In-Depth

RFID and data: Here’s what’s next

Let’s lift a glass of California Zinfandel and drink a toast to the Radio Frequency Identification (RFID) technology that made it possible. First, there were RFID chips, attached to every grapevine, connected with ultra wide-band and WiMAX that allows the tiny radio transmitters to broadcast over the 30-mile radius of the Napa Valley vineyards. Gartner fellow Tom Austin envisions a scenario where the chips on the vines will broadcast information on irrigation and climate conditions to a Web application so that grape growing can be micro-managed via a computer network.

Once the Zinfandel grapes are harvested, crushed and made into wine, RFID chips and sensors will monitor the movement and temperature of every bottle to ensure optimum conditions throughout the supply chain. This is the type of pervasive sensor network envisioned by Gartner, and one that is being actively pursued by key suppliers like Oracle Corp., Redwood Shores, Calif., where Jon Chorley, senior director of development, is working to move it from concept to reality.

How ubiquitous can RFID become in our daily lives? Suppose the Zinfandel you drank in this toast interacts negatively with your prescription medication. Gartner’s Austin offers a scenario where you are rushed to the hospital, and the nurses and doctors in the ER are able to read data from an RFID chip on your person to determine exactly what medications you are on, which may help them to save your life.

While RFID is starting out as a way for Wal-Mart to further optimize its supply-chain management, Austin sees the tiny radio transmitters invading every aspect of our business and personal lives by 2014. So in the time it takes to age a fine wine, the Zinfandel scenario may not be so far-fetched.

Of course, RFID technology is not there quite yet. At its core, RFID is just another source of data that has to be integrated into enterprise systems to become valuable information. While some users are beginning to tackle the middleware challenges, at the moment, useful implementations are barely more than a gleam in the Wal-Mart smiley-face cartoon character’s eye.

Meta on RFID stages
Gene Alvarez, vice president at Stamford, Conn.-based Meta Group, is a little more cautious in his predictions than Gartner. He believes the RFID revolution may unfold as an evolution with its full impact coming late in this decade, which does not exactly contradict Gartner’s 10-year scenario, but is a little more conservative.

In Alvarez’s view there will be three levels of progressive RFID adoption.

First will come the early adopters, or “leading enterprises” as Alvarez refers to them, including Wal-Mart and its suppliers, which are currently testing RFID tags and readers in pilot projects. But even these pioneering organizations will only put the technology into limited products -- “perhaps a few key stores” -- between 2004 and 2006, Alvarez said. Next come “cutting-edge enterprises,” which Alvarez characterizes as companies like Target that are being driven into RFID by market pressures.

Finally, there are the aptly termed “trailing-edge enterprises,” in which Alvarez includes small- to medium-sized businesses waiting to see how the big boys do with their pilot projects. These followers move to adopt the technology in 2007-2008, he predicts.

But whether analysts are blue sky or conservative in their view of the technology’s impact, the major software vendors -- IBM, Microsoft, Oracle, Sun, Sybase and Tibco -- are getting ready to support RFID. The major players all appear to believe that RFID may be the next big technology innovation.

RFID a middleware problem
When all of the futuristic, high-tech stuff is stripped away from RFID, it is simply another source of data that must be integrated into enterprise systems.

At IBM, the view is that RFID will require middleware, such as MQSeries, because once the tiny radios record data, that data will need to interact with back-end ERP, warehouse, supply-chain and financial systems.

“From an IBM perspective, the overall business problem that is defined by RFID is, in fact, a system integration problem,” said Rainer Kerth, RFID lead architect for the IBM Software Group. “At a very high level, it’s about taking new data from devices that haven’t been considered in the past, which would be RFID readers, and feeding the data into existing IT systems. That is where systems integration comes in. You need to make the new data sources compatible with the existing applications.”

Kerth points out that there is very little business value to having an RFID system that simply reads data and then transmits it into a database. The amount of data and the size of such a database could be enormous because those tiny transmitters can potentially stream out endless data. With Gartner’s vision of a sensor network, there would not only be data on the location of a pallet, but possibly every variation in temperature and humidity, plus every movement that could jar or damage a product.

“You would amass data to a significant extent,” Kerth said, “but the only value you get out of the data is when you actually relate it back to existing apps.”

Reducing or eliminating the “manual activities” is a key area where IBM and others see RFID’s value-add for supply-chain systems. Workers would no longer have to go over pallets or individual products on shelves with a bar-code reader to find out what was where. Nor would information from a warehouse need to be keyed in to the supply-chain or inventory management system. RFID has the potential to broadcast that information directly into those systems.

But, as Kerth notes, “all of the above is very much a middleware challenge.”

As he outlines IBM’s approach to RFID, the focus is on middleware working with existing enterprise systems to provide them with automatic updates of information that currently are done by warehouse workers and others.

“The key challenge IBM has promised to tackle for our customers is to bridge between the new technology -- which is RFID -- and the old technology --which are order management systems, warehouse management systems, inventory systems and supply-chain optimization systems,” said Kerth. “From our perspective, the core challenge in RFID is middleware and applying that middleware in such a way that you can transparently connect the new data to the old applications.”

How it works: RFID application
IBM is not alone among vendors planning to adapt current middleware products to handle the new technology. Bedford, Mass.-based Sonic Software is working with what it describes as a “large consumer goods manufacturer” to integrate RFID information into enterprise systems with its enterprise service bus product, Sonic ESB.

This is an RFID app where the future is now. Retailers are looking to enhance old EDI processes for handling purchase orders and advance ship notices with RFID data made available through a Web services app. This would allow the retailer to verify that the products listed on the advance ship notice are on the pallet that arrives at the warehouse, said Hub Vandervoort, vice president of professional services at Sonic.

“This potentially will provide savings beyond just eliminating labor costs,” Vandervoort said. With current systems, discrepancies between what a retailer ordered and what arrived on the pallet can take 30 to 60 days to resolve. With RFID feeding data instantly into a Web services application that both the manufacturer and the retailer can access, discrepancies could be resolved immediately.

Since time is money and cash credit received today is better than cash credit received 60 days from now, it is not hard to understand why retailers like Wal-Mart are pushing for RFID adoption.

That is also why Sonic’s manufacturing customer is pushing the envelope to get the integration and Web services application completed.

“The back-end systems at this manufacturer are largely legacy systems,” Vandervoort said. “When they were built they didn’t know about RFID or Web services. And yet they house the information about what went onto the pallet. So it ties together the ERP, inventory and warehouse management systems. The pallet from this manufacturer may contain multiple products. The Sonic bus will allow that one Web services call to scan this pallet of a mixed bag of products and to hit multiple back-end inventory and warehouse management systems.”

Oracle on RFID as sensor-based computing
While some software vendors are applying existing middleware and integration products to the RFID problem, Oracle is looking at the broader sensor-based computing network.

“Our key differentiator when we talk about RFID is that we see it in the broader spectrum of sensor-based computing,” said Oracle’s Chorley. “RFID is one kind of sensor, basically one that can pick up identification of a product. But other sensors can pick up temperature, moisture and motion. All of those things are relevant.”

The sensor network provides potential cost savings for retailers that go beyond just reducing labor costs and getting quick refunds for deficient shipments. In Chorley’s view, the sensor network has big-time ROI written all over it.

For example, monitoring temperature and humidity during shipment of perishables from beer to bananas would provide an assured level of quality control. Motion detectors would record “drops,” which would explain why a shipment of eggs, for example, was unacceptable. Initially, this technology would allow retailers to identify and reject or get refunds for products that had been exposed to high temperatures or other ruinous conditions. Of course, getting the sensors to work with existing and new apps takes us back to RFID as an integration problem.

But there is still time to work on this problem, as 2014 remains Gartner’s target date for RFID and sensor network ubiquity.

Chorley acknowledges that Oracle, along with its customers and rival vendors, is still in the early stages. “Most of the customers we’re talking to are still in the pilot stage,” he said.

Advice for starting pilot projects
For developers starting pilot RFID projects, Chorley and Meta Group’s Alvarez offer this advice.

First, developers working in any part of the supply chain, from manufacturing to shipping to wholesale and retail, “need to get [their] feet wet,” Chorley said.

“It’s going to take some time to understand the technology and work out the kinks,” he said. “But I’d be cautious of overpromising immediate benefits. There’s a learning curve here. Your costs are relatively high for the tags and associated readers.”

Meta’s Alvarez cautions firms to beware of the costs, since RFID hardware is expensive, especially the battery-powered transmitters that can broadcast the most meaningful data. He also said that IT departments need to assess how the new RFID applications impact the overall network infrastructure.

Reflecting the big picture view of the technology’s potential, Chorley said, “you should think about RFID as part of a broader strategy. You should think about it in terms of your overall information architecture. How does RFID fit into that? You need to be able to incorporate the data that RFID is going to generate and leverage that and make use of it.”

Redesigning business processes will mean looking at the information currently being recorded manually when a box is moved, which can now be automated by using RFID, Chorley explained. But that will go beyond being a technology problem to become a corporate human resources issue, as it will change the jobs that warehouse managers and workers are currently doing.

A work in progress
Despite Gartner’s predictions, there is no way of knowing how or even if the RFID and sensor network technology will impact business. Until the applications move beyond their current pilot phases, there are few real-world examples beyond the oft-repeated Mobil Speedpass, which uses RFID technology to help drivers whiz through the process of buying gasoline on credit.

Consumer groups are wary of what RFID may do to privacy, since individual buying habits may be tracked in detail beyond anything possible today. Gartner analysts simply say that the concept of privacy that consumers and society have now is simply being made irrelevant by the steady march of technological innovation.

Meta gives the privacy issue a more traditional approach, with Alvarez urging IT departments to have someone in the RFID project seriously consider the privacy impacts. He also ominously warns that RFID has the potential to open the way for a new form of high-tech corporate espionage with unmarked vans filled with receiving equipment being able to track a competitor’s inventory by parking outside a warehouse.

In the end, nobody can know what 2014 will look like until we get there. But RFID and its attendant technology appear to have the potential to bring about big changes.

Please see the following related story: “DoD improves logistics through RFID” by Lana Gates

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