While the "cashier less check out" is still quite far in the future, RFID has enormous application in the goods receiving and merchandising processes. One of the world's largest retailers has decreed that its top 100 suppliers must be in a position to tag their products from 2006. Other large international retailers such as the UK's Tescos and Marks & Spencer and Germany's Metro Group are also in the midst of major RFID projects.
There are at least four clear drivers that will see RFID become a core technology across a variety of businesses:
* US Homeland Security and Customs' drive to dramatically improve the security and visibility of the contents of containers entering the US by sea.
* A drive by retailers to reduce shrinkage and increase delivery and shelving efficiencies.
* Manufacturers' drive to improve manufacturing and distribution process efficiencies and increase quality of information.
* Transportation organisations' need to increase visibility and tracking of valuable assets.
So - given that RFID is needed, is available, and is being implemented on a wide scale, what is the SA IT manager to do about it?
One of the key issues that UK retailers and their suppliers have to deal with is now that they're getting RFID, their business systems will have to be substantially changed. They will have to be able to deal with a large amount of real-time data, which they mostly didn't have to before (typically a retailer would have stock entry systems, with periodic month-end or stock-take cycles for reconciliation).
They may also need to restructure their physical goods receiving, storage and display to take advantage of the benefits of RFID.
There are certain fairly obvious steps that every IT manager working in a warehousing and logistics or retail environment needs to take. It is important for them to brush up on the latest standards and technologies in RFID, and see how they could be used in their own business to increase efficiency. It is also critical to check with suppliers and customers what their plans are.
"A supplier that is on the ball with RFID and can synch with a customer quickly is going to have a massive competitive advantage over another supplier that only implements the technology when the customer demands it," said SCS's Simpson.
A final step is to find a good RFID implementation partner - one with skills in several key areas: the RFID tagging systems themselves, the IT systems to take advantage of this new flow of information, and one that understands the business advantages of RFID, and how internal processes can be changed to make the technology pay for itself.
Says Simpson: "The real danger of moving to RFID is not that it won't work -- it will - but that the business will not be able to adjust to derive the enormous benefits." As with any disruptive technology, things may need to be taken apart and put back together in new ways. As the old saying goes: "to make an omelette you need to break some eggs". With RFID, at least you don't need to touch the eggs any more.
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