The Hindu Business Line : Get your goods movin'

RADIO Frequency Identification (RFID) is the buzzword in the supply chain industry. But its deployment is plagued by many problems, including higher cost of tags (about $0.50) and different protocols.

At present two protocols — Class 0 and Class 1 — are in use and they are not interoperable. This means global retailers such as Wal-Mart or Target, which have mandated their suppliers to use RFID to automate the supply chain, either need to install two kinds of readers or else tell their suppliers what to use.

However, the new EPCglobal UHF Generation 2 (Gen 2) standard — latest protocol for RFID tags and readers — would allow UHF, the most common frequency range used for case-and pallet-level tracking (of goods), to interoperate on an international level. This is likely to change RFID deployment globally, says Ravi Mathur, Chief Executive Officer, GS1 India, a not-for-profit organisation affiliated to the Belgium-based GS1 International.

In an interview to eWorld, Mathur discusses the new standard, which was approved in December. He is the regional coordinator for 18 Asia-Pacific countries and a member of the Global Strategy Team of GS1 International. GS1 India's vision, he says, is to create global, multi-sectoral standards and solutions based on international best business practices and by driving their implementation, play a leading role in supply and demand chain management worldwide. Excerpts from the interview:

What are Gen 2 standards?

The Gen 2 standard is the first royalty-free global standard that allows companies to harness the power of RFID. It provides greater product visibility in their supply chains worldwide. The standard was developed through a collaborative process involving more than 60 leading global companies that subscribe to EPCglobal Inc — it is leading the development of industry-driven standards for the Electronic Product Code (EPC) to support the use of RFID.

Gen 2 paves the way for vendors to begin making products based on a single converged standard designed to work globally. A large number of manufacturers of chips and tags are supporting the new standards that will lead to a competitive marketplace — driving up volume and bringing down prices.

How different is it from the existing standards?

While RFID technology has been in use since the early 1940s, its potential has remained largely untapped due to a lack of sufficient standardisation and the overall expense of the technology. With new standards now in place and growing demand in the marketplace, the mass production of products built to EPCglobal standards is expected to reduce the cost of deploying the technology, and fuel large-scale adoption. Some industry analysts estimate that standards may reduce chip prices by as much as 80 per cent. Other firms predict that the overall market opportunity held out by RFID will reach more than $4 billion by 2008 with estimated spending on the technology to range between $515 million and $3.8 billion next year alone.

Gen 2 protocols offer performance enhancements over the first generation of EPCglobal UHF protocols, including superior tag throughput, improved accuracy and compliance with global spectrum regulations.

How will the new standard help improved usage of RFID?

With the new architecture, improved performance can be realised in the areas of speed, bandwidth efficiency and security. And Gen 2 lays the groundwork for future wireless infrastructures.

What factors are hindering the spread of RFID in India and globally?

The biggest hurdle in mass adoption of RFID technology both in India and globally has been the cost factor attached to it. The cost of the tags is quite high. Ubiquitous adoption is expected to bring prices down. Gen 2 standards are the solution to this problem by addressing RFID hardware, which is designed for worldwide deployment, and take into account emerging UHF regulations in different regions.

Another limitation of the existing technology has been the inability to read through metal or liquids, which restricts its usage somewhat. Research is under way at the Auto ID labs to overcome this. It is true that India is still at the nascent stage when it comes to RFID but now the Indian industry too is evolving. Currently numerous pilots are under way in India.

Where do you see India in this transition to the next generation of standards, in terms of usage and also as provider of software and services to the industry?

Since India is still at the stage of piloting RFID technology, it has the advantage of getting on board the new Gen 2 standards without worrying about migration issues. Gen 2 standards will lead to increased adoption of RFID technology within the country, which in turn will present a huge opportunity to the IT software and services industry within the domestic market. All the major players already have separate RFID divisions.

Who is working on this?

EPCglobal India is a division of GS1 India, which was launched in India in November 2004. It is a member-driven organisation comprising leading companies and industries focused on creating global standards for the EPCglobal Network.

GS1 India, set up in 1996 under the Ministry of Commerce, Government of India, is an Industry-Government collaborative initiative to bring international best practices in standardisation into India. GS1 India is affiliated to GS1 International, which oversees a network of 101 GS1 Organisations across the world.

What sort of investment is going on in this new standard in India and abroad?

IDTechEx has researched the RFID industry to highlight new trends and forecasts for the years ahead. Cumulative sales of RFID tags for 60 years until the beginning of 2006 totalled 2.4 billion, with 600 million tags being sold in 2005 alone. The expenditure on RFID tags in 2005 was $1.2 billion and the total spend on RFID (including tags, readers and services) was $1.85 billion.

In 2006, the company expects 1.3 billion tags to be sold. About 500 million of these RFID smart labels will be used for pallet and case-level tagging, but the majority will be used for a range of diverse markets from baggage and passports to contact-less payment cards and drugs.

raja@thehindu.co.in