RFID Strategy -- Diverse RFID Value Propositions

July 7, 2007
From sushi restaurants to jet aircraft assembly

In last month's column, I discussed how total solutions providers will increasingly drive RFID innovation and adoption. Now, I would like to elaborate on how three very different industries are finding value in RFID implementation. These examples are a sushi restaurant, a grocery-store chain and an aircraft manufacturer.

Closed-Loop Sushi Tracking In Seattle

A recent Intermec announcement showcased their work for the Blue C Sushi restaurant in Seattle. This restaurant brings the kaiten style of service, popular in Japan, to American diners. A conveyor belt carries plates of sushi past diners throughout the restaurant. Instead of ordering your food, you simply pick up a plate of sushi as it moves past your table. Your bill is calculated by the number of plates that you pick up, as well as by the type of item on the plate. Think of it as an automated Japanese version of the more-familiar (to Americans) Chinese dim-sum service.

The restaurant had been using barcodes to provide basic plate-tracking information. The Intermec RFID system allows Blue C Sushi to track far more information in real-time, such as how long the sushi has been on the conveyor, what type of sushi is on each plate, and which types of inventory are running low. The restaurant has successfully used the real-time reporting from the RFID data to optimize its order profile and preparation practices. In addition, it has dramatically cut down on wasted sushi and reduced the number of out-of-stocks of popular items on the conveyor belt. Another plus -- the RFID system has improved the speed and accuracy of the customer check-out process.

This system cleverly capitalizes on several strengths of RFID. It is a closed-loop application, where tagged plates are re-used and readers are tied to a limited geographic area, thus making an ROI case simpler to demonstrate. It uses the increased speed and accuracy of RFID-tagged data to provide inputs to intelligent demand planning. And it also leverages the traditional RFID application of automatic inventory tracking.

Grocery Distribution In Germany

A Reva Systems press release brings news of a major RFID production deployment at METRO Group grocery stores and distribution centers in Germany (and ultimately throughout Europe.) The system will record RFID data as pallets of product arrive at 200 stores and distribution centers, using the Reva TAP (tag-acquisition processor) reader network-manager product. METRO Group has been a leader in piloting RFID technology in Europe, as well as a frequent target of anti-RFID privacy advocates. This production roll-out represents the end of their RFID piloting efforts and the beginning of a large-scale RFID technology infrastructure build-out. Reva Systems worked closely with METRO Group to make the application a reality.

The METRO Group RFID system will use pallet-level tags to provide proof-of-delivery of items at the store. The Reva TAP technology will allow real-time decisions to be made at this point, based upon instructions from the corporate IT backbone. For example, a person receiving a pallet might be given a real-time alert to move that pallet directly to the sales floor for promotions. It is the real-time decision-making and notification element that distinguishes the METRO Group deployment from traditional RFID supply-chain applications. It combines traditional pallet-level supply-chain RFID data collection with real-time decision-making algorithms.

How important are such real-time instructions in the grocery industry? I don't have European statistics, but the Grocery Manufacturers Association research for the North American market shows that the out-of-stock rate for advertised in-store products ranges from 8% to 17%. Kimberly Clark's experience with pallet-tagged promotional products at Wal-Mart allowed them to improve in-stock execution from a baseline of 56% (without tagging) to 75%. If the European market reflects similar behavior, METRO Group could conceivably improve their sales of advertised items by 25% -- which is an attention-getting number for any technology.

Aircraft Manufacturing At Airbus

Boeing has long been a proponent of RFID technology in the aerospace industry. Now, thanks to ODIN technologies, we can see details of how Airbus is deploying RFID technology throughout its value-chain. A press release issued by the company does not specifically say so, but ODIN is helping Airbus play catch-up to their American rival.

Aircraft manufacturing is an attractive fit for RFID technology. The value of each part or assembly to be tracked is usually quite high, which makes the relative cost of an RFID tag less of a consideration than in low-cost industries such as retail logistics. The data-tracking burdens are also quite high, due to government and safety regulations that require manufacturers and airlines to keep detailed records on the history of each serialized part.

RFID tags provide benefits in the speed and accuracy of such data tracking, and the physical configuration of the tags can make them much more durable in a manufacturing or maintenance environment than barcodes. ODIN technologies is now helping Airbus design and deploy a network of passive and active RFID technologies throughout their organization. As an example of the size of the problem, ODIN notes that the recently-developed Airbus A380 aircraft already contains 10,000 RFID tags -- and this was before the initiation of the comprehensive RFID program envisioned by Airbus.

An interesting feature of the ODIN project is the scope of Airbus's program. They anticipate deployments in traditional supply-chain logistics, tool and asset tracking and work-in-process inventory management. ODIN Technology's task is to work as a solutions developer for Airbus in managing fast-track roll-outs of RFID systems.


These RFID solution examples all share the same characteristics. They are customized solutions to a particular industry's needs. They leverage different aspects of RFID performance to provide a meaningful value proposition. Taken together, they provide an interesting portrait of how solutions providers are currently driving innovation.

Paul Faber is a Principal with Raleigh, N.C.-based Tompkins Associates, a supply-chain-solutions consulting firm. As the chief manager of RFID equipment implementation at Tompkins Emerging Technology Center, he possesses extensive experience in material handling solutions, systems integration, and installation. Faber has managed field integration and operations activities at material handling sites around the world.

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