RFID Creates Fast Asset Identification and Management

If you’re like most airline passengers, you don’t give much thought to the serving carts that flight attendants use to distribute soft drinks and meals (unless one happens to be blocking your way to the rest room).

Cash-strapped airlines, however, think a lot about serving carts (called trolleys within the industry), which can cost as much as $1,000 each. “We’ve heard horrific stories of airlines losing up to 1,500 of these things in three months,” says Tony Naylor, vice president of in-flight solutions for eLSG.SkyChefs, a technology provider for the airline catering industry based in Irving, Texas.

To keep tabs on their vanishing trolleys, airlines and their outsourcing partners, like eLSG.SkyChefs, have tried a variety of different tracking approaches, ranging from bar-code scanning to manually counting inventory. Each technique, however, required at least some degree of human intervention?a significant weakness in a system that aims to keep humans from swiping trolleys.

Like a growing number of businesses that need to track physical assets, eLSG.SkyChefs turned to radio frequency identification (RFID), a data collection technology that uses electronic tags to store identification data and a remote reader to capture information. RFID tags come in many shapes and sizes, ranging from tiny animal tracking tags inserted beneath a critter’s skin to 5-by-4-by-2-inch placards slapped on shipping containers, trucks and railway cars.

Naylor says his company was attracted to RFID because of the technology’s hands-off nature. “Every time you’ve got human intervention, things don’t always go according to plan,” he says. Unlike bar codes, the main competition, RFID doesn’t require time-consuming hand scanning or even sequential automatic scanning (readers can capture data at gulps of up to 96 tags per second). RFID information is also readable regardless of the asset’s position while a bar code can be blocked by other objects.

For eLSG.SkyChefs, finding the right RFID technology wasn’t easy. The RFID market?systems, software, accessories and services?encompasses more than two dozen vendors, including Lockwood Technology, RF Code and Texas Instruments. “It really was a little bit of a minefield as we went through this because there were so many conflicting stories and opinions,” says Naylor. The company ultimately settled on Scanpak, a Dorval, Quebec-based company that offers Galley Equipment Tracking System (GETS), an RFID application targeted specifically at trolley management.

The Case for RFID

RFID has existed for at least a decade, yet the technology has never lived up to its proponents’ expectations. “It’s always something that’s ’the next big thing,’” says Jeff Woods, a senior analyst at Stamford, Conn.-based Gartner. Like others who follow the industry, Woods believes that RFID’s acceptance has been hampered by a number of factors, including high costs, a lack of standards and global radio frequency differences that sometimes prevent businesses from shipping RFID-tagged objects between countries.

Many of RFID’s shortcomings are gradually being resolved as the industry’s vendors join together to make the technology more attractive to businesses. RFID standards covering agriculture, vehicle management, postal items and freight containers are at various stages of maturity. Industry observers are hoping that a basic support framework allowing interoperability between vendors’ products will take shape within the next couple of years. Costs are gradually coming down as the technology matures. Frequency conflicts are also becoming less of an issue, as vendors and government agencies work together to smooth out global differences. As a result, although an RFID boom isn’t in the wings, steady growth appears likely.

Businesses have much to gain by adopting RFID. The technology provides key information more efficiently than bar codes in a variety of environments (even in hurricanes and blizzards) with little or no human intervention. RFID tags can also contain more information than bar codes, making it possible to retrieve information about an asset’s type, configuration, version, location, history of location and maintenance, and other facts. The added speed and rich information provided by RFID can lead to significant savings. “Early implementations have shown a 3 percent to 5 percent reduction in supply chain costs and 2 percent to 7 percent increases in revenue from inventory visibility,” says Peter Abell, director of retail research for Boston-based AMR Research.

The Technology

An RFID system consists of two components: tags and readers. Tags (also known as transponders) incorporate a chip and an antenna. Active tags, which include a battery, can transmit hundreds of feet and cost upward of $5. Passive tags are smaller, require no battery and usually have a range of only a few feet. Thanks to their simplicity, they generally cost less than a dollar.

Readers (sometimes called interrogators) communicate with tags to retrieve and, sometimes, write information to the tag. Readers are designed to work with a specific type of tag in one of the four RFID frequency ranges: 125kHz to 134kHz, 13.553MHz to 13.567MHz, 400MHz to 1GHz, and 2.3GHz to 2.48GHz. The reader also relays information into a database and other parts of an organization’s IT infrastructure.

The tracking implementation at eLSG.SkyChefs is a typical RFID setup. The trolley tracking solution uses an RFID transmitter tag secured on each trolley that’s scanned by readers at every catering location. Managers can then track equipment anywhere in the world via a Web application.

Simply Complex

Despite its many variations, RFID is a fundamentally simple technology. What isn’t so simple, and what has contributed to RFID’s slow progression into the mainstream, is its need to mesh with existing business systems and practices. Databases, networks, employee job duties?even warehouse layouts and production lines?must all be tweaked or entirely redesigned to accommodate RFID. “It really changes many business processes throughout the organization,” says Gartner’s Woods.

Yet RFID can also provide the rationale for a profitable business-line restructuring. Carlsberg-Tetley Brewing, for example, identified RFID as an opportunity to outsource the management of its beer kegs. “It will put the complexities and the rigor of content management into the hands of a better provider,” says David Dixon, business solutions executive for the Northampton, England-based beer maker.

One of the United Kingdom’s largest brewers, Carlsberg-Tetley last September sold more than 1 million of its containers (a.k.a. kegs) to Trenstar, a Denver-based asset management company. Under the arrangement, the brewer will pay for use of the containers on a “per fill” basis while Trenstar will retain legal possession of the containers. Trenstar, in turn, will put RFID tags on each container and install fixed readers alongside conveyors inside Carlsberg-Tetley’s breweries. Delivery trucks will also be equipped with readers that scan the kegs as they are loaded onto each vehicle and then off-loaded at local pubs.

The arrangement is designed to allow Carlsberg-Tetley to improve its return on capital by removing the containers from its balance sheet. The RFID technology, on the other hand, should let Trenstar cut the losses Carlsberg-Tetley was experiencing from lost and stolen kegs. “That’s the result of the need to attach tags to over 1 million containers,” Dixon notes. The new system is scheduled to become operational by the end of 2003.

Tag and Read

As RFID evolves and the prices fall, the technology will track an ever-wider array of objects. Many observers also expect RFID to eventually find a home inside a variety of everyday business and consumer products. “RFID is actually already deployed in many retail environments. People just don’t think about it that way,” says Woods. For many years, in-store theft prevention systems have relied on RFID-tagged merchandise to snare shoplifters. More than 6 million consumers also carry RFID tags on their key chains in the form of ExxonMobil Speedpass tokens. The device, when waved in front of a gas pump-mounted reader, sends an ID code that allows the merchant to deduct the purchase amount from a linked credit card or checking account. “It’s a great application,” says Joe Giordano, vice president of Speedpass network business and product development at Exxon Mobil in Dallas. “I think it could benefit any retailer, particularly retailers who have convenience-type transactions.”

Tiny, cheap tags will allow the efficient tracking of even the smallest items, such as overnight letters and packages. An RFID tag attached to a letter would not only tell a shipper the package’s current location but also where it’s been and where it’s scheduled to go. “Pieces of mail will probably wait until [tag prices] get down to one or two cents,” says AMR’s Abell. Back at home, miniature tags?perhaps in the form of an implantable chip?will allow pet owners to affordably and conveniently track the movements of Fido and Fluffy. “[Wild] animals have been tracked with RFID for a long time,” says Abell. “They even put them on hummingbirds.”

Then there’s the potential for people-tracking. Sporting event and concert tickets could incorporate tags that allow event organizers to sidetrack counterfeiting, achieve improved crowd flow management and ensure that people sit in their assigned seats. Likewise, RFID could help parents track their kids’ movements around an amusement park. More ominously, authoritarian governments could use implantable tags to track people and create lists of places they’ve visited. “There is a dark side to this technology,” says Abell.

Plan and Pilot

As RFID gradually rolls out during the next few years, CIOs should remain aware of the technology and be ready to exploit it when the need arises, advises Woods. “What a CIO needs to be doing right now is to plan and pilot,” he says. “I don’t think we’re going to see a tidal wave in 2003 of RFID adoption, but I do think we’ll see some really encouraging stuff going on.”

Start small, but think big, suggests AMR’s Abell. “RFID has promise, and if you prepare your enterprise for incremental deployments, you will be ahead of the curve but within budget.” The danger lies in procrastination. “Organizations that wait too long may watch the competition, as well as potential savings, pass them by,” says Abell.