RFID: Testing Waters

Having crossed the hype stage, RFID is now reaching a status
where interest in the technology is moving from building awareness to testing
waters. In India, the year 2007 will witness RFID pilots growing and the first
few will be looking at linking their RFID systems to their business
applications.

The activity has been talked about a lot in the last couple of
years, with many industry verticals and the Government advertising for RFID
solutions. Some of the prominent ones driving the adoption were the tenders for
supply, testing, acceptance and installation of RFID based systems for NIC
headquarters; LPG cylinder tracking by HPCL; Vehicle tracking by Rashtriya Ispat
Nigam; Indian Airlines asset tracking etc. It remains to be seen how these
eventually evolve after the promising start. Besides this, the railways and the
postal department have also been showing active interest in RFID adoption.

According to Kaushik Yegnan, MD and CEO of SkandSoft
Technologies, there has been a significant shift in the way companies are
looking at RFID-from the earlier skepticism to "ok let's do something
small and check it out first" attitude. Bimal Sareen, founder and CEO of
Avaana India and also president of the RFID Association of India, feels that
while there are going to be increased budgets for pilots this year, few
companies will be looking at graduating beyond pilot to the next phase of
production implementation as well. "Production implementation is the stage
where your business depends on the application and becomes a part of your
business application portfolio," explains Sareen. "Also, we are
noticing a change in the customers' mind set to include RFID in their overall
IT decision making," concurs Shailender Kumar, managing director, BEA
Systems India.

The current RFID market size is $4.96 bn. By 2017, it is estimated to grow to $26.88 bn		The US has the largest number of RFID projects, followed by the UK where the RFID market size is one-third of the US
Source: (IDTechEx, RFID Trends and Forecasts)

The next wave of RFID, therefore, is not about talks in the air
but hardcore implementation strategies and RoI. In the last one-year, people
have started allocating resources in their budget and looking for business
process where this technology could really help in improving efficiency and
other benefits, points out Avnesh Jain of Hero Honda. The result-enterprises
are now looking at applications to start with and maximizing the RoI through the
right strategy. According to Prasad Putta, founder of Oat Systems, the Indian
market will take the learning's from the US and European markets on which
applications/solutions and the product categories have value, and adopt the
technology in a focused way.

Not Just about Mandates

Contrary to popular belief, WalMart has had little to do with the RFID
adoption in India till now. The Indian suppliers have not yet come under the
purview of the retail giant's RFID mandate for its suppliers. According to
Ravi Mathur, CEO, GS1 India, "The WalMart mandate is currently impacting
more in the US, barring pharma, for the enterprises in the India mandates, are
not yet a big driver as improving their internal efficiencies."

Padmaja Krishnan, director, Marketing, Planning and Research,
CSC India, opines that among the factors driving RFID adoption are the promise
of process optimization, operational excellence, streamlining the supply chain
and increased collaboration across vendors and customers.

Perceptions of high capital costs, low read rates and
uncertainty around standards had been some of the factors dampening the
technology's adoption in the country. However, with Gen2 having become widely
available, many low read rate issues have gone away and the uncertainty around
standards has also been resolved to a large extent. According to Kumar, EPC
standards are now more widely accepted which is helping in RFID adoption.
"While the high-costs of the tags is still a challenge by Indian standards,
the good news is that the read rates and reliability of the EPC Gen2 standard
has proven to be much more in conformance to the practical implementation
requirements," he adds. Intel has also, recently, released news about their
new chip that encapsulates 90% of all the features/functions of an RFID reader.
The opening up of the UHF band for industrial applications has further
accelerated the adoption.

Vertical Adoption

Among the verticals that have evinced interest in RFID and undergoing early
deployments are manufacturing, transport and logistics, retail, pharma, and
hospitals. According to Sandhya Sule, senior manager, Product and Technology
Initiatives, Patni, RFID may not show immediate RoI in the existing
manufacturing sector due to an unorganized supply chain in the Indian
subcontinent. However, this segment continues to be the prime beneficiary of the
RFID technology, especially in asset tracking and inventory management.

Retail, which has traditionally been the leading adopter of the
technology worldwide, has now started gaining momentum in India. According to
Putta, there have been several major retail rollout announcements, and some of
them are looking at using RFID right from the beginning. This interest could
lead to large RFID deployments in the Indian retail sector, he adds. Major
retailers are expected to deploy the technology to try and create six sigma
supply chains by error proofing and automating their supply chains. As Sule
points out, the retail boom in India makes it the low hanging fruit for RFID
implementation, especially because the infrastructure and processes would be
state of the art.

According to Bratin Chakraborty, GM-Technology Solutions at
Keane Inc, other areas that will eventually embrace this in a big way will be
the defense and the transport sector.

"RFID will enable the introduction of a process, whereby relevant components for each of the variety of engines to be assembled are picked based on the sequencing plan and then moved to the assembly line through the integration of the SAP ERP system with RFID"
-Avnesh Jain, manager, Information Systems at Hero Honda

Getting Started

With things moving from education to actual groundwork, the enterprises are
now looking at what application to get started with. According to Mathur,
asset-tracking is an appropriate application to start with on the RFID roadmap.
In fact, asset tracking is expected to emerge as the leading RFID application in
the Indian market cutting across the industry verticals. Besides this, security
and access control remain the mainstream applications. According to Yegnan,
warehouse management, asset management and solutions around supply chain will be
the first mover.

According to Sule, from the perspective of 'key process areas',
the killer application in retail will be in 'distribution chain'. Another
potential application is at the retail PoS, using a combination of RFID, Smart
Card, Wireless Network and Sensor networks. Typical implementations in transport
and logistics will be for parcel and container tracking, tracking of hazardous
material, high value goods, etc. Putta feels that the initial applications in
the retail segment are likely to be around asset tracking, supply chain
automation inventory management, out of stock management, and fresh item
management of perishables and promotions execution. The manufacturers, on the
other hand, are expected to deploy the technology for asset tracking and
improving work-in-process manufacturing processes.

	"Animal ID and gas cylinder tagging will be killer applications, specifically for the Indian market"
	-Rajeev Mehtani, VP and MD, NXP Semiconductors India

Rajeev Mehtani, VP and MD, NXP Semiconductors India feels that
animal ID and gas cylinder tagging will be the killer applications, specifically
for the Indian market. Rural economy and the agricultural sector lag in terms of
growth. Improving the cattle health, improving the milk yield and tracking the
life cycle of the revenue-contributing cattle, can help in improving the rural
economy. Gas cylinder tagging, he points out, will be a killer application in
India for a short term until the piped gas dream is realized. The number of CNG
vehicles, which also use the cylinder, is increasing as well. Tagging and
tracking of these cylinders can help in identifying misuse, lost cylinders,
legal users, and will help in improving the profitability of the gas providers.
According to Chakraborty, the Indian market will have a good future in
wagon/container tracking like in railways, passport and supply chain management
automation.

According to Kumar, the chief applications for RFID should look
towards getting more real time and accurate data so that supply chain management
across the landmass of the country can be better managed. In general terms, he
foresees 'Supply Chain Visibility' and 'Reusable Asset Tracking' as the
key solutions that have high applicability in the Indian market, especially in
manufacturing, retail, government and healthcare.

"The Indian market will take the learnings from the US and European markets and adopt the technology in a focused way"		"Factors driving RFID adoption are the promise of process optimization, streamlining the supply chain and increased collaboration"		"We are noticing a change in the customers' mindset, to include RFID in their overall IT decision making"
-Prasad Putta, founder, Oat System		-Padmaja Krishnan, director, Marketing, Planning and Research, CSC India		-Shailender Kumar, MD, BEA Systems

Like most technologies, RFID has its share of challenges.
According to Kuldeep Tikoo, country manager, M/A-COM, Tyco Electronics, among
the typical challenges are RFID reader and system cost, which is a major issue,
and read rates and tag performance in adverse conditions.

While the good news is that RFID tags can collect lots of data,
the down side is to manage and utilize this data. According to Jain, any
organization planning to deploy RFID will definitely need more than tags and
readers. Back-end support at the database level is required to complete the
cycle.

Among other challenges is the shortfall of experienced solutions
providers in India with adequate RFID expertise. Jain agrees that that there is
a shortfall of experience in the Indian market, and finding the right competence
to execute an RFID application is a real challenge. While many vendors already
have in-house RFID labs, they lack adequate on-ground implementation track
record. As Sareen points out, RFID is not plug and play application, and
requires much understanding of the technology and the systems processes of the
organization.

Higher capital costs (viz. for long range readers) and
short-term high RoI focus have been other roadblocks. Also, Mehtani points out
that blindly following US/Europe deployments would not yield good return on
investments in India. "We need to carefully choose the right business cases
and develop customized solutions to demonstrate RoIs to the stake holders,giving
confidence to deploy on a large scale," he advises.

RFID is not a magic wand as the hype around it suggests.
According to Yegnan, it's like any other technology and would need a lot of
trials and errors before a solution takes a RoI ready shape. Since the success
of RFID will directly impact physical business processes, enterprises have to
factor in many process re-engineering issues before one gets any realistic
results.

Shipra Arora

shipraa@cybermedia.co.in