When will RFID Hit Main Street?

Every week on the speaking circuit I am asked this question by users and technology firms: When will we see mass adoption of RFID? I have a date. But I think I will teach you to bake bread, rather than feeding you toast!

The way to proceed is to just look at the forces that can inhibit or accelerate RFID technology adoption and market growth.

Inhibitors:

First, there are Manufacturing constraints on Gen2. All the leaders in this space have some kind of manufacturing process, technology or capacity constraint. We expect that it will take a year or slightly more to be able to ramp up to meet the potential demand of the world-wide 100,000 plus firms who will be tagging cartons.
Shortages in trained, experienced RFID professionals who know the art and science of implementation. Lack of qualified, knowledgeable implementers. Data collection projects have mostly been the domain of small regional players, with a few exceptions. These small firms have been taxed to the limit! Try and get them. (Domain leaders, who know their stuff, are in short supply, but deliver more value.)
Intellectual property wars. (I have opinions about these, but I won’t go there.) It is a simple fact that it scares off buyers and creates confusion in the market.
Shortage of sales people and solutions people to meet with; design unique solutions for many firms.
Lack of engagement by the 3rd party market to achieve economies of scale for their customer base.
Standards- Globally, we can’t get to a one standards world…this is true of most wireless, RF, and cellular products. Deal with it! And each industry group weighs in on process standards relevant to their industry. (See below)
Challenges with packaging. Many of the products or their package shapes and materials defy the tags sold today. These firms need customized tags to be developed. Think simply of an expensive pen. Where do you place the tag? The chips themselves are quite small, but the antennas are not appropriate for these projects. Or components in machinery such as aircraft engines. How to create enduring tags? These issues will have to be worked out in order to achieve full compliance.
Lack of understanding of Value Proposition- this can be solved if one thinks about!

Of course, the counter to the inhibitors is the Enablers.

Enablers:

Enablers come from a myriad of industry and government standards.
Government Initiatives in the US:

CT-PAT/CSI- not mandates just arrived (see addendums)
DoD Mandate/Policy RFID- cartons/containers/pallets 2005. Alan Estevez stated several weeks ago, as he looked the audience in the eye, “we are on time.”
DoD Policy for UID- 2005-all serial numbered products—not all have to be RFIDd, but all expect that to change, and they will be tagged.
Homeland Security- TAS for airport security- now that McCarran airport has ‘proved out’ baggage tracking, we expect more here.
FDA /Pharmaceuticals.
Successful pilots.

Conclusions:

A fair amount of ‘Faith’ is accompanying early adopters, or those testing the water temperature, deciding whether to jump in. They assume that all the technical problems will eventually be overcome, and total asset visibility will be accomplishable. Even if this is the case, there are issues that will slow growth that are very real today.

ChainLink Research has done extensive research (of hundreds of firms) and the desire for improved visibility, tracking, etc. stands out as a critical issue to global firms. Most firms don’t know how to get started. But as the cultural knowledge begins to spread, training comes on line, and success stories start to get out…the swimmers will start to signal to those still on the shore that the water is fine!

Addendum:

Addendum 1: CTPAT

CBP TIGHTENS C-TPAT PARTICIPATION REQUIREMENTS FOR NEW IMPORTER APPLICANTS

US Customs and Border Protection has announced new, stricter requirements for importers applying for membership in the Customs-Trade Partnership Against Terrorism (C-TPAT) program. Although C-TPAT participation will remain voluntary, the new standards, which became effective March 25, will require importers to fulfill additional responsibilities in order to join. CBP will also phase in these standards for existing importer participants over a six-month period.

From its onset, C-TPAT has sought to enhance security measures across the entire supply chain by compelling close cooperation among its constituent entities, from importers, brokers, and warehouse operators to carriers and foreign manufacturers/suppliers. Until now, however, the importer’s obligation has primarily been merely to communicate C-TPAT security standards throughout its supply chain. Under the new C-TPAT requirements, importers will be required to go a step further and ensure that pertinent security measures are in place and adhered to by all members of their supply chain.

Changes to Participation Requirements

Importers wishing to join C-TPAT on or after March 25, 2005 must meet or exceed the revised C-TPAT Security Criteria for Importers before they will be certified and eligible for benefits. Among the most notable changes from the previous standards are the following.

Business Partner Security Requirements: For those business partners eligible for C-TPAT certification (carriers, brokers, consolidators, etc.), the importer must have documentation (e.g., C-TPAT certificate) indicating whether or not these business partners are C-TPAT certified. For those business partners not eligible for C-TPAT certification (manufacturers, warehouses, etc.), importers must have written or electronic confirmation that the business partners are meeting C-TPAT security criteria. In addition, non-C-TPAT eligible business partners must be subject to verification of compliance with C-TPAT security criteria by the importer.

Container Inspection: Procedures must be in place to verify the physical integrity of the container structure prior to stuffing, including a seven-point inspection process covering the front wall, left side, right side, floor, ceiling/roof, inside/outside doors, and outside/undercarriage.

Container Security: At point of stuffing, procedures must be in place to properly seal and maintain the integrity of the shipping containers. In addition, a high security seal meeting or exceeding the current standards must be affixed to all loaded containers bound for the United States.

Employee Identification System: An employee identification system must be in place for positive identification and access control purposes. Company management or security personnel must adequately control the issuance and removal of employee, visitor, and vendor identification badges. Procedures for the issuance, removal, and changing of access devices (e.g., keys, key cards) must be documented.

Additional areas of supply chain security for which importers must have documented procedures include: pre-employment verification and personnel termination; documentation processing and manifest; physical access controls; cargo discrepancies; security training and threat awareness for employees throughout the supply chain; information technology security; and physical security.

Importers will also only be able to apply for C-TPAT membership through an online application and submit their security profile electronically. Upon receipt of the importer’s completed security profile, CBP will review and provide the importer with feedback within 60 days.

Phase-in of New Requirements for Existing Participants

For current C-TPAT participants, implementation of the new security criteria will be phased in through three steps.

(1)	Importers will have 60 days (until May 26, 2005) to meet the container security, physical security, and physical access controls criteria.
(2)	Within 120 days (by July 26, 2005), importers must implement the more internal or procedural security elements, including personnel security, procedural security, information technology security, and the establishment of a security training and threat awareness program.
(3)	Within 180 days (by September 26, 2005), importers are expected to satisfy the business partner requirements under the new criteria by using their corporate strength to push security enhancements back into their supply chain, from point of stuffing through receipt in the U.S.

Addendum 2: Business Standards

Voluntary Standards- Life-time tracking for Electronics (RohS and WEEE), although today this is not an RFID initiative one can visualize the electronics industry getting on-board, for their own industry needs, as well as compliance to the various industries they serve.
AIAG Automotive Industry Action Group
- Trace and track for tires- “AIAG B-4 Parts Identification and Tracking” guidelines. Of course they will also be required to meet DoD standards as well (and Retail).
Aerospace – Boeing and Airbus have partnered together to drive the whole supply base to RFID. These firms are already use/experimenting with RFID in their spares business. Boeing is also partnering with UPS in logistics. Delta is partnering with Boeing on engine parts ordering and tracking.
The UCC family- epc, RosettaNet, etc.
Cisco Systems RFID enabled protocols—will download code to all vendors (just as they did with wifi devices) so all devices can be read by the quasi-ubiquitous Cisco routers. These will be based on epc/UCC standards.
IBM’s Device interface. This competes with Cisco’s, so will this confuse and limit the options of device users/buyers?
FDA, FTC, Commerce Department……..and so it goes!