With everyone and their brother promoting radio frequency identification (RFID) as the next killer app, two prominent trade management software vendors have posed the million dollar question: How actually to apply RFID outside a warehouse environment so that it creates real benefits along the whole supply chain?

RFID has been utilized in warehouses since World War II to track cargo, but the short-range wireless technology has now evolved to the extent that it can be applied to tracking and tracing products, containers or even track chassis between the warehouse and destination. That means that companies in the not-too-distant future will be able to receive real-time, or close to a real-time data flow throughout a shipment.

But, it's not as easy as it sounds to effectively apply RFID in the field. Officials from both Exel and Descartes Systems Group Inc., however, say they're determined to find out how to do it. To do so, they've established RFID labs to test the technology while a shipment is en route to its destination.

Exel, a logistics management software vendor based in Bracknell, the United Kingdom, recently opened a RFID Center of Excellence in a 110,000-square-foot distribution center in Harrisburg, Pa. This will be the U.S. base of numerous RFID pilot studies open to interested companies, whether or not they're currently Exel customers, says Jeff Calvert, Senior Director of Information Technology. They can reach the program through www.exel.com.

And Descartes Systems, a Waterloo, Ontario-based supply chain management vendor, is offering a RFID Benefits Testing Program regardless of whether an interested company is a current customer. Interested parties can reach Robert Bowerman, program director at Descartes, at RBowerman@descartes.com, or for more information go to www.descartes.com/solutions/products/rfid_program.html.

Like Exel, Descartes is hoping its program will enable companies to measure the impact of RFID on order fulfillment quality, cycle times, and inventory and asset productivity. The program lets companies test RFID processes in their own company and, optionally, with trading partners and others across the extended supply chain.

Bowerman sees RFID's "real potential for helping people have an efficient supply chain and cut costs. And we're finally seeing real tracking capabilities beyond closed loop (warehouse) situations." However, Bowerman points out that the concept of applying RFID to an entire supply chain is still in its infancy. And for all the potential benefits of implanting shipping and product information on tags that can be read wirelessly, the effects don't happen effortlessly.

"We're discovering in our pilots that the physics, or nitty-gritty details, are quite important. Things like where to place the tags on packaging are just the first level. There are lots of things we don't know about how the tags work really well throughout the supply chain without testing them. How do you save receiving time? Reduce inventory levels? RFID, alone, can help, but it's not the whole answer," he says.

"No two businesses are exactly alike and that's why the value of RFID can differ dramatically by company and industry," said Manuel Pietra, Descartes' President and CEO. "Our RFID Pilot Program provides companies with a comprehensive way to test the impact of RFID in their business."

Calvert at Exel and his RFID advisor, Tony Hollis, agree. In Exel's case, Wal-Mart and Target stores are key drivers for testing out RFID capabilities, as the retail giants have mandated use of RFID by top suppliers. Many are Exel customers who need to be brought up to speed on RFID applications, says Calvert.

"They're very interested in doing the testing to select the right type of tag, learn how to situate it on pallets and get the right read rate," he says. Others want to learn to apply the new, second-generation RFID tags that can be implanted directly into garments and hold far more information than traditional bar codes. The so-called 2G tags "will provide a history of where the tags have traveled through the supply chain, which means lots more documentation," he adds.

The new Exel center is being fully equipped as a small, test warehouse replete with RFID readers, racking for pallets, material handling equipment, pallet jacks and forklift equipment. Calvert adds that Exel is in "current discussions with a number of printing equipment vendors so we can print RFID tags to be used to test cases traveling at 600-feet per minute."

Pilots providing results

Both vendors have been running RFID pilots for several years that are the precursors to these new programs and offer a glimpse at how the technology can promote cost-effective trade.

Exel, for example, has been working with House of Fraser, Britain's' leading department store group, on an RFID experiment. This pilot involves embedding the RFID tag, which carries shipment information, on the article security tag that many retailers affix to garments as an anti-theft device. In this case, Exel employees in a Chinese factory apply the multi-purpose tags to garments made in China so they can be tracked across the ocean to a UK-based distribution center. Once they arrive in the UK, the tags are scanned and then are scanned once again when they go out to the stores. The tags are then removed at the point of sale, collected and sent back to China for reuse.

Hollis says this is just one of a number of RFID pilots that Excel has been running worldwide in the past year and a half. The American Center of Excellence evolved out of a sense "that we need a more focused solution center to learn how to best apply RFID to the supply chain. Besides the retail focus, we want to look at the velocity of how products move through a warehouse, high-value asset tracking and how to leverage for sea containers."

Descartes served as the technology vendor for the Canadian Supply Chain Network Project, which involved Canadian food and transport companies working in tandem to test RFID for use in the warehouse receiving process. Bowerman says RFID tags were embedded on pallets in the supplier's warehouse and then tracked in between two locations in the metro Toronto area wherever readers had been planted. Global Positioning Systems (GPS) were also embedded on the trucks, so they could be tracked as well.

Through this operation they were able to keep tabs on purchase orders "and other standard business documents. The key we discovered is to get good, reliable reading. That means setting up the readers (also called antennas) properly. It's not a roll it on and slap it on thing. You can have the technology, but doing it properly and getting reliability is something we need to test and work out," he says.