Logistics and Supply Chain Management

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

RADIO FREQUENCY IDENTIFICATION

(RFID)

Submitted By

Ankit Agarwal – 01

Mohammad Fuad-11

Sunmeet Kaur – 21

Tanushree Maheshwari -31

Ayush Gupta – 41

Jatin Singhal – 51

PGDM-IB-2010-12

INTRODUCTION

Radio Frequency Identification (RFID) is a technology that employs radio waves to pass on the identity of an object wirelessly. This identity is replicated in the form of a distinctive serial number. RFID aims at improving the accuracy of data and reducing the amount of time and labour required to input data manually. Unlike bar code systems, RFID technology does not require manual intervention and scanning of a label to extract the details. RFID tag consists of a chip attached to a radio antenna which is placed on a substrate. The chip has s storage capacity of up to 2kb of data. A reader is used to retrieve the data stored on an RFID tag. A reader has one or more antennas that emit radio waves and receive them back from the tag. The information is then passed on to the computer system in the digital form.

Earlier implementation of RFID faced two major obstacles:

·  High cost

·  Recycling. RFID tags that were put on the pallets and packaging boxes of the products used to get thrown out with the packaging.

·  Standardization. Absence of standards makes a technology region centric.

But now companies are looking to develop ways to recycle tags on corrugated cases. In recent times three key factors have contributed to the increase in the usage of RFID: increased performance to a reliability of 99.9%, decreased cost of tags and equipment and adoption of standardized procedures.

RFID TRACKING PROCESS

TYPES OF RFIDS

TAG TYPE / ADVANTAGES / DISADVANTAGES / APPLICATION
ACTIVE / Greater read range, memory capacity, continuous signal / Batteries required / Used with high value asset tracking
SEMI PASSIVE / Greater read range, longer battery life / Battery wear and expense / Reusable containers and asset tracking
PASSIVE READ/WRITE / Longer life, multiple form factors, erasable and programmable / Shorter range than active / Case and pallet applications.
PASSIVE WORM / Suited for item identification, controllable at the packaging source / Limited to a few re-writes, replacing existing data with new data / Case and pallet application
PASSIVE READ ONLY / Simplest approach / Identification only, no tracking updates. Difficult to generate on demand and integrate data / Case and pallet application

GLOBAL SCENARIO AND USAGE

RFID find its uses in many of the businesses worldwide:

·  Logistics and transportation: These are the key areas of implementation for RFID technology. RFID has a major impact on the business value and efficiency. RFID has been adopted by The North American railroad industry. Locomotives and rolling stock are equipped with two passive RFID tags; the data encoded on each tag identifies the equipment owner, car number, type of equipment etc. The equipment owner and car number is used to derive further data about the physical characteristics from the Association of American Railroad car inventory database that indicates about origin, destination and lading etc. of the products being carried.

Large fleet of trucks are owned by many industries for transporting the raw materials and finished product periodically from production units or ware houses to distribution or storage points. Hence frequent refuelling of the trucks at fuel station is required. RFID fuel dispensing unit are installed at the fuel filling stations. Similarly the trucks are fitted RFID tags. As the truck approaches the filling station the authenticity of the truck is recognized by the RFID reader, consequently allowing or denying fuelling of the truck. Once the fuelling is over the information about the vehicle and fuel dispensed is relayed immediately to concerned offices of both trucking as well as fuel dispensing company which helps in keeping the track of truck being billed.

Tanzanian logistics firm Usangu Logistic Ltd. has employed RFID-based system to help assure the distribution of oil products to the proper channels throughout East and Central Africa. Pilferage of product is controlled by tracking whether a tank is sealed with a RFID tag. The status is transmitted to a reader. Reader data along with GPS coordinates are then sent to the back-end software.

RFID cards and bag tags are used by Qantas in "Next Generation Check-in system” in the airlines. They are deployed in Australian domestic airport terminals to speed up the process of passenger check-in and tracking and recovery of their luggage. In 2004, Boeing integrated the use of RFID technology to help reduce maintenance and inventory costs on the Boeing 787 Dreamliner. With the high costs of aircraft parts, RFID technology allowed Boeing to keep track of inventory despite the unique sizes, shapes and environmental concerns. The company was able to save $29,000 in labour in the first six months after integration of RFID

DHL has implemented RFID to track the packages as they are shipped from one country to another. DHL aims at capturing real time information about the shipped package and provide an automatic generated data to the customers thus saving time and money.

Port of Oakland and Port of Busan (South Korea) have implemented RFID technology and provided tags to the trucks entering the port premises to ensure smooth and faster check in process of the containers. Use of RFID at the ports also saves the effort of checking each container manually and log the container identification number.

RFID is used at WalMart. It is installed at the stores, various centres, at the receiving docks and between the backroom and the retail floor. RFID enables the store operators to know what is inside a container by just waiving the container having a RFID tag. The reader at the receiving dock records the data at the time of arrival. Hence manual opening of the box for content identification is not required. The software helps in keeping a track of different items sold to the customers and the number of items brought down to sales floor. WalMart has established a retail link extranet with all its suppliers with the help of RFID. Data is shared from all RFID read points with their suppliers. Thus RFID has helped in efficient management of the inventory, reduction in the numbers of data entry errors and lowering human labour costs in a distribution centre.

Wal-Mart has benefitted from RFID as below

•  Turnover of $245 billion. Each year,

•  Roughly 80% of American households make at least one purchase at Wal-Mart.

•  Wal-Mart has saved an estimated $20 billion of costs for US customers in 2002 alone.

·  Toll booths: RFID prepaid passes are incorporated in the toll booths in most of the countries across the world. The technology allows the driver to simply drive through the toll booth without stopping. The cars are equipped with a Tag that emits unique RF waves that identify the vehicle and cause the drivers prepaid account to be automatically debited. In Norway and Italy, all public toll roads are equipped with an RFID payment system known as AutoPASS and Telepass respectively. In Pakistan, RFID is being used for e–tolling in Motorways, implemented by NADRA. In Dubai, UAE, RFID is being used for e–tolling – SALIK in Motorway implemented by RTA.

·  Crowd Management: RFID tickets were successfully implemented during the Beijing Olympics. These tickets provide protection against counterfeiting. Reason being it is impossible to guess the original serial number and to make or source RFID inlay matching the original one. Faster scanning of RFID tags on tickets at access gates enables in smooth crowd management. RFID also find its use in animal tracking and identification management.

·  Payments through mobile: RFID has found its uses in payment by mobile phones. 7-eleven has partnered with MasterCard to promote a new touch-free payment system. Those joining the trial are given a complimentary Nokia 3220 cell phone which after activation can be used an RFID-capable MasterCard credit card at any of 7-eleven’s worldwide chains.

·  Passports: The first RFID passports were issued by Malaysia in 1998. The Malaysian e-passports provide the capability to record the travel history (time, date, and place) of entries and exits from the country.

Some of the other countries that insert RFID in passports include Republic of Korea, The Philippines,

Norway, Japan, Spain, Ireland and the UK, Republic of Macedonia, Australia, Hong Kong and the United States, Serbia, Taiwan, Albania.

·  Public transport: RFID is implemented in many countries where they are used for the payments for public transit in the mass transportation like bus, car parks and train. The RFID tags are used as smart cards where the transit amount is debited from the user by calculating the amount of distance travelled between the check-in station and check-out station. RFID technology in public transport has been implemented in Washington Metro, Chicago Transit Authority, New York City Metropolitan Transportation Authority, Shanghai Metro, and in trains all across Europe,

·  Libraries: RFID has replaced the barcode system for recording and tracking the movement of books, DVDs and CDs in the libraries. RFID does not require to open a book or a DVD cover to record the details. RFID is majorly used in the libraries in United States, UK, Japan, Malaysia, Netherlands and Singapore. The University of Hong Kong has the largest RFID implementation in academic library. It has over 1.20 million library items containing RFID tags.

·  METRO group is Germany’s biggest retailer, €56.4 billion sales in 2006, 2,300 locations in 30 countries, 250,000 employees, 6 independent “Retail Formats”. Metro Group initiated the RFID rollout that began in November 2004 with shipments of warehouse pallets and cases from 20 pro duct suppliers, including Unilever, Procter & Gamble, Gillette, Johnson & Johnson, Kraft Foods, Colgate-Palmolive, GlaxoSmithKline, Nestle, and Esprit. METRO Group has used an IBM RFID middleware based on the IBM WebSphere RFID Premises Server to provide the retailer with a virtual view of RFID-tagged pallets and cases shipped to its distribution centre and exchange data with METRO’s merchandise management system. METRO’s RFID rollout is expected to grow to about 100 suppliers by December and about 300 suppliers by 2006, along with additional METRO warehouses and stores in Germany. Early deployment in November 2004 was influenced by METRO’s belief that the results of the Future Store Initiative indicated that process efficiency and merchandise availability increased by about ten percent and losses and theft were reduced about 15%.

RFID IN INDIAN CONTEXT

The cost related to logistics in Indian context is expected to be approximately 13% of the GDP, which is US$94 billion in 2005-06. However, the cost incurred on logistics is much higher than the developed economies like the Japan (10.5%) and US (9.5%).

Logistics in India is unorganized with frequent stoppage of vehicles coupled with overloading, taxation and infrastructural bottlenecks.

RFID aims to solve the above issues in the logistics sector with cost reduction and reduced lead time.

·  HPCL and IBM’s in RFID tracking solution

HPCL will leverage IBM’s technology expertise to deploy an tracking solution based on RFID technology at HPCL’s Nashik plant

The $2.2 million deal is one of the largest implementations in India for RFID-based tracking solutions and it involves infrastructure services, business consulting services and middleware solutions from IBM. Under this agreement, IBM will design, deploy and integrate the RFID solution for tracking LPG cylinders from plant to the end-customers.

This RFID-based cylinder tracking project is the first of its kind in India. This will bring efficiency which is required in supply chain of a large firm.

·  RFID in toll collection in India The Indian Government has accepted the Report of Mr.Nandan Nilekani ,Experts’ Committee on Electronic Toll Collection .

The Committee has suggested adoption of RFID technology for electronic toll collection on National Highways in India. Nationwide operations of this will start from May,2012.

·  Indian Defence Forces in Medical Stores Depot facility in India

The Armed Forces Medical Stores Depot is equipped with the most essential supplies for medicines. This is basically to ensure that the appropriate and adequate stock level is maintained at all levels. This requires an intelligent monitoring system. Use of RFID had help in effective replenishments.

·  RFID for Indian Railway and Indian Post

The two bodies Indian railway and Indian post are planning to deploy RFID for tracking the movement of goods .This will reduce operational costs and will help to become more competitive. RFID tracking systems use microchip-enabled tags that transmit high-frequency radio signals, making it more effective and accurate than compared to older systems which uses bar-code stickers and readers.

·  Indian Railways under Information Technology, Vision 2012

Under the Information Technology Vision 2012 which was announced in the Railway budget for 2008-09.according to it modern communication systems such as RFID, GPS and GIS will be implemented to give the Indian Railways more effective

·  RFID for Pantaloons (apparel tracking)

Pantaloon Retail had piloted an RFID project at one its warehouses in Tarapur using RFID tags. The company had started from implementing the technology at the warehouse itself ,this will help in reducing costs and become effective.

·  RFID in the Pharmaceutical Industry

Ranbaxy , which has been acquired by Daiichi Sankyo, had chosen Acsis to implement a RFID tracking system to meet Wal-Mart’s RFID mandate for its pharmaceutical suppliers.

·  RFID in Rural banking in India

India is adopting RFID technology, and is benefitting significantly not for its urban cities but also for its rural region.

NXP Semiconductor under the partnership with seven banks in four states in India to offer its RFID based mobile payment solution in more than four hundred and fifty villages in these states.

More than forty five thousand rural populations will benefit from it and services such as deposits and withdrawals, micro insurance and cashless payments without visiting the bank branches will be made available. Also due to mobile phone density increasing, a number of people that will benefit from RFID is increasing. And thus use of this technology will help in further development of the country as companies will become more competitive globally.