Radio Frequency Identification – RFID in short – is a key technology which is going to fundamentally change the face of process chains in the consumer goods sector in the coming years. 
RFID - Management Summary
What is RFID?
Radio Frequency Identification – RFID in short – is a key technology which is going to revolutionize the consumer goods supply chain in the coming years. Thanks to RFID product and process information can be transmitted using radio signals and retailers and manufacturers can streamline their processes and respond better to customer requirements. RFID is already being used in day-to-day life and is being tested in many new applications. Libraries in Vienna, Munich, Siegburg, Stuttgart and even the Vatican library have fitted their inventory with RFID transponders. Users will be able to borrow books, CDs and videos more easily and quickly. In many ski-resorts RFID transponders are integrated into ski-passes – which cut waiting times at lifts. Tickets for the 2006 Football Championships were also fitted with RFID transponders. Organizers introduced the measure to curb black market trading. It proved to be a successful measure.
How does RFID work?
The so-called RFID transponders are at the heart of Radio Frequency Identification (RFID). These transponders are minute computer micro chips fitted with antennas which are embedded in razor-thin labels. They can easily be attached to pallets, parcels and products. Transponders are also called Smart Chips and store the so-called Electronic Product Code (EPC). In contrast to the existing GTIN numbering system which only differentiates between product categories, the EPC allows identification of each individual item within the category. As well as the customary product information you would expect to find, the EPC also contains a nine-digit serial number, which is used to clearly identify shipping units or single items.
There are basically two types of RFID transponders, active and passive. The passive type does not require its own power supply. As soon as an RFID reader emits an electro-magnetic field, the smart chip picks up the signal and returns the Electronic Product Code (EPC) stored on the chip. Active transponders have their own battery and send information to readers without being “prompted”.
The new, more efficient EPC Class1/Gen. 2 chip standard, the so-called, second generation transponder along with further advances in the interface technology have led to a marked improvement in both readability and speed. Physical interference problems with liquids and metals have been significantly reduced.
There are basically two types of RFID transponders, active and passive. The passive type does not require its own power supply. As soon as an RFID reader emits an electro-magnetic field, the smart chip picks up the signal and returns the Electronic Product Code (EPC) stored on the chip. Active transponders have their own battery and send information to readers without being “prompted”.
The new, more efficient EPC Class1/Gen. 2 chip standard, the so-called, second generation transponder along with further advances in the interface technology have led to a marked improvement in both readability and speed. Physical interference problems with liquids and metals have been significantly reduced.
What are the Advantages of RFID?
RFID technology helps companies optimize and accelerate processes, while making sure that the path of a product can be tracked and managed seamlessly from the manufacturer to the shelf. This bares advantages for retailers, manufacturers and consumers alike: thanks to RFID consumers can rely on finding first-class fresh goods in stores, because the merchandize management system automatically spots if stocks are coming close to their expiry date. Workers can then remove the goods from the shelves and reorder accordingly. Consumer goods companies are protected against losing revenues because customers no longer reach into empty shelves. This means that all involved parties can operate more efficiently.
RFID technology also contributes to reducing stock levels because the lead time between ordering and receiving goods is reduced significantly. Store managers can check which point of the supply chain a pallet has passed. This also benefits manufacturers. They can cut stock levels and produce just-in-time in sync with retail demand.
Furthermore, RFID technology meets the increasingly higher safety expectations of consumers, retailers and manufacturers. Growers and producers, together with the retailer can track the path of their products from point of manufacture right along the chain to the supermarket. This helps ease the legal requirements demanded in this area. EU directives 178/2002 and 1935/2004 governing food safety require manufacturers and retailers to be able to trace food and feedstock in an unbroken chain directly back to their source. This measure is to ensure that companies can recall goods swiftly and effectively if required. RFID supports them in this and is therefore a valuable contributor to quality assurance.
RFID technology also contributes to reducing stock levels because the lead time between ordering and receiving goods is reduced significantly. Store managers can check which point of the supply chain a pallet has passed. This also benefits manufacturers. They can cut stock levels and produce just-in-time in sync with retail demand.
Furthermore, RFID technology meets the increasingly higher safety expectations of consumers, retailers and manufacturers. Growers and producers, together with the retailer can track the path of their products from point of manufacture right along the chain to the supermarket. This helps ease the legal requirements demanded in this area. EU directives 178/2002 and 1935/2004 governing food safety require manufacturers and retailers to be able to trace food and feedstock in an unbroken chain directly back to their source. This measure is to ensure that companies can recall goods swiftly and effectively if required. RFID supports them in this and is therefore a valuable contributor to quality assurance.
How does METRO Group use RFID?
METRO Group is the first retail company worldwide to decide to implement RFID technology in phases throughout its supply chain. RFID implementation began in November 2004 and focused on warehouse and goods entry automation as well as stock management. Numerous suppliers as well as selected warehouses and stores from the Metro Cash & Carry, Real and Kaufhof sales divisions were involved. Additional suppliers and stores gradually came on board. In the first phase shipping units (pallets, parcels and garment consignments) were fitted with Smart Chips. Since summer 2006 suppliers involved in the RFID roll-out have been labeling boxes and packaging with Smart Chips. METRO Group will be fitting an increasing number of stores, branches and warehouses with RFID technology in the coming years as well as involving more manufacturers. In 2007, all Metro Cash & Carry wholesalers in Germany as well as 100 Real SB warehouses are to be fitted with RFID. Likewise, MGL METRO Group Logistics GmbH are to equip their new food warehouses with RFID gantries.
At the METRO Group RFID Innovation Center in Neuss readers in the shelves automatically spot if stocks are running low or even if an item has been inadvertently stacked in the wrong place. METRO Group is the first retailer worldwide to place a so-called De-Activator at the customer’s disposal to enable them to de-activate their Smart Chips. The De-Activator ensures that the chip is made permanently unreadable.
At the METRO Group RFID Innovation Center in Neuss readers in the shelves automatically spot if stocks are running low or even if an item has been inadvertently stacked in the wrong place. METRO Group is the first retailer worldwide to place a so-called De-Activator at the customer’s disposal to enable them to de-activate their Smart Chips. The De-Activator ensures that the chip is made permanently unreadable.
Which Technical Requirements must the Systems Architecture Meet?
RFID transponders and readers use radio frequencies to communicate with each other. Since frequency allocation is governed by each country’s own individual regulations there are significant differences worldwide. In the USA, RFID transponder frequencies are restricted to between 902 and 915 MHz. There is even less band choice in Europe where only the 865 – 868 MHz range is available. Different rules apply to Asia where in Japan, for example, the 952 – 954 MHz frequency band has been set aside for RFID technology. Ideally a worldwide uniform frequency band for RFID technology is what is required. However this would seem to be difficult to achieve at the moment. Certain frequencies are, as is the case in Germany, reserved for mobile phones and medical services.
A number of organizations in Europe are involved in developing standards and guidelines in frequency allocation for RFID readers such as the European Commission, the European Conference of Postal and Telecommunications Administrations (CEPT) and the European Telecommunications Standards Institute (ETSI).
A special systems architecture consisting of RFID readers and local IT infrastructure is required to allow transponders to communicate. RFID Middleware is a key component in this systems architecture. It works similar to an adapter: RFID Middleware communicates with readers and applications while processing information so it can be read by any compliant terminal.
A number of organizations in Europe are involved in developing standards and guidelines in frequency allocation for RFID readers such as the European Commission, the European Conference of Postal and Telecommunications Administrations (CEPT) and the European Telecommunications Standards Institute (ETSI).
A special systems architecture consisting of RFID readers and local IT infrastructure is required to allow transponders to communicate. RFID Middleware is a key component in this systems architecture. It works similar to an adapter: RFID Middleware communicates with readers and applications while processing information so it can be read by any compliant terminal.
