Compliance boosts RFID adoption
for RFID technology may see increased uptake over the
next three years as Canadian manufacturers and
distributors begin to feel the pressure of complying
with mandates from big retailers and the U.S.
government, industry observers say.
And with compliance as a driver for RFID adoption, many
manufacturers and distributors will be looking at
acquiring hosted RFID services, according to George
Goodball, research analyst at Info-Tech Research in
Hosted RFID services would allow companies to quickly
set a "slap-and-ship: RFID tool in order to "play the
game" of big retailers like Wal-Mart and Target, which
have mandated suppliers to use RFID tags for shipping
goods, said Goodall.
"Short-term, hosted RFID is a stop-gap measure, so I
think over the next three years it will increase in
popularity, but after that point, some of the more core
technology will become more available," he said.
IBM and Seeburger are two major vendors that offer
hosted RFID services ideal for manufacturers "struggling
with RFID mandates from key customers," read an
Info-Tech research note.
IBM launched its Expressed RFID Services in the fall of
2005 in anticipation of an expected increase in RFID
adoption if an expected increase in RFID adoption this
year, said Ray Paskauskas, RFID solutions manager for
IBM Canada in Markham, Ont.
"RFID adoption in the U.S. is ahead of Canada [but]
right now we are preparing for a lot more activity in
2006 ... for major retailers in Canada," said Paskauskas.
The IBM executive pointed out that managed services
would allow small and medium-sized manufacturers to
"fulfill the minimum requirement at a much lower cost."
The hosted service involves customers entering product
information by scanning product barcodes. This
information is electronically sent to the hosted
software that converts it into EPC (electronic product
code), the global standard for RFID codes. RFID tags are
then printed by the customer and placed on the case or
palette before shipping.
"There isn't a less expensive [RFID] solution in the
marketplace and we are seeing a range between $60,000 to
$100,000 [to invest] in an on-premise RFID technology,"
he said. Startup cost for IBM's RFID Express Service is
under $35,000, which includes the barcode reader, RFID
printer, access to the application and services, as well
as help desk support and equipment monitoring. The
succeeding monthly fee is less than $1,000, said
Seeburger's IDnet, meanwhile, is a hosted component of
its RFID Workbench product priced at about $500 per
month, according to Info-Tech.
Both Paskauskas and Goodall agree, however, that managed
services may not be a viable alternative for larger
enterprises looking at RFID deployment to improve
business processes. In its research note, Info-Tech
pointed out that hosted service does not offer "advanced
analytics that help companies leverage RFID investments
into supply chain efficiencies."
While there seems to be an industry consensus about the
potential benefits that RFID could bring to business
processes, a big issue that may hinder its full
deployment among organizations is cost, said Stella
Yoon, president and CEO of wireless technology developer
cStar Technologies Inc. in Toronto.
"Right now everybody is focusing on [RFID] to prove [the
benefits of] the technology. But once it's proven, does
it make ROI sense? These two should come together - the
technology and price points," said Yoon, whose company
has developed patent-pending RFID technology using
passive, low-cost tags specifically designed as a
security application for low-risk cargo shipments.
One market need that cStar hopes to address with its
RFID development is cross-border cargo security using
paper based disposable RFID tags, called "stealth tags,"
containing read/write data and a thin film "break-away"
antenna. The tag is buffered by sponge layers designed
to take up surface variance and contains an outer
wrapper with adhesive that can attach to any cargo
package, essentially serving as a security seal.
If the shipment is tampered or opened after leaving the
point of origin and before reaching the border or the
point of destination, the tag would stop functioning and
the RFID reader would not be able to detect a signal.
This would cause a red flag to be raised on a particular
shipment and would require further inspection, either at
the port of entry or at the point of destination.
The cStar tag, which costs anywhere from $5 to $20
apiece, serves as a tamper-detection tool aimed at
expediting cargo shipments entering the U.S. in light of
increased security at the border resulting in shipment
delays, said Yoon. The stealth tag caught the attention
of the U.S. Department of Homeland Security, which
invited the Toronto company to conduct a briefing in
2004, said Yoon.