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RFID: hype or reality?

The Indian RFID market has run into rough weather, writes Varun Aggarwal

Radio-frequency Identification or RFID has revolutionized the way many industries work in other countries. Despite the hype and hoopla with which the technology was tom-tommed, two years after its arrival it has yet to be widely adopted and many projects remain at the pilot stage.

RFID remains a promising technology not just for retail but even for sectors like Oil and Gas, Animal Husbandry, vehicle tracking, e-Passport etc. However, unlike the global market where the technology has already matured, the Indian market has a long way to go in terms of RFID deployment. While the global market is talking about advances in RFID technology, it is more important for us to understand the reasons behind the lack of momentum of the technology in our country.

Hurdles in growth

There are a number of factors holding back the adoption of RFID in India. The most critical issue is the cost of a tag (especially in high-volume applications), reader, and middleware. The other significant factors are lack of awareness of its benefits, and the high level of satisfaction with the incumbent technology, viz., bar-coding.

According to Paramjit Puri, Business Development Manager - Advanced Technologies Cisco Systems, India & SAARC, “Actual RFID deployments in the country are few as compared to the hype that was created. There are still apprehensions about its viability primarily due to the associated costs.”

According to him, when people wanted to move from bar-coding to RFID, cost turned out to be a big hurdle. Companies were unable to justify the ROI of the new technology as large investments are required for it and not all players are ready to invest so much.

Kumar Rajagopalan, Retail Solutions Leader, IBM India, said, “Everyone wants to be in RFID and the number of early adopters are increasingly leveraging India’s base for RFID related technologies. What we have seen is that the market is facing some challenges in this space with pricing being a primary concern, as Premium Product Points are not conducive for a price sensitive market. Hardware pricing, and not product performance, dominates decision making. Selling an RFID solution is not easy–hardware dominates the thinking, solution and service is viewed as contributory. Technically naïve players are likely to cause challenges to RFID growth with negative experiences.”

Prithvi Raj, Senior Research Analyst, Automation & Electronics Practice, Technical Insights, Frost & Sullivan, added, “One major application area often talked about is retail. However, we are extremely skeptical about this, especially in a country like India where even a rupee increase in a product’s price is totally unacceptable. Now many argue that inexpensive passive RFID tags are available, however most do not take into account the reader, software, and infrastructure costs.”

According to T S Rangarajan, Principal Consultant, RFID Solutions – TCS, “The initial interest in RFID in India was due to global interest in the technology and also the perception that India needs to be on par with global companies on the technology front in order to be competitive in various industry segments. However, unlike western countries, India does not have any mandates from retailers or defense department to drive the adoption of RFID. Even the adoption of barcodes (which RFID will help replace) in India is way behind that in other countries. Indian businesses lack scale to justify ROI from RFID. Manual labor savings from RFID deployment are not attractive enough in India where labor costs are already low.”

As the cost of RFID tags rapidly reduces, the technology is becoming more affordable. While, a passive tag used to cost around Rs 10 a couple of years back, that’s dropped to Rs 2 today. You can get an active tag for Rs 5-10; this cost around Rs 80-100 a while back. This is a positive indicator for the market as the deployment of active tags is non-existent in the country, while even the passive tags are used only for high value assets.

According to Sudesh Prabhu, Director - Services and Presales, Sybase Software (India) Pvt Ltd, “RFID technology is rapidly becoming a critical tool for turning asset location and environment data into valuable business information. Companies in all industries—healthcare, manufacturing, retail and transportation, among others—know that creating applications based on intelligent, event-driven networks of RFID and sensor devices offer them greater visibility and control of business assets and processes, thus increasing productivity, profits and competitive advantage.”

However, there are challenges that must be overcome before pilots can be rolled out in full-fledged deployments. Developers and system integrators face numerous challenges in providing their companies and customers with efficient, cost-effective solutions that leverage and integrate RFID, sensor and location tracking data.

Today’s obstacles include:

• Many diverse device types, with differing functionality, usage and interfaces
• Emerging, but still fragmented, standards
• The need to manage and monitor distributed sensor networks
• Hardware in many locations throughout the enterprise
• Abundance of raw, unprocessed data generated by sensor networks
• Inability to simulate or troubleshoot production environments
• Difficulty in adding business intelligence to asset location data
• Cost

Many of these challenges can be overcome by using a comprehensive middleware platform that integrates RFID and sensors with business logic. RFID middleware simplifies development, deployment, configuration, and management tasks.

RFID vs. bar-coding

Perhaps the only competitor for RFID is bar-coding technology. The latter is a mature technology with relatively widespread adoption in the country. However, RFID evangelists find RFID to be a superior technology.

Milind Shah, Country Service Principal for Retail and Consumer Packaged Goods, Technology Solutions Group- Sales, HP India. He finds RFID to be a better technology vis-à-vis bar-coding. According to him, “Bar-coding is useful only in sophisticated environments, whereas RFID tags are rugged and can survive for a lifetime. Moreover, it is more difficult to misuse RFID tags than barcodes. A barcode is used only for tracking and tracing while RFID can offer you complete supply chain visibility based on stock outs—checking which goods are selling more, general selling trends etc. Lastly, the RFID readers are more advanced than barcode readers.”

However, RFID offers numerous advantages over barcodes; the cost advantage still makes bar-coding the undisputed winner in India.

Achieving optimal readability

Accuracy in the case of RFID depends on three factors, i.e. signal strength, frequency, and the surrounding environment. Ideally, you should look for the best solution for a particular environment. Most tags have limited readability in RF impaired environments or when placed near metals or liquids. Other technologies have better performance around metals (albeit with some other limitations such as read rates or cost).

“Before you jump into RFID it is important to first look at the specific environment of operation and understand the various limitations. If the optimal solution is chosen then nearly 100% accuracy can be achieved,” Raj explained.

Deployment can become a nightmare if not planned well. Typical challenges are support for multiple hardware, multi-protocol, multi-frequency, support for easy roll out, network management for distributed architecture, security, ease of development and maintenance, patch releases, and easy integration to next generation enterprise systems.

Tackling these challenges can be tedious unless middleware is used to perform these tasks. Starting from scratch and deploying can take a long time and results in a high maintenance, proprietary interface system.

Rajagopalan feels that attaining 100% accuracy is a challenge, but that these challenges will not stop RFID’s inevitable forward movement. However, problems with data filtering and analysis, continuing high costs, and unrealized returns on investment are causing temporary derailments. “They’re also breeding frustration and maybe even a backlash. The proper adoption of RFID would result in superb supply chain efficiencies coupled with capability to speed up processes like retail cashiering ushering in a new standard in customer centricity,” he said.

Applications of RFID

RFID systems can be used just about anywhere where a unique identification system is required. RFID technology has become a vital point of discussion on the agenda for many logistic service providers, food manufacturers and retailers across the globe. The industry has learned the benefits of using RFID technology and is using it throughout the supply chain to automate and speed up inventory identification and for movement of items. As far as India is concerned, RFID can be effectively utilized in healthcare, in transportation, parts of retail and in the information technology field. Suppliers of access and data protection devices are looking to take advantage of the latest advances in RFID to be able to offer higher-value access and data protection.

IBM RFID Solution Centers have been established to provide customers with real, hands-on exposure to RFID so that they have the information needed to decide what is best for their company. IBM has thirteen RFID Solution Centers across the world. Each of the thirteen IBM worldwide RFID Solution Centers has a specific focus and area of specialization -everything from the core RFID technology through to the business value of implementing industry driven, RFID-enabled solutions.

Raj opined, “An interesting area to consider would be in the low-volume high-cost asset tracking applications in hospitals, process industries, pharmaceuticals, etc. RFID-based asset identification and tracking would bring security and transparency to these areas while reducing counterfeiting (a major issue in India considering the volumes of drugs produced). Another possible hot area for RFID is in aviation MRO (Maintenance, Repair and Overhaul). Here RFID tags could be used to quickly locate and identify specific tools required for specific MRO processes. This could significantly shave off many hours of manual searching, reducing bottlenecks.

“Other areas such as hospitals and banks may see some niche applications. Essentially, we still need TCO to come down to really see significant penetration of RFID throughput sectors. With rising inflation, most manufacturers/retailers will not be ready to put in a huge investment especially with a technology that has yet to prove itself within the country. I personally feel that we still have a long way to go before we see large scale success stories around RFID,” he added.

The Indian government is also planning to launch RFID passports soon, which would set the momentum of growth in the technology in areas of security. Cisco is working with companies like L&T and BHEL for asset tracking, giving hope to the technology even in the government sector. India is also responsive towards anti-counterfeiting, theft prevention and mandate compliance for foreign buyers.

Though the noise about RFID has turned out to be more of hype than reality in the Indian market, many small players are investing in this technology, although not in a big way. With companies like the future’s group, Bharti, etc going for large scale deployments, the market would soon pick up the much aspired momentum.

varun.aggarwal@expressindia.com