RFID 101

Bonni KirkwoodNortheast Secure Value Chain Leader

Deloitte Consultingbkirkwood@deloitte.com

Overview

• RFID Background

• RFID System Components

• Choosing RFID

• RFID Benefits and Applications

What is RFID?

• Radio Frequency Identification: Radio Frequency is an automatic identification method in which devices called RFID readers use radio frequency waves to retrieve information from RFID Tags

• RFID is a non line-of-sight technology which supports automated data capture for many industries

• RFID can communicate information on a product, its condition, and its history

The (not so) brief history of RFID

2010+1970’s1960’s1950’s1940’s 1980’s 1990’s 2000’s

• Major WW II development efforts

• RFID invented in 1948

•Early explorations of RFID technology

•Long –range transponder systems for “ID” of friend and Foe (IFF) for aircraft

• RFID companies Sensormatic & Check-point are founded

• Very early adopters implement

• RCA and Fairchild publish “Electronic ID System”

• NY and NJ Port Authority test electronic toll applications

• Commercial applications for RFID enter the mainstream

• Applications emerge in transport, industrial, personnel access and animal tagging

• Toll roads worldwide are equipped with RFID

• Emergence of initial RF open standards

• RFID widely deployed in toll collection, animal tagging and personal identification

• MIT establishes the Auto ID Center

• First CPG retailer auto ID pilot launched

• Gillette buys 500M tags from Alien

• Walmart & DOD announce supplier mandate

• Pharma Track and Trace requirement emerge

• RFID costs drop

• Technology hurdles eliminated

• Non clone able tags introduced

• Sensitivity and bandwidth improved in UHF

• RFID Background

• RFID System Components

• Choosing RFID

• RFID Benefits and Applications

RFID technology enables auto-identification through the use of three major components –

tags, readers and software

Tags Readers IT Architecture

• ID Device comprised of a microchip and an antenna that store/transmit data

• Memory contains Electronic Product Code (EPC) that uniquely identifies each product

• Tags may be active or passive

• Data retrieved via an antenna from the RFID tags

• Data passed to systems

• Software gathers and manages data

• Data communicated into existing enterprise applications (WMS, ERP, etc.)

• Common digital language describes products

How the three major components of an RFID system work together

• An RFID tag may store and transmit data like serial number or NDC, model, price, date of manufacturer of a tagged product

• May store information about an animal or a person’s identity, details of the account to which a tagged smartcard links, or codes required for security clearance

• May also include built-in sensors that detect and transmit information about the condition of a product – e.g., temperature or tampering

• When an RFID tag detects electromagnetic energy, its antenna enables the chip to receive and reply to radio frequency signals from an RFID Reader

• The reader decodes data it receives from the RFID tag and passes it to a computer system for processing

TAGS: Depending on the application and physical requirements, RFID systems can use active (battery

powered) or passive (reader powered) tags

•Includes power source and transmitter for read/write capabilities

•Larger than passive tags

•Additional functionality, such as monitoring temperature, humidity, shock/vibration

•Cost range $20-$50

•Effective range of 1000+ feet

•Examples: EZ Pass car toll systems, container environment monitoring

•Powered by RF waves - no internal power

•Reflects energy radiated by reader

•Sized to product

•Used for track and trace, inventory, shipping

•No batteries - Cost <$1

•Effective range of up to 30 feet

•Examples: ExxonMobil Speedpass

ActivePassive

Tag Reader

Antenna

Antenna

Interface to Host Computer (RS485, RS232/422, ethernet, 802.11 etc.)

READERS: RFID readers are designed to perform the following functions:

• Interrogate• Communicate • Translate • Resolve

There are several peripheral devices and enabled locations that support an RFID system

• Dock Portals

• Staging/holding

• Case Crusher/compactor

• POS locations

• Shelving

• Perimeter doors

• Carts and trolleys

• Forklift enabled readers

• Perimeter doors

• Receiving Dock Portals

• Applicators

• Stretch wrap

• Commissioning station

• Receiving dock portal

• Shipping dock portals

Manufacturing/Packaging Distribution Retail/Hospital

Mobile readers

In line applicators

Printers./ programmers

Turntable readers

Smartcart Dock Portal

Passive RFID tags consist of three parts:1. A silicon microchip: holds information about the

physical object to which the tag is attached

2. An antenna: transmits information to a reader (e.g., a handled, warehouse portal, pharmacy or store shelf) using radio waves

3. Conversion: encases the chip and antenna so that the tag can be attached to physical object

Sample tags

RFID systems can only use frequency ranges that have been reserved specifically for industrial, scientific or

medical applications or for short range devices

• RFID frequencies:

–Low-frequency (around 125 KHz)

–High-frequency (13.56 MHz); and

–Ultra-high-frequency or UHF (860-960 MHz)

LF:•Uses Magnetic field (Near field)•Better able to penetrate non-metallic substances•Ideal for scanning objects with high-water content•Read range is limited to < 1ft

HF:•Uses Magnetic field (Near field)•Can work around goods with high water content•Practical read range is in inches

UHF:• Uses Magnetic (Near field) and/or the Electric (Far field)• Tags are more simplistic and hence less expensive• Can be used for waters, coupled to metals for greater range• Used for items, cases and pallets• Read ranges from an inch to 100+ feet away

Magnetic Field = Inductive Field = Near Field Electric Field = Far Field

The EPC data format used with RFID is more specific and unique than bar coding

•UPC – Universal Product Code : Associated with Bar Code Technology. A means of identifying a manufacturer and generic object category.

•EPC – Electronic Product Code: A unique identification code associated with RFID Technology. A means of associating a manufacturer, object and a specific item via a unique serial number, allowing reference to a specific item, origination, date of production, etc.

EPC is the basis for RFID

•The EPC stores product information in the form of a value in each tag•This value is composed of the following elements:

Header (8 bits):

Used to indicate EPC version and may identify variant naming schemes. Also can be used for future labeling extensions

EPC Manager (28 bits):

Used to indicate the company and the manufacturer – similar to company identifier in GTIN* formats

*Global Trade Identification Number (GTIN) is the interoperable data format that USS and EAN numbering systems conform to

Object Class (24 bits):

Identifies the product group and is identical to the GTIN* number

Serial Number (36 bits):

Provides the unique product serial number

• RFID Background

• RFID System Components

• Choosing RFID

• RFID Benefits and Applications

Factors to consider when choosing passive tagsConsiderations

Where will the tags be used? Are there other RF activities?

• The location will define the frequency, cycle, antenna pattern, data rate and power limitations (to avoid interference etc.)

What will my trading partners need?

• Read only

• Read/write• Complexity and cost involved if deploying multiple technologies; e.g.

2D for small items, LF or HF for water based products, UHF for cases and pallets.

What kind of product will be tagged?

• Characteristics (round, square, liquid, glass, plastic), cartons, totes

• Determines size of tag, the kind of adhesive and placement location

How will I build my hierarchy?

• Placement of tags

• Alignment• Aggregation

What kind of environment will the tags need to withstand?

•Cold Chain

•Humid

•High temperature

While there are factors that can impact tag performance, knowing how to optimize tags and

system configurations is important for successConsiderations

Tag shape • Antenna shapes can effect performance- more sensitive silicon has improved this

Tag size • Large antenna mean larger tags and longer read range

Read rate of tags • Rapid rate is suggested

Tag packaging • May effect durability

• Foam, stickers, plastic cases (conversion)

Tag sensitivity • Greater chip sensitivity, longer read range

Tag stacking • Tags stacked closely together may interfere with one another

Number of tag antennas • Readability can be reduced if a tag has one antenna that is sensitive to orientation

• Double dipole tags alleviate orientation issues, but are more expensive and are larger

What product is attached to •Cardboard, plastic, clothing

•Metal, water

Different types of auto id tags/technologies can be used at various points in the product hierarchy

Bar Code/ Linear or 2D Passive RFID Semi-Active or Active

L1 -Item L2 -Packaging L3 -Case/Pallet/Unit Load L4 -Container L5 -Vehicle

GPS

Passive Tags:• Low cost• Long Life• Range 1- 30 ft• Typically used for L1–L3

Semi-Active Tags:• Higher cost• Battery, more memory• Range of ~150 ft• Typically used for L3-L4

Active Tags:•High cost (10-100x)•Battery and electronics (10Y life)•Long range ~ 1000+ ft•Larger in size•Wider range of applications•Typically used for L3 – L5

GPS:• Highest cost• Extended range –

satellite based data capture – cargo/vehicles

• Typically used for L4-L5

RFID is the ‘next generation bar code’ and is already delivering additional benefits

Bar Code Labeling and Scanning RFID

Price • Low cost • Material is expensive compared to linear and 2D bar codes –but can return higher ROI

Capacity • Limited space – typically only simple identifiers (e.g. lot#, SKU) are stored

• Low granularity of data• Read only

• Can hold substantial amounts of data (96-256 bits)

• Can track events and make decisions at lower level, real time = new opportunities for process optimization and traceability

• Can read and write information from partners

Flexibility • Line of site reading required

• One simultaneous scan per read

• No line of site required - proximity only resulting in simpler handling of goods

• Multiple simultaneous tag scans per read

Accuracy • Human intervention opens possibilities for errors

• Fully automated and nearly error-free

• O.H.I.O. principle – Zero Human Interventions Operations – reducing labor requirements

Durability • Labels can be easily damaged, destroyed and duplicated

•Tags are more durable

•Tags can operate in harsh environments

• RFID Background

• RFID System Components

• Choosing RFID

• RFID Benefits and Applications

RFID drives benefits that directly impact organizationsValue

Revenue Growth Operating Margin Asset Efficiency

• Upstream supply chain benefits

Regulatory / Expectations

• Counterfeit prevention• Recall management• Patient compliance

management• Clinical Trial Management

Volume

Price Realization

• Chargeback accuracy• Reduce wholesale shortages• Diversion prevention & tracking• Customer complaint data accuracy• Trade partner terms• Government pricing/ ASP• Negotiating leverage as industry

leader

SG&A

COGS

Inventory

• Brand Equity

• Regulatory relationships

Patient Safety

ExternalFactors

Strengths

• Returns management effectiveness

• Order accuracy• Recall management

effectiveness• Adverse event tracking• Demo kit controls• Transportation leakage

management• Sales force compensation• CMO efficiency• Free product controls• Shipping & Handling*• Inventory cycles

• Working capital• Channel inventory

management• Excess Inventory reduction• Clinical Product Tracking• Increase disaster response

inventory identification• Shrinkage reduction• Direct-ship to the MD*

PP&E

• Improve equipment availability, efficiency, throughput (OEE)

• Utilize more robust and scalable IT systems

• Sales uplift• Promotions effectiveness• Market data effectiveness• Demand planning • Launch planning• Provider contracting (non-

government pricing)• Anti-counterfeiting (product

authentication)

*Scale of Potential benefits will vary with the implementation of Track & Trace

Legend : • Black – Tangible; quantified • Grey – Qualitative or future benefit • Red - RFID Direct Benefit

Source: Deloitte

Point, closed and open RFID solutions can be deployed within the supply chain–with varying benefits

Point Linear, Closed Network Open

Description • Stand alone solution within four walls of facility

• Linear solution that does not have to be end-to end (e.g., a supply chain route)

• A solution that is deployed throughout a supply chain integrated network

Who benefits?

• A particular function or point in the supply chain

• All parties in the chain that ‘touch’ the RFID

• The benefits are gained by all parties in the supply chain

Examples • Tagging warehouse assets for yard management

• Tagging of returnable totes from wholesalers to retail pharmacies

•Item level tagging of medical devices through the supply chain

4. Repacker

5. SecondaryWholesaler

Contract Manufacturer

Plant

ManufacturerPlant

Contract Packaging

Plant

PackagingPlant

3rd Party LogisticsProvider

DistributionCenter

1. Manufacturer

Hospital

Community Pharmacy

Prescriber/Provider

SpecialtyPharmacy

IndependentPharmacy

Mail Order

7. Pharmacy2. Wholesaler

Hub DC

Local DC

Warehousepharmacy

Chain Pharmacy

3. Retail Chain

6. Importer

Internet

8. Patient

Initially RFID opportunities have been at discrete entities. With time, opportunities will grow to encompass the

entire supply chainSupplier Manufacturer Wholesaler 3PL Hospital/

Pharmacy Consumer

Reusable containersReusable containers

Production schedulingProduction scheduling

Reusable containersReusable containers

Inbound receivingInbound receiving

Supply planningSupply planning Pallet and tote location and trackingPallet and tote location and tracking

Inbound receivingInbound receiving Delivery planningDelivery planning

Inventory ManagementInventory Management

Pick, pack and shipPick, pack and ship Inventory visibilityInventory visibility

Back room/inventory loss preventionBack room/inventory loss prevention

Demand planning – DC and retail pharmacyDemand planning – DC and retail pharmacy

Pick, pack and shipPick, pack and ship Pharmacy LPPharmacy LPInventory countsInventory counts Self authenticationSelf authentication

Demand planning – pharmacy shelf level, pricing, availability, vmiDemand planning – pharmacy shelf level, pricing, availability, vmi

Safety and Security – Track and TraceSafety and Security – Track and Trace

Reverse Supply Chain (recalls, returns, charge backs)Reverse Supply Chain (recalls, returns, charge backs)

Pallet

Case

Item

Shor

t ter

mLo

ng te

rm

RFID applications impact every major industry

Potential Applications

Value

• Counterfeit protection

• Drug validation and compliance

• Product recall

• On shelf availability

• Inventory management & visibility

• Asset tracking

• Patient and medical records tracking

• Medical waste

• Clinical trials

Healthcare & Life Sciences

Potential Applications

Value

• Electronic Payment & Ticketing

• Baggage Management

• Yard Management

• Transportation Tracking

• Asset Tracking

• Terminal Management

• Customs Clearance

• Vehicle Access

• Auto rental

Transportation

Potential Applications

Value

• Process control

• Inventory Management & Visibility

• Part supply/auto replenishment

• Asset Tracking

• Product recall

• Total Management

• Quality control

• Transportation Tracking

• Authentication & Immobilization

Manufacturing

High Low

Early Adopters of RFID

CPG Retailers TMT Transport Healthcare and Pharmaceuticals

FSI Auto CPG Mnfg.

• Inventory Mgmt

• Asset tracking, POS payment

• Electronic payment & ticketing

• Inventory Mgmt, Loss prevention

• POS payment • Process control• Consumer

experience

• Loss prevention

• Consumer experience

• Process control

• Asset tracking

• Safety and Security

• POS payment • Inventory management

• Tool Management

• Inventory management/ productivity

• Loss prevention • Vatican Library Mgmt

• Baggage Management

• Inventory Management (IV fluids)

• POS payment • Product Recall • Asset utilization (bulk containers)

Building a Business Case for RFID

Finalize RFID Opportunities

Assess Process and Org. Impact

Step 1

Characterize Opportunities

Identify Opportunity Areas

Step 2 Step 3 Step 4

Build Business Case

Step 6Step 5

Plan Pilot and Program

Shareholder Map

Opportunity matrix

Impact assessment

Prioritized opportunities

• Quantify opportunities

• Identify people, process and technology changes & data needs

• Build cost model and pilot/program plan

It’s important that you know what you want to use RFID for before you consider implementing an RFID system

If you know what aspects of your business processes you want to improve through RFID, you can purchase the correct number of tags, put the correct systems in place, and train employees correctly for the implementation

It’s important that you know what you want to use RFID for before you consider implementing an RFID system

If you know what aspects of your business processes you want to improve through RFID, you can purchase the correct number of tags, put the correct systems in place, and train employees correctly for the implementation

What factors are influencing RFID adoption?

Considerations

Standards • Standards that govern how readers, tags and network infrastructures exist

Cost of tags • Reduction in the cost of tags is dependent upon demand

• RFID will likely remain more expensive than bar codes unless benefits beyond current systems are identified

• Closed supply chain tracking can reuse tags - open supply chain seldom does

Consumer Privacy • Consumers may have concerns that RFID device embedded in product may transmit personal data

Mixed Solutions • Complicates infrastructure – some trading partners using different identification (2D bar coding or linear)

Varying data formats • Writeable tags may contain varying data format, making them unreadable except by customized readers

What will drive the future of RFID?

RFID Acceptance and Adoption

Regulatory bodies

• Government bodies (DoD, DHS, FDA) mandate RFID usage

• US and EU outlined Food Safety and Security requirements

Standards

• Global RFID standards (EPCglobal, ISO) exist and are being augmented

Improving economics

• Reduction in cost of tags, readers

• Downward pricing on RFID hardware will continue

• Disruptive strategies

Industry pressure

• Retailers, Hospitals, Wholesalers are beginning to require suppliers become RFID capable

• Others are following

Thank You!

Questions?

Please contact :

Bonni KirkwoodNortheast Secure Value Chain Leader

Deloitte Consultingbkirkwood@deloitte.com