Continuing on from Part II, we talk about some of the vertical markets in which RFID can be utilised.
The Economic Sectors
It is believed that the fastest growing top three economic sectors in order of importance will be: retail services, health care services and commercial services.
The commercial and industrial applications of RFID are among the largest, with inventory management, safety and security being most prominent. Severe environmental conditions are typical of manufacturing environments where RFID can be advantageous over other technologies.
Examples of Applications – product identification, raw material inventory control, product handshaking, work-in- process and asset management – particularly where reusable containers are used to transport hazardous substances. Here, rewritable tags can be used to record the container contents in order to facilitate the required processing.
Retail and FMCG
Traditionally RFID usage within retail systems has had minimal usage but is quickly on the verge of change, with large supermarkets leading the way. The retail and FMCG industry is largely responsible for the RFID piloting projects currently underway and view RFID adoption as a means of limiting out-of-stocks, allowing supply chain visibility in real or “near-real” time, and reducing costs.
Examples of applications – automated checkouts, product identification, inventory management, asset management, theft prevention, promotion and customer service, returns and recall management.
Libraries/Bookshops/DVD rental
Libraries and bookshops are heavy users of electronic article surveillance systems (EAS), which strictly speaking are not RFID systems because they can only be used to detect the presence or absence of an item and not its identification. EAS systems are beginning to be replaced by RFID, which can achieve the combined anti theft function and remote capturing of inventory data in one. This is similarly applicable in the DVD rental market.
Examples of applications – automated borrowing and return, theft control, item identification, inventory management.
Life Sciences – human, animal, medical Life sciences is one of the longest establish and currently fastest growing markets for RFID systems. Traditional applications such as, animal tagging, has helped develop this area. Also, more recently prisoner and baby tagging is a growing segment. However, medical and pharmaceutical applications are set to surpass these more traditional usages as regulation requirements for traceability increase and pharmaceutical manufacturers seek to improve means of protecting their investments.
Examples of applications – patient identification (wrist band labels), item identification, product authenticity verification, inventory management, asset management, returns and recall management.
Military
The US military is currently one of the largest users and biggest markets for RFID systems although the majority of their systems require/use expensive active RFID tags, some with sensing capabilities. There is an obvious need for low cost RFID, particularly for the use of managing food and medical supplies.
Examples of applications – item identification, inventory management
The Air industry
The airport and airline industry are piloting and using RFID for a multitude of applications. For example, Boeing is using RFID to track and manage serviceable parts on their aircrafts, whilst others such as Hong Kong International Airport are using an automated in-flight catering system for the routing of in-flight meals and the management of returnable containers. The application with the most potential within the industry is for baggage tagging. The airlines are reported to handle approximately 3 billion bags each year and due to limitations of barcode technology it is estimated that about 2 % of bags get lost each year, representing 60 million missing bags. Each missing bag cost the airlines as much as $200 to replace, costing the industry around $12 billion per year plus the additional problem of dissatisfied customers.
Examples of applications – baggage tagging/management, parts identification/management and asset management.
Automotive industry
RFID is a mature technology within the automotive industry and has established itself as an integral part of flexible manufacturing systems for those at the forefront of technological development, with greater penetration within vehicle security systems (immobilisers) being adopted. The industry is investigating additional usages of the technology such as supply chain management similar to other industries.
Examples of applications – item/parts identification, product handshaking, inventory management, asset management, work-in- process, returns and recall management. Logistics industry The logistics industry consists of warehousing and postal services, road haulage, fleet management and more. Worldwide the independent logistic industry is a late adopter of RFID although this is currently being addressed. Postal services are paying an active interest in RFID particularly for item management (auto-routing etc.), as are logistics service providers.
Examples of applications – item identification, inventory management, asset management, returns and recall management.
Business Innovation
RFID can provide the foundation for product developers to create new products, which have the ability to process and communicate information to other objects or devices, described as ‘silent commerce’ or ‘ambient commerce’. With the added functionality of sensor technology, these objects/devices will be able to sense and respond to their environment, demonstrating a degree of intelligence, thus providing greater returns on investment.
Conclusion
It is evident that RFID is a flexible technology and has potential for applications across all industry sectors. Common to all industries is its usage for item identification and management, which highlights interest in the technology for supply chain applications. It does seem that the technology is moving beyond traditional application niches such as baggage handling, rental item tagging, point of sales, Real Time Location Systems (RTLS) and Supply Chain Management. This last application is seen as the ‘killer’ application, since this segment presents the strongest opportunities for achieving long-term revenues, supporting applications such as; work-in-progress tracking, container tracking, cradle-to-grave tracking, pallet tracking and item management, which will drive growth.
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Andrea Percival
September 13, 2010
Professor K C Chan, Secretary for Financial Services and the Treasury