When Manukau City Council opened the new Botany Library in October of last year, it was the first time a public library in New Zealand deployed radio frequency identification (RFID) technology. Some 35,000 items were tagged, allowing stocktakes to be completed in a few hours instead of two days. And if a book was misplaced, it could be found by a library staff waving a wand to pick up the frequency of the book's tag.
RFID is a generic name for technologies that use radio waves to automatically identify people or objects. Typically they use a tag, a tag reader (with an antennae or transceiver) and a host system or connection to an enterprise system.
The technology promises much to industry, particularly to retailers and warehousing, with systems tracking items as they work their way through the supply chain, even to goods on a supermarket shelf 'telling' the back-end that the shelves are running out of stock and need refilling.
Such efficiencies led US-based Wal-Mart hypermarket to mandate its 100 largest suppliers to use RFID technologies by January 2005, with the rest by 2007.
However, as Gartner Asia-Pacific research vice president Bob Hayward says, RFID is having a troublesome introduction, and its common adoption probably won't happen until 2006.
According to Hayward, Toyota Australia recently abandoned an RFID project because it failed to show "sufficient benefits", but the AMCOR paper and finishing plant in Melbourne uses RFID for stock tracking and has shown "very good productivity, loss reduction and turnaround time improvements".
New Zealand is running a little behind, with RFID projects mainly confined to retailers and their supply chains.
IDC New Zealand sees potential for RFID, but country manager Graham Muller admits there is little evidence of its use here, agreeing its adoption is running late.
The tags are currently too expensive, Muller continues, but once large retailers adopt the technology, this should lower tag prices and make RFID more economical for widespread use.
Globally, IDC reported in December that 66 per cent of enterprise organisations were considering an RFID system in 2004 and the global market would be worth US$2 billion by 2008.
In February this year, industry standards authority GS1 organised the country's first RFID conference in Auckland, attracting more than 150 attendees.
Gary Hartley, GS1 manager for strategic initiatives, says while businesses in New Zealand are keeping their RFID plans under wraps for competitive reasons, the conference has generated much interest in RFID beyond warehousing and retailing.
GS1 is helping a manufacturer work on RFID for tracking assets and is funding a three-year research project with the University of Auckland to investigate the use and application of RFID in New Zealand.
GS1 is also establishing an RFID cluster group of industry, corporate and academic officials to share information, drive pilots and research RFID industry developments. "How industry and companies respond over the next two to three years will determine the eventual success of RFID and the new era of information sharing," says Hartley.
"Most companies in New Zealand that are interested in RFID are at the 'learn' stage, with some starting to dip into the 'experiment' stage. The key thing is for companies to make some commitment to RFID, starting with an effort to understand the technology, the types of process changes likely to be involved, reduced capital costs and the value that might be gained in the business.
"Remember - this is not about technology per se, but rather what can be achieved with the technology," says Hartley.
As one of New Zealand's earliest adopters of RFID, Manukau City Council is happy with its implementation, and plans to extend it to other public libraries.
City librarian Chris Szekeley says the business case behind the project was gaining greater efficiencies in routine stock management, a very staff intensive process.
Szekeley had seen RFID used in libraries overseas and believed it offered potential, though a city-wide rollout, some 18 months away, will depend on overall cost.
Late in 2003, the council began an RFI and RFP process, with shortlisting, interviews and product demonstrations. Selection criteria included functionality, plus company experience and expertise. Price was important but not a determining factor.
Meto technology, Szekeley credits a smooth implementation on good relations with the vendor, professionalism from project manager Adele Nairn and the library being new, featuring other technologies.
"We have gained learnings in relation to hardware (e.g. proximity to metal) and the layout of the circulation workroom. Proximity to other technologies (e.g. door counters) was also an issue," he explains.
Now, some 80 per cent of issues at Botany Library is self-service and RFID also helps with self-checking, saving staff for better 'customer service' work. It also helps in stock security.
Elsewhere, however, RFID seems to be at the 'learn' stage.
Retailer Progressives Enterprises (Count-down, Foodtown and Woolworths) planned a trial of meat tags in cases moving through a factory late last year, but citing a planned takeover, IT manager Alan Hesketh declines to comment.
Rival Foodstuffs also declines to comment, though Glen Wilson, infrastructure manager of the Wellington division, believes, "RFID systems have not matured sufficiently yet."
Carter Holt Harvey staged RFID trials in its Australian tissue operation last year, but chief information officer Pat O'Connell is unaware of how they went, since the division was sold off.
CHH is adopting a "wait and see" approach and O'Connell expects "2006 to be a more active year when we see results and an example of use from other sectors and our parent company in the US, International Paper".
The Port of Napier ran some experimental trials for a government agency, but citing confidentiality, says it cannot comment on them.
"We are not doing anything with RFID at present," says CIO Steve Johansen.
"It will take someone (exporters, shipping lines, NZ customs) to move to this technology before we will adopt it. Use of RFID in the transport sector certainly has the potential to speed up some areas of our operation," adds Johansen.
The Warehouse sees great potential in RFID in the supply chain, right from suppliers, to the store shelves and even the checkout counters. It is planning trials for the second half of 2005, before a possible implementation in 2006.
Alan Mayo, general manager IS, says it is important for his company to plan for its adoption, though RFID standards and technologies are rapidly changing.
The Warehouse has begun talking with vendors about systems, but has no firm plans yet. "Physics gets in the way. Existing hand-held scanners, plus cellphones, can have an effect on the RFID. The key challenge will be to integrate RFID to existing stock management systems," says Mayo.
Meat company AFFCO NZ is looking at an RFID-based system, in place of existing barcodes, for tracing meats when it opens a new Hamilton plant in October.
"The biggest concern is robustness. Chemicals used in cleaning up can affect the recording on the chips. It will also come down to cost," says IT manager Joe Ireland.
Placemakers is looking at using RFID for stock takes, and is piloting a related GPRS delivery vehicle tracking system, as a precursor to a possible RFID system in 2005 to 2006, says business systems general manager Brent Powell.
Powell believes RFID will help customers source and fulfil their requirements and help the building industry "reach a point of product identification and compliance/assurance to drive up standards in the building industry".
Mainfreight also sees potential in RFID working with GPRS to offer quick and easy "exact pinpoint information" at all times on consignments.
"The issues are all cost-related, which will be overcome when we can run RFID tags off like labels through a printer and they become disposable. Furthermore, RFID readers around the warehouses and on trucks will need to be powerful enough to read the tags but not to interfere with each other," says IT supervisor Michael Hood.
Indeed, the New Zealand government's Centre for Critical Infrastructure Protection (CCIP) recently warned of potential security risks and other issues. The CCIP says existing retail-based RFID systems are not accurate or reliable enough and there are privacy issues if individual items (and hence people) are tagged. There are no industry standards and existing CRM systems can also offer as much data for analysis.
Tags may also fail in 'hostile' environments, and can be subjected to technical attacks, spoofing and denial of service attacks. Floods of RF energy may incapacitate readers, software tools may reprogram some tags, and attackers may alter or disguise a tag to ease theft.
Nonetheless, Wal-Mart sees enough benefit to continue its groundbreaking project.
Gartner analyst Jeff Woods reports Wal-Mart is not revealing much, but the "Wal-Mart eco-system" is benefiting from new business models and strategies.
These include better knowledge of stock allowing lower stock levels and better diversions of stock and invoice reconciliation.
"Just because the operational business case for RFID tags in warehouses never really materialised, (that) doesn't mean that no business case exists for RFID," says Woods.
The road to RFID
With many New Zealand businesses about to go down the RFID track, GS1 has issued an "RFID adoption roadmap".
Learn - about the technology, says Gary Hartley, appoint a champion to monitor developments and advise senior management. A business then avoids company ambivalence or indifference, staffers putting in minimum efforts and the champion becoming overly enthusiastic.
Experiment - Develop a manageable high-level business case and a small technology proof-of-concept pilot confined within the business to assess how comfortable the business is with the technology.
Evaluate - Create a vision for the project, set funding and company resource requirements. Find partners in trials, such as tag suppliers, software suppliers and integrators. Work with like-minded companies if possible. The next key decision is a wider adoption and rollout, which involves new issues of trading partner adoption, developing management policies, systems integration and transition planning.
"The companies 'leading the charge' towards adoption have found that the emphasis on costs will change as the implementation becomes more mature," says Hartley.
GS1 suggests the following timeline:
Year one: The most significant costs are in systems integration. Only a small number of tags and readers will be needed for operational testing.
Year two: More tags are needed to track product through the supply chain and they will become the largest cost element.
Year three: Most of the infrastructure is in place and deeper process change takes over with the focus now on detailed design, development, education and continuous process improvement.
Adapt: "This phase of the journey is recognised as uncharted territory since leading players internationally are still largely in the evaluation stage," says Hartley. "However, it is expected that the deployment will involve increasing levels of complexity as implementation progresses from initial adoptions."
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