Here comes the “New RFID”

The recession is over. Business decision makers can now think less about surviving the present and more about creating the prosperous future we all want. Radio Frequency Identification (RFID) with its huge potential for gains in efficiency and customer service must be part of that thinking – and not just in Europe and America but in New Zealand and Australia as well.

RFID thought leader Kevin Ashton, the executive director of Boston’s Auto-ID Center (where the Electronic Product Code or EPC was developed for use with RFID), recently predicted a worldwide resurgence of interest and investment in RFID. Ashton says two years’ of global recession have choked off innovation in many areas and cleared the way for superior technologies to take off (as such economic occurrences always do!)

In his view, we are about to see the “New RFID” – a rush of simpler, lower-cost applications of the technology for specific tasks like tracking high-value items, controlling lights for energy efficiency and identifying individuals in particularly sensitive situations. Ashton says vast supply chain management usage of RFID – which was the earlier vision for this technology – has largely been put on hold but it may well follow later when more people are familiar and comfortable with less ambitious applications in many smaller settings.

New data in Europe may support that perspective. A Eurostat survey on technology usage by businesses shows personal identification and access control, along with vehicle toll collection, are the most frequent uses of RFID today. Of all firms currently applying the technology in some way, only 29% are doing so to track and trace inventories in their supply chains. RFID is used most by utility providers and, not surprisingly, by information & communications companies. Next are transport and storage businesses.

Overall, the latest information from Eurostat could be seen as depressing. Europe-wide, only 3% of enterprises employing 10 or more people currently make some use of RFID. The percentage is highest in the Netherlands (9%) and Finland (8%). On the other hand, this is really just confirmation of what we already know, that RFID usage is still modest everywhere. It is an indication of the growth potential for “the new RFID”.

In the US, Wal-Mart – one of the world leaders in supply chain applications of RFID – has been very quiet over the past year on its future intentions. However that company’s new Chief Information Officer, Rollin Ford (yes, that’s his real name), has started 2010 with some bullish statements on RFID. Ford says Wal-Mart will move ahead with plans to adopt generation-2 EPC tags from 30 June, continuing the programme that his RFID evangelist predecessor (Linda Dillman) started in 2003.

In our part of the world, we will see more action on RFID in the short term, notably in livestock farming and meat production. This January, the Government approved plans for a National Animal Identification and Tracing system (NAIT) that will see all cattle RFID tagged from October next year, with deer scheduled to follow in 2012.  New Zealand is coming out of recession with a major commitment to this form of technology in an industry at the heart of its economy. Traceability for export market access and biosecurity are the critical drivers – and we expect NAIT to continue developing with the adoption of RFID technologies that are even fit for purpose in the medium term.

Livestock farming and meat production is a great place to make the economic case for RFID. There are significant upfront costs, but far less significant than the costs of not getting into this technology. The longer term returns are potentially huge. Other sectors could do well to follow suit – healthcare, logistics and transport, and apparel retailing to name a few.

The recession is over, the costs of RFID equipment are coming down and there is growing awareness of big benefits in a multitude of uses for the technology. What more is the world waiting for?

Gary Hartley
GS1