RFID without the hype: Best practices and lessons learned

LGO Alumni WebinarRonak Shah

May 20, 2005

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Agenda• Background

– What is RFID?– RFID capabilities– Industry adoption

• RFID and enabling operational efficiency– Developing a business case– Performance and reliability– The Raytheon Integrated Air Defense Center

• Conclusion– Key takeaways– Other resources

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RFID Technology – How it works

• An interrogator emits RF waves, which are picked up by tags nearby• A tags modulates the signal and responds with its unique identifier• The interrogator filters the responses to identify events like tag arrivals

and departures• These events are communicated to enterprise middleware software

which understands the business process impact of this activity.

Network

RFID Tag Middleware / ERPInterrogators

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RFID History

1940sIFF

1970sLivestock

80s-90sRetail theft

Fastlane

Accelerating pace of development

1999Auto-ID Center

2003RFID mandates

published

2004Raytheon kickoff

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What does it look like?

4 inches

8 inches x 12 inches

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What does it cost?Hardware subcomponent Cost in US Dollars

Active tag (limited functionality) $1.50

Passive tag $0.25

EPCGlobal™-compliant fixed interrogator $2,000.00

Antenna $200.00

• Software costs are highly variable– Licenses for middleware solutions $18K – six figures– Implementation costs high because it still has emerging technology problems

• Change management costs can be substantial– Training, installation, re-engineering processes

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Existing technologies

standard barcode

2D barcode

Mobile tracking systems

Old-fashioned way!

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The promise of RFID• RFID’s three key advantages over traditional barcode…

– Field-based: does not require line of sight or manual scans– High throughput: 10s – 100s of scans / second– Storage capacity: allows product serialization and more

• Working under the constraints of:– Cost: currently $.10 - $.25 per tag– Performance: what if the tag is cannot be read?– Ubiquity: information is more valuable when it is shared– Interoperability: still difficult to integrate with enterprise systems

RFID enables more efficient supply chains

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Drivers of adoption• EPCGlobal™

– Industry consortium with a goal of reducing barriers to adoption for RFID� Set standards for tags, readers, middleware� Forum for discussing intellectual property issues� Knowledge-sharing� Allocation of global identifiers

– Members include Wal*Mart & DoD, their suppliers, RFID component providers, and system integrators

• Mandates– First Wal*Mart and DoD, now many others– Requires suppliers to tag shipments and transmit the information in

advance of the arrival.

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Developing a business case• RFID teams creating business cases have the same

questions: – What “future state” can we achieve using RFID?– What data do I need to be looking for?– What usage scenarios should I implement and what should I tag?

• These are often difficult to answer• Root cause is two key complexities with RFID:

– Separating what RFID can offer from what can be achieved using other process improvement efforts

– Systems interactions drive both costs and benefits� Large upfront cost associated with hardware, training, installation� Gets easier to add elements to an RFID system

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Excel™ RFID Calculator• Four stage process for evaluating RFID

– Inputs: an understanding of RFID and process mapping abilities• Outputs

– Decisions on what you should implement and what to tag– NPV / ROI / Payback you’ll achieve– Ability to gauge sensitivity to various scenarios

System-wideParameters

wizardUsage scenario

detailROI / PaybackoptimizationProcess mapping

• Current & future state• Does not use Value

stream mapping!

• Replace barcodes w/ RFID scans

• Asset visibility• Cycle counting• Others….

• Usage scenarios• Materiel types• Reader sets• IT Modules

• Manual or automatic optimization

• Allows sensitivity analysis

• Financial results in standard FCF terms

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Stage 1: Mapping w/ RFID swim lanes

X

X

X

X

S

S

S: Separate contents

X: Detrash

C: Consolidate items

Material Type / Usage Scenario Link

Warehouse receiving / PoU Main Stores

Container - VQP

Container - Inspected

Container - IES

Container - Non Product

Carousel Stock

Picked Parts

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Stage 2: System setup

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Stage 3: Usage scenarios

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Stage 4: Financial results & sensitivity

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RFID tag performance• The ability for a non-battery tag to communicate with a reader

can be negatively affected by a number of factors– Fishbone diagram follows

• This is a big problem for some manufacturers!• Performance is getting better, but will it approach some

asymptote below expectations?

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Fishbone diagram: Tag read reliability

Tag readfailures

Environment Tag technology Tag Application

Setup Materiel / Product

Free-spacesensitivity

Anti-collisionalgorithms

Tag antennageometry

Deadtags

DeadOn

Arrival

Longetivity

External RFNoise

Air gapswithin

container

Separationdistance from

conductivemateriel

RF-absorptivemateriel

RF-conductivematerielRF field

coverage ESDBags

ESDTotes

Silver-linedBags Metal

Multipleantennas

Targeting

Availablefrequency

bands

Antennapower

Regulations

Reflectors

Blockedfields

ConveyanceSystems

Shelving /Carts

Bent tags Horizontal

Vertical

Orientationrelative toantenna

Cross-polarized

Multipletags

Near-side

Far-side

Orientationon product

Shadowing

Distance fromtag to antenna

Heightoff thefloor

Process

Antennapolarization Number of tags

in field

Tag travelspeed

Label applicationreliability

Water

Human body

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Raytheon’s experience & my internship• First Andover internship outside of Operations / Engineering• Company has a large compliance project underway and a

site in Texas had just begun a pilot project for cycle counting• Wanted to evaluate RFID for supply chain efficiencies in

Andover, Massachusetts• Lots of support for the internship

• Andover, MA plant = Integrated Air Defense Center (IADC)– 1.2M sq. ft. facility with 3,000 employees– Very few will have seen the IADC on tour, so…

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Overhead view

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Incoming conveyer (not used)

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Barcoding process

Vendor, UPS, and Raytheon Receiving labels

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Penco bulk storage

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Main stores carousel

27 carousels total

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Results of the internship• Evaluated materials distribution process to the manufacturing floor only

– Much harder to get data for manufacturing lines, and far less discipline in handling once you get downstream

– Volumes become very small– 13 usage scenarios, 6 material types, 219 solutions

• RFID is not appropriate for the IADC at this time• A few solutions were 5-year NPV positive, but

– Only when evaluated as a risk-free project– Ignoring costs for change management– High expectations of RFID tag performance

• Sensitivity analysis– 4X reduction in HW and tag costs helps, but– Only when it’s easier to integrate will RFID make sense for internal use

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Key takeaways• Key differentiators between defense and commercial:

– Short distribution chain precludes popular usage scenarios– Years before we can expect material tagged by our vendors– Cost-plus contracts result in different accounting methods for inventory

carrying cost

• Two methods for approaching RFID– “Paving the cow-paths” (Prof. Jonathan Byrd)– New, future-state processes enabled by technology adoption

• Separating usage scenarios in which RFID is an enabler from those in which RFID is a distraction

• RFID can work very well in unique tracking scenarios!– FastLane, Cow leather (!!!)

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Other resources• Shameless plug: My thesis!• www.autoidlabs.org• www.epcglobalinc.com• www.rfidjournal.com