By Sean Smyth
By Sean Smyth
This has become an increasingly popular system to minimize costs and maximize asset utilization. “Prior to implementing any type of RFID system, it is necessary to explore the risks associated with its implementation.”
As the world of greenhouses continues to become more competitive, the need for operators to implement new ways of growing their operations while minimizing cost and maximizing asset utilization will intensify.
For some, RFID technology may be the solution they are seeking. In this article, we will briefly explore RFID technology and discuss some of its associated benefits and risks.
RFID OVERVIEW AND BENEFITS
Radio Frequency Identification (RFID) technology enables object identification using radio waves. RFID allows a “tagged” object to carry unique identification and descriptive information that can be electronically read at distances ranging from one inch to approximately 100 feet. It uses a safe, low-power radio frequency signal that is transmitted to a reader from a tag as illustrated in Figure 1. Data-capture from an object’s tag is immediate and accurate.
An RFID tag is made up of three basic elements – a microchip, an antenna and a backing material known as a substrate described in Figure 2. These three elements are part of every RFID tag. More advanced, battery-powered tags can carry a wide range of information, including sensory data (e.g. temperature and moisture levels). These “active” tags offer a full picture on the condition, quality, quantity, and real-time location of the tagged object.
RFID is part of a larger family of automatic identification technologies (e.g. global positioning systems and Internet-enabled cellular services). While it is often referred to as a next-generation barcode, as illustrated in Figure 3, this expression underestimates RFID’s distinct advantages in the areas of capacity, flexibility, accuracy and durability.
RFID will help reduce costs, improve asset utilization, and grow revenues. However, like all technologies, RFID must be accompanied by business process changes and supported with training and development. Properly adopted RFID systems will allow greenhouse operators to:
• Locate products (i.e. crops, containers and carts) and make real-time decisions based on that information
• Control assets for more efficient utilization
• Remove costs from the supply chain to improve margins and remain competitive
• Share transaction information with customers and suppliers
Despite these benefits, not all greenhouse operators need to embrace RFID technology at this time. Barcodes, as a proven mature technology, will continue to provide some operators with solutions that are both stable and appropriate for their specific business needs. However, as government policies – such as those addressing traceability concerns – and larger retailers (i.e. big box stores) continue to demand greater visibility to their supply sources, first-mover advantages and improved strategic relations may potentially be gained by greenhouse operators who first adopt this technology.
There are a number of challenges that are currently hindering the widespread adoption of RFID in the marketplace (not just in the greenhouse sector). Prior to implementing any type of RFID system, it is necessary to explore the risks associated with its implementation. Three key risks that must be carefully examined are economic, technical and implementation challenges.
Economic Challenges: for many companies, the cost of RFID tags and supporting equipment (e.g. readers, encoders and IT hardware) remains a barrier to adoption. At present, tags are far more expensive than bar codes. However, growing demand is expected to bring costs down substantially over the next few years. To determine if and when to invest in RFID, companies are strongly encouraged to develop a thorough business case.
Technical Challenges: while industry and government mandates are driving change, the marketplace for RFID technologies still remains fragmented, noisy and immature. This means that companies interested in RFID will need to perform the technical due diligence to ensure that the systems they invest in will be extendable in the future.
Implementation Challenges: RFID implementations can be complex, touching multiple points across an enterprise as well as throughout the supply chain (e.g. involving buyers like big box retailers and large wholesalers). From generating substantial data volumes that require filtering, aggregation and analysis, to data sharing with strategic partners and to staff training, RFID implementation must be carefully planned and executed so that the expected qualitative and quantitative benefits can be realized.
In summary, RFID technology can be an attractive option for some greenhouse operators. This option, however, cannot and should not be considered an overnight solution. Proper due diligence is required to ensure that not only is RFID the right decision for your operation, but that you also maximize the intended benefits it promises. For further information on this topic, contact your local supply chain/RFID expert.
Sean Smyth is a senior consultant with the Kitchener office of Deloitte Inc.
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