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Revolution in Logistics or BigBrother Technology?

Radio Frequency Identification has the potential to revolutionize logistics, but first it must overcome its reputation as an intrusive technology Radio Frequency Identification (RFID) may have been around for some time, but only in the past 12 months has it become one of the hottest buzzwords in information technology, attracting the attention of government chiefs.

Latest forecasts put worldwide spending on RFID at $US90 billion ($A116 billion) by the end of 2008, with between 50 and 100 RFID projects believed to be under way in Australia alone.

One of the biggest of these is the Australian e-passport, which was given the green light in February when the Australian Passports Act 2005 was approved by the Senate.

In another project, the Australian Defence Organisation put out a tender for the provision of an RFID systems analysis in March, which foreshadows a much bigger RFID initiative involving the streamlining of defence materiel handling and logistics.

In Victoria, the state government is eager to benefit indirectly from the technology by setting the state up as the RFID centre of Australia. Late last year, the government launched a new industry cluster - Vic RFID Action - said to be the first of its kind in Australia, which received $100,000 in seed funding from the Bracks government to establish a collaboration of providers, users and others involved in the research, development and application of RFID.

"The potential of RFID technology is enormous, with many industry experts already predicting that it will have as big an impact on the way companies do business as the Internet," Minister for Information and Communication Technology Marsha Thomson said at the launch of the program.

Shot in the Arm for RFID

The use of RFID in logistics received an enormous shot in the arm from the formal approval of the EPC UHF Generation 2 (UHF Gen2) specification by the EAN.UCC international product numbering associations in February. This marked a milestone in RFID technology, eliminating two of its greatest hurdles: standardization of the passive RFID technology and interoperability between tags, readers and printers.

Texas Instruments and Philips Electronics are in a race to be the first to bring out mass production of RFID tags, which have the potential to replace barcodes on individual items. It is expected the International Standards Organization will approve UHF Gen2 as an ISO standard, part of the 18000 series for RFID by the end of 2005.

The UHF Gen2 specifications comprise five fundamental elements: the electronic product code (EPC), a number designed to identify uniquely a specific item; the ID system, EPC tags and readers; object name service (ONS), which provides access to complete, up-to-the minute intelligence about any product; physical markup language (PML), the common language that defines data on physical objects; and middleware, software that bridges RFID hardware and applications - the primary tool to gather data for any RFID deployment.

However, it is the use of radio frequency as an integral part of automatic identification technology (AIT) to transfer data between a reader and a tag or transponder attached to a movable item that has given the technology its dubious reputation of Big Brother technology.

An automatic identification system (AIS) consisting of RFID tags, antennas, interrogators, host computers and software transform the raw data into actionable information. In a basic RFID tag reading, the reader sends messages to all tags in its field, which respond by transmitting unique tag identification back to the reader. The reader then forwards all collected tag identifications to the main system through a platform that filters and aggregates data before passing it on to other systems.

RFID tags can be passive, typically small read-only tags, or active with their own power supply to store data that can be read or written from great distances. RFID tags can be attached to almost anything, including pallets, cases of product, vehicles, company assets, high value electronics, grocery items, apparel, security cards, passports, luggage, livestock, pets - and even people.

Prices of passive RFID tags at present range between 25 cents and 40 cents - considered still too expensive to use on most individual items. However, prices are forecast to come down eventually to as low as 1 cent. Active RFID tags can cost up to $100. The more advanced their sensor and security functionality, the more expensive they are.

Readers can be either fixed or mobile. Fixed readers can be installed at any location, ideally, where the tags frequently pass through areas such as gates or bottlenecks, at a point of sale or in a warehouse. Mobile readers are usually smaller, handheld devices with a tethered cable or wireless communication.

Operating frequency varies, too, offering different read ranges, from less than one metre when using low radio frequency, up to 10 metres for active tags using high microwave frequency. The UHF Gen2 standard is based on ultra high frequency between 868MHz and 928MHz, which has a read range of up to one metre.

Key Benefits - Instant Data Collection

The key advantages of the technology are its non line-of-sight capability and instant data collection. At its optimum, data can be collected and action taken instantaneously without requiring physical contact or sight between reader or scanner and the tagged items. Tags can be read through a variety of substances such as paint, dirt, grime, snow, fog, ice and other visually and environmentally challenging conditions.

The technology combined with biometrics offers increased security, and in logistics, unparalleled inventory control, vast efficiency gains and cost savings from elimination of human error in the supply chain and reduced shrinkage and labour.

However, the advantages of RFID are not new. RFID transmitters deployed on allied aircraft during World War II helped identify friend from foe on radar. Since the 1970s the technology was further developed in the private sector to keep track of livestock.

The most recent government use of RFID technology in Australia has been in NSW. The permanent identification and lifetime registration system of dogs and cats, which became mandatory in NSW on July 1, 1999, relies on RFID technology.

There are now more than one million dogs and cats identified with implanted microchips in Australia. In NSW, the technology helps return lost and injured animals to their owners and provides NSW councils with a more effective way of keeping track of stray dogs and cats.

This development was followed by the introduction of automatic toll collection by road authorities, first on the Melbourne City Link from late 2000, also using RFID technology, followed in NSW on the Sydney Harbour Bridge and Tunnel in 2001.

In electronic toll collection, the E-Toll tag is an active RFID tag that is instantaneously linked to specific information provided by the car's owner and the toll is charged from a prepaid deposit. Prepayments are automatically charged to the car owner's bank account or credit card, in the case of E-Toll in NSW, at increments of $100.

Melbourne City Link was one of the world's first automated, fully electronic toll roads. Since opening in late 2000, the number of motorists using the City Link toll road has increased at a rapid rate. By June 2003, City Link had more than 650,000 customer accounts, plus a million infrequent users without accounts. In total, motorists were using the toll road for more than 700,000 transactions a day. These figures are expected to increase further in the future.

In NSW, half a million E-Toll tags had been issued by June 30, 2004, and use of E-Toll has increased to two in every three tolls paid on the bridge, tunnel and linked Cahill Expressway in the morning peak hour, according to the NSW Roads and Traffic Authority (RTA) 2004 Annual Report.

For users, the E-Toll is a convenient way of paying a toll, particularly for NSW users after it became compatible with other motorways M2, M4, M5 and the Eastern Distributor, as well as Queensland Motorways and Melbourne City Link uses. Business users in particular benefit from the ability of keeping track of the expense for GST calculations.

At the government level, the take-up of E-Toll has enabled the RTA to significantly improve traffic flow through the toll plazas.

In the case of the e-passport, the Department of Foreign Affairs and Trade (DFAT) hopes the use of facial recognition technology will significantly reduce identity fraud and overcome the growing problem of impostors using legitimate passports.

Bob Nash, DFAT assistant secretary, passports branch, says identity fraud could be perpetrated when somebody who illegally or otherwise obtained a passport and who looked similar to the bearer of that passport simply assumed that person's identity. "They don't do anything to the [passport] and this is happening in increasing numbers," he said.

In 2003, DFAT issued almost one million passports. Of those, 4000 contained mistakes and 30,000 were lost.

Now IT risk-management company Cybertrust has won the federal government contract to supply the biometric technology, which incorporates RFID tags with unique and secure electronic identities or credentials, in a 10-month pilot test involving 6000 e-passports for DFAT. The pilot received $2.2 million funding in the federal 2004-05 budget.

Biographical information and digital photographs will be marked with the government's "key" and burnt onto a chip in the passports. Customs staff will use specialized RFID readers to access the data and signatures will be compared against those on the International Civil Aviation Organization's central directory.

This development was prompted by the need for increased security border control following the 2001 terrorist attacks in the US, and US requirements for travellers to their country from visa waiver program countries to have biometrics in passports by October 25, 2005. Australia is one of the 27 countries involved in the US visa waiver program.

Potential uses of RFID by Australian government agencies vary from building security, tracking aircraft parts and luggage handling, to keeping track of books and CDs in public libraries. In New Zealand, the Botany Library in Manukau, South Auckland, which opened last October, is using RFID technology to achieve significant security and efficiency gains in areas such as item management, lost book searches, real-time updates of returned items and stocktakes.

Celebrity Status - Where RFID Really Counts

However, the sudden celebrity status of RFID over the past 12 months only came after its enormous potential benefit in logistics was discovered leading to its deployment by Wal-Mart Stores, the world's biggest retailer, and the US Department of Defence (DoD) in January 2005, which required vendors to take up the RFID technology.

In Australia, the Australian Defence Organisation is closely watching the evolution of RFID systems in the US DoD supply chain and US industry.

Michael Weaver, Department of Defence communications adviser in Canberra, said areas of particular interest were the progression of US DoD strategy and policy for the technology.

Professor Andy Koronios, head of the University of South Australia's School of computer and information science, division of information technology, engineering and the environment, told the annual Defence Integrated Materiel Support conference in November last year the technology could ensure continuous availability of materiel, which was critical to reducing the total cost of ownership of weapon systems and platforms.

The Defence Materiel Organisation is the biggest manager of physical assets in Australia, with an annual budget of about $6.5 billion in acquisition and sustainment contracts for about $50 billion of specialized military assets.

"RFID makes it possible to maintain a real time, up-to-date record of the location, configuration and health of the asset equipment from a remote location. RFID can pre-warn of irregular patterns in asset operation and enable embedded information exclusive to the asset equipment such as equipment health," Koronios said at the conference.

The US DoD finalized its RFID policy last July. It will be implemented over the next two years, involving 43,000 suppliers, which will help drive the RFID technology into the mainstream market.

RFID became mandatory for US DoD orders for certain classes of supply delivered on or after January 1, 2005. Contracts with US DoD now require passive RFID tags be applied to ship containers, pallets and cases in unit loads and exterior containers.

This requirement applies to: packaged operational rations and packaged food; clothing, individual equipment, tools and administrative supplies; and repair parts and components delivered to the Susquehanna depot in Pennsylvania.

After January 1, 2007, the requirement will be for all classes of supply to strategic depots as well as all service and maintenance facilities. Suppliers of all classes of supply have to tag individual items in addition to the containers, pallets and cases required from the beginning of this year.

After successfully deploying RFID technology early this year to improve its supply chain and realising cost savings, US DoD is now examining other ways to further refine the supply chain process such as tracking the useful life of specific parts and tracking weapons and even soldiers in the field.

Nicholas Tsougas of the US DoD automatic information technology office said at the EPCglobal US conference in Baltimore, in October last year, that RFID was critical to US DoD's logistic transformation.

"RFID represents an untapped capability to improve DoD's business processes," he said. "DoD's objective is to use RFID technology as an integral part of a comprehensive suite of AIT to facilitate accurate, hands-free data capture in support of business processes in an integrated DoD supply chain enterprise."

RFID Tag or Spy Chip?

Nevertheless, RFID is not without its drawbacks. As RFID is increasingly forced on the public through e-passports, library cards and building security cards, lack of awareness could lead to a public backlash against the technology like that which occurred against genetic modification (GM) science. That cause was irretrievably set back - despite its potential to lessen use of herbicide and alleviate hunger - after Monsanto introduced Roundup-resistant GM soybeans into the food chain without warning, triggering harsh worldwide legislation against what has been popularly termed as "frankenfood".

The danger signs for RFID are already there - in emotive terms for the technology such as "spy chips" for RFID tags and unfounded fears of "skimming", the secret tracking and reading of items with RFID tags.

In Germany, protests earlier this year by consumer group FoeBuD against the deployment of RFID by Metro, the country's biggest grocery wholesaler, were strong enough for the company to cancel its RFID testing.

In the e-passport project, the privacy of the passport holders was an issue that forced changes to the proposed Australian legislation before it was passed.

However, at present, the biggest headache in the deployment of the technology is interoperability with other systems and system architecture that must handle substantially increased amounts of data.

Weaver said the Australian Defence Organisation was keeping a close eye on the development of international standards controlling the technology. "Interoperability with the US and Britain is a high priority for the Australian Defence Force," he said.

Another problem is that several factors prevent the system from being 100 percent accurate. Wal-Mart achieved only 80 percent accuracy in its deployment of RFID technology, which meant suppliers received payment for only 80 percent of the goods shipped to the retailer. Low quality tags, metal interfering with the radio frequency signal, positioning of the tags on cases and inability to read individual cases when palletized were blamed for the problem.

US DoD overcame these problems by requiring from suppliers Advanced Shipment Notices (ASN) containing shipment and order data, against which the shipments were checked when arriving at the depot. Tagged cases and pallets are shipped to DoD, associating cases with pallets and the shipment data is captured in the DoD environment.

So, if the perception of RFID is handled in a positive way, it appears the technology is set to provide great improvements in logistics and massive cost savings - at the very least.

Eva Wiland

CIO Australien, 08. August 2005

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