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Minnesota Technology Magazine - Fall/Winter 2006

On the Right Frequency

A look at five new application areas that are driving growth in RFID technology.

BY WILLIAM GURSTELLE
William Gurstelle is a Minneapolis-based writer and frequent contributor to Minnesota Technology. Elsewhere in this issue he profiled Surly Bikes.

PHOTOGRAPHS BY SARA JORDE

The Winter 2005 issue of Minnesota Technology examined the then-nascent realm of Radio Frequency Identification (RFID) technology. At the time, RFID was just making the jump from futuristic vision to a mainstream technology with provable ROI, and many observers were predicting a bright future for it. What's happened since? Well, the promises of growth remain pretty much on track. Consider some recent numbers. BCC Research of Norwalk, Conn., recently issued a report noting that the global market for RFID hardware, middleware, and IT applications, which was estimated at nearly $640 million in 2005, will increase to more than $713 million by the end of this year. By 2011, the market is projected to reach $1 billion—an average annual growth rate of 8 percent. And Boston-based AMR Research estimates that up to 40 percent of all U.S. manufacturers could be deploying RFID by 2010, up from less than 10 percent today. As far as local interest goes, RFID has been the most popular seminar topic at events put on by MTI and the Minnesota High Tech Association over the last few years (see the Business Innovation Series for more information on an RFID event scheduled for next year).

What's driving the growth? Market maturity is one factor. Many RFID users now have multiple years of experience with the technology, which leads to more effective implementations and more useful results. RFID system costs also have been declining. RFID tags that cost between $1 and $5 a few years back now sell for around 10 to 20 cents apiece. "The price of tags has been coming down considerably," says Fred Riggins, an assistant professor at the University of Minnesota's Carlson School of Management, who researches new supply chain technologies such as RFID. "The industry has been talking for some time about the nickel tag. We are not there yet, but we're in the 10-cent range for large bulk purchases. That's been important for building RFID business cases."

At the same time, mandates from the U.S. Department of Defense, Target Corp., and Wal-Mart, among others, requiring suppliers to install RFID tags on individual parts and pallets also have played a big role. But there's more to the story. In the last few years, RFID has engendered an exploding number of game-changing applications. While early investigators may have focused primarily on RFID as a retail/wholesale supply chain improvement, the technology is proving itself capable of making a big impact in a wide range of industries—everything from airport security to agribusiness to the daily commute.

The technology is still maturing, but hundreds of applications have been tested. And while the scope and focus of the applications vary widely, most can be categorized into one of five areas: supply chain automation, asset tracking, security enhancement, transportation payments, and what you might call "peripatetics management."

RFID Application Area #1:
SUPPLY CHAIN AUTOMATION

Automating the supply chain was one of the first RFID applications and it remains extremely important. This key early driver helped develop and implement the technology via such applications as inventory control, parts-tracking during manufacturing, and control of finished items. While early adopters were enthusiastic, the corporate mainstream has been somewhat hesitant to commit to the technology until its benefits have been conclusively proven. Recent academic research has shown that the application of RFID technology in the retail supply chain does indeed improve business processes in important ways. "Last year, researchers at the University of Arkansas posted a white paper studying the impact of out-of-stocks at Wal-Mart," explains Riggins. "The authors found RFID significantly decreased out-of-stock situations. The paper got a lot of attention."

Out-of-stocks are to retailers what staph infections are to hospitals: an endemic and serious problem avoidable only by scrupulous attention to their root causes. According to the University of Arkansas paper, RFID technology may be like penicillin for the chain store world. When applied to Wal- Mart's supply chain, RFID contributed to a 30 percent reduction in out-of-stock situations. In the ultracompetitive world of retail, this can make the difference between reaching critical revenue goals and falling short.

Dave Sawyers, 3M

RFID Application Area #2:
HIGH-VALUE ASSET TRACKING

One of RFID technology's most powerful advantages is the ability to track the location of high-value assets. Tracking systems are being applied to equipment in offices and labs, books in libraries, shopping carts in supermarkets, and animals in zoos and agribusiness. It's an application rich with future potential.

For example, Dave Sayers, a marketing development manager at St. Paul's 3M Corp., says implementations of the company's electronic RFID document-tracking system are increasing rapidly. The company recently announced that the U.S. Tax Court will soon install a 3M RFID document-tracking system. The Tax Court currently has more than 100,000 case files on hand, along with thousands of law library books, periodicals, and other documents. Tracking these documents via RFID makes a lot of economic sense, since present methods of locating and keeping files easily accessible are cumbersome. Despite the high drama portrayed on television's Boston Legal or Law and Order, court cases are often won or lost based on the fine details. Hence, the loss of a key file can be a bigger legal disaster than placing an unprepared witness on the stand.

Besides wasting time and money, misplaced files are a security and legal liability. The Tax Court and 3M are confident that the new RFID tracking system will vastly improve the process. The system features a tiny microchip and antenna embedded inside a tag affixed to each file, which allows file locations to be easily tracked through the entire workflow. Retrieving information and finding the current location for any RFID-tagged document is easy, as records for tagged files can be viewed on any network computer.

3M's Sayers says that the system has great appeal for the administrators charged with keeping track of all those documents. "Files can be 'stamped' in and out as they travel through the court," he explains. "The documents management staff is always aware of who has what document. Document accountability is a crucial concern, and the complete information that the system offers is a key benefit to them."

RFID Application Area #3:
SECURITY ENHANCEMENTS

The relatively generous information-storage capabilities of RFID, coupled with the technology's ability to embed coded information in an electronic format, make it potentially valuable for a number of security-oriented applications. Examples include forgery-proofed identification documents, egress and ingress management for secure spaces, and controlled access to restricted-area hospital wards such as postnatal care floors.

Following close on the heels of a number of other countries, including Sweden, Australia, and Singapore, the U.S. State Department has begun issuing "e-passports." Currently, the Department of Homeland Security (DHS) is concluding a trial at San Francisco International Airport to test epassport readability and assess how the RFID readers and the biometric equipment needed to process the e-passports will affect the passport inspection process. Embedded within the pages of e-passports are minuscule RFID chips containing the holder's name, birth date, passport number, state, and a photograph. The tagging devices will enable scanning of passports by the Customs Service equipment. The new readers can snoop out forged or invalid passports, thereby keeping the unauthorized, and possibly the criminal, from entering American territory. The trial will also determine how well the RFID interrogation equipment reads the tags embedded in the e-passports. Results look good so far, and RFID tags are planned for almost all new U.S. passports by early 2007.

Another security example comes from Hoboken, N.J. Residents of the city, which lies just across the Hudson River from the southern tip of Manhattan, were also concerned about unauthorized visitors—but the problem involved illegal automobiles, not illegal immigrants. Because of its proximity to Manhattan, a great number of commuters had been flooding Hoboken daily, taking up residents' limited spaces with out-of-date or fake parking permits. To spot phony permits, parking enforcement officers had to spend a minute or more trying to determine if a parked vehicle had a legitimate permit. Worse, if the permit wasn't positioned correctly or was obscured by tinted windows, the task was even more time consuming. With more than 12,000 parking spaces to monitor, a better solution was required. So in 2005, Hoboken officials installed RFID chips in all newly issued parking permits, enabling parking officers to instantly distinguish between legitimate and counterfeit permits. Now, the scofflaws with bogus permits return from work only to find that their cars have been towed to an impound lot. With parking congestion significantly reduced, residents run errands in Hoboken again.

John Doan, Minnesota Department of Transportation

RFID Application Area #4:
TRANSPORTATION PAYMENTS

Another useful feature of an RFID system is the inherent ability to read data on moving objects from a distance. This makes them ideal for collecting commuter-billing information, whether via automobile transponders on toll roads or on wallet-sized mass transit cards read at commuter train turnstiles. In the United States, a growing number of electronic toll collection systems now in use on turnpikes and tollways use RFID's proximity reading capabilities to speed traffic through tollbooths.

Here in Minnesota, RFID lies at the heart of the MnPASS lanes on I-394. For the stretch of freeway between downtown Minneapolis and I-494, MnPASS drivers may lease a small electronic transponder that attaches to their windshield near the rear-view mirror. As drivers pass the toll lane entrance, a toll is automatically deducted from a prepaid MnPASS account. Toll-recording equipment located on the road makes this possible. As any driver in the western Twin Cities suburbs knows, the fees vary by time of day and the level of traffic congestion. "RFID is pretty much ubiquitous in the United States for the tolling industry," says John Doan, MnPASS program director for MnDOT. "On the East Coast there's EZ-Pass, Florida has SunPass, Illinois has I-Pass, California calls its FasTrack, and there are many others. All of them use RFID."

What's new, Doan adds, is that all of these separate tolling systems are rapidly working towards becoming interoperable. "At the federal level, there's new legislation that requires the states to move towards a standard interoperable tolling technology," he notes. "The current RFID transponders are not, but that doesn't mean they couldn't be in the next generation."

The upshot: A single RFID transponder could then be used on any toll road in the nation. With an RFID transponder and high credit card limit, a driver could eventually roll, congestion free, on a high-speed, tollway burn through Boston and Buffalo and Berdoo, without ever slowing down or throwing quarters into a toll booth catch basket.

RFID Application Area #5:
PERIPATETICS MANAGEMENT

Some of the most novel RFID applications sprout up in decidedly nonobvious places. Consider "peripatetics management," my neologism for the management and tracking of crowds of people running, walking, and wandering about at public events. In many such situations, RFID's proximity tracking capabilities fit like a new pair of Nikes. For example, some trade shows now use RFID sensors embedded in nametags to speed the transfer of information at show booths. By doing so, say RFID proponents, it's easier to validate continuing education credits, obtain attendance data for statistical purposes, track visits to exhibits, and retrieve sales leads after a show.

RFID is also revolutionizing the management of large sporting events such as marathons. Race organizers routinely use RFID-based timing systems to track participants as they start a race and later (they hope) pass the finish line. Each October, runners competing in the Twin Cities Marathon are accurately timed using an RFID system designed by ChampionChip of Nijmegen, the Netherlands. The system works by attaching an RFID tag to each marathoner's shoelaces. When a runner passes the starting line, an antenna embedded in a mat captures each transponder's unique ID code and sends it to a central computer. When the runner crosses the finish line, another antenna captures the ID code and the computer instantly calculates the runner's time to within onetenth of a second.

Brian Mastel, race operations manager for the Twin Cities Marathon, praises the system. "It works extremely well," he notes. "The runners merely place a chip on their shoe, and the system does the rest."

The RFID-based race-timing system makes a tremendous difference in staffing requirements as well. In the old days, explains Mastel, far more finish-line volunteers were needed to tear off portions of the runners' bibs as they crossed the finish line, to string up the bibs in the correct order, and to record stopwatch times. "For races as big as ours, you have to do it this way," he says. "The old methods would be nearly impossible."