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EPCglobal Inc. is looking for big changes to radio frequency identification technology adoption in 2006, and expects to launch its RFID network that will enable businesses to collaborate and share data electronically early next year.
Electronic Product Code Information Services (EPC IS) is a set of software standards that will allow companies to more easily exchange, find and record EPC data as it moves through the supply chain. "The platform is loosely built on the Web Services model," said Mike Meranda, president at EPCglobal U.S., the non-profit organization spearheading RFID adoption. "The network is a collection of standards that companies will implement and access for Internet-based services."
Businesses can choose from a variety of processes and connect electronically to share data between suppliers and customers. EPCIS will act as the hosted gateway to servers at suppliers and customers to merge information from warehouse management systems and enterprise resource planning (ERP) platforms that contains data about products shipped with RFID labels.
It's estimated that businesses budgeted RFID projects at about $500,000 in 2005, with 16 percent growth next year and 20 percent in 2007, according to AMR Research Inc. The research firm said RFID represents 9.1 percent of the overall IT budget for 2005. Manufacturers, which include consumer products companies, have the highest budgets for RFID through 2007: $628,000 in 2005, $826,000 in 2006, and $1 million in 2007.
Meranda also sees the International Organization for Standardization, which is scheduled to vote on formally adopting the UHF EPCglobal Gen 2 protocol, approving the standards in March 2006. If the protocol passes, it will become ISO 18000-6C. Gen 2 refers to the Generation-2 RFID standard from EPCglobal.
The standard provides specifications so manufacturers can produce RFID chips, tags, and readers that can transmit and receive RF signals in multiple protocols from a variety of vendors. The standard was created to aid the use of electronic product code (EPC) numbers that uniquely identify objects, such as pallets, cases, and products. Wal-Mart Stores Inc., which is leading RFID adoption, expects to stop receiving the first generation of RFID tags from suppliers and transition to Gen 2 in mid-2006.
This year EPCglobal created a certification program for Gen 2-compliant products, and announced in September the first 10 hardware products and four laboratories. The certification process and standards have created a competitive environment and are expected to result in falling prices for RFID tags, readers, and other equipment. Meranda said readers have already fallen to $1,000 each in the past two months. As recently as a year ago, readers cost approximately five times that price, according to industry experts.
Meranda said Gen 2 is responsible for "a precipitous drop" in the overall cost for RFID equipment. In September, Alien Technology, cut the per-inlay price, inserted inside the label, by 44 percent, to 12.9 cents, on its electronic product code Class 1 RFID labels for quantities of 1 million or more. Avery Dennison is offering inlays at 7.9 cents. Although the sub-eight-cent price is still above the five-cent price some industry analysts tout as the magic number needed to ensure a viable RFID industry, prices are falling.
Beyond price, Gen 2 offers other advantages. For one, the protocol enables equipment to operate at multiple frequencies to comply with standards on multiple continents. Tags also have the potential to carry up to 256 bits of memory each--nearly triple the memory of first-generation tags. Gen 2 readers also have better read rates and cause less interference with each other, letting companies position readers in closer proximity.