News

Miles ahead of early RFID

Dec. 31, 2007 - Tom O'Boyle is VP and Sales Manager of Miles Technologies, a company providing business solutions that employ barcode, RFID and voice technology.

O'Boyle: As a company we started out in 1982 in the bar coding world. One of our largest customers, Kodak, came up to us and said 'we have got to comply with Wal-Mart, we are in the middle of a rollout. Can you help us?' We started learning about RFID at the very, very early stages of some of the Wal-Mart compliances.

Since you have the historical perspective, what were some of the earliest challenges that you met with your clients?

O'Boyle: The challenges we had is that nobody, the manufacturers, the software companies, the tag companies - nobody really knew what their things did. So our goal was to find out the real world scenario and make it fit for the application.

In Kodak's perspective, they couldn't read when they were expecting to read. All of our larger early customers had the same exact problems. They couldn't write when they were expecting to write. The dead tags, the problems associated with the software networking, all of those kind of bugs that were in part of the early systems, are now gone.

Now that people have moved a little further along, are you finding that they are starting to use RFID beyond the mandates that brought them into it?

O'Boyle: Some of the larger ones are. They are taking the data that they had assumed were just validation of reads, data they were getting from their retail customer; and they are taking that data and starting to look at what their inventory levels are, to see the flow of promotional items and where they have landed.

They're really starting to do some forecasting that makes sense to them. They are also able to take some of the software that was put into place and start adding readers, to be able to read at different points that they never tried before. So, they are able to take advantage of the infrastructure they put into place. But, for many of them, the infrastructure was for compliance only.

Are you seeing that the compliance-only implementers are focusing on costs, whereas the other ones are perhaps more open minded?

O'Boyle: I would say the first two rounds of the Wal-Mart suppliers are a lot more open minded than the last couple of rounds. One reason is that they are larger companies, who had IT infrastructure and who could put teams together to actually focus on RFID and try and figure out where it would work. And they gained that experience to know where to look.

The smaller companies, the suppliers who are just at their early stage of compliance, they are looking at a pure cost factor. In fact, many of them aren't even reading yet.

Do any of your clients have any surprises that you might be able to share with us, some unexpected benefits?

O'Boyle: Probably the number one benefit that we found - which people weren't looking for at all - is the ability to count.

They are finding that their counts on the pallets are actually going up, that the units they think are on the pallet are actually valid. And they would have never have known that without RFID, because they just assumed that everything was bar-coded, scanning correctly, and that everybody was grabbing the right item.

Besides learning that their data is valid, did any of your customers cause actions to happen, like warning signal when there is a problem?

O'Boyle: Yes. Typically, you signal that through some type of user intervention. Meaning that you could have a light stack that actually turns red; audio signals that beep; or in many cases, it is a screen that the operators are looking at where negative number come up on the screen. It is in red as opposed to the green valid number. You have to have some type of notification to the user that they have done something wrong or there is a problem with the order.

I know that Miles Technologies is involved with asset tracking and work-in-progress and other types of applications besides supply chain. Are you finding that these are different customers, or are the same customers expanding their use?

O'Boyle: Our finding has been that these are different customers. The customers who are focusing on the supply chain are typically consumer goods type companies.

We are seeing companies that you would never expect: after-market, auto manufacturing houses. We are seeing companies that are working with processes that have nothing to do with any form of outside supply chain process. It is all internal from their manufacturing sites to their own distribution site.

Can you characterize how they recognize that need?

O'Boyle: I had an example the other day where a company has gotten $40,000 in charge backs from their customers because of lost pallets within their facility. So it is typically a financial problem at first. And they don't know exactly how to fix it. But they know that it is occurring because they lost pallets. So, how you fix that process could be completely different technologies based upon what their true application is internally.

With work-in-progress, does the value lie mostly in keeping track of where you are at, or are their additional values that the customer gets?

O'Boyle: It is twofold. In some cases it is tracking the tote or the carrier of the goods. Of course, that has some small value. Then there is the value of the inventory within itself.

But, then in many cases, it is being able to find it. We ask people, 'What is the value of the XY coordinate? Do you really need to know and pinpoint within feet where it is? Or do you want to know when and where it was last seen? Depending upon the value of that tote or that carrier, the XY coordinate is useful to them, or not.

For companies that might be thinking about getting involved in RFID for tracking for internal purposes, and they are reading about ROI, which we know can be great, are there any words of advice in terms of ongoing costs? Is there a cost trend chart you can tell them about?

O'Boyle: If they go with the passive type of system, the cost of the passive tags continually goes down. And the good part is, is a year and a half ago, we were sitting at 40-45 cents per smart label, and as of today you are sitting at 12-15 cents per smart label. That cost drop will probably not be consistent from a percentage point of view, but it is going to continue to go down as time goes on.

As more adoptions happen, the cost goes down. Rigid tags used to be $25, now rigid tags are $5-7. So the trend we are seeing in the passive world is to continue the drop on your consumable side. If you are using active tags, we are also seeing those things drop. It is probably about 40-50 percent over a year.

Now looking ahead to '08 which is just beginning, what is Miles Technologies most excited about, either technology- or application-wise?

O'Boyle: For us it really is the ability to determine what problem the customers are trying to fix, what applications work for them and then being able to integrate multiple technologies. You know, our goal as system integrators is to pick the right ones, whether it is barcode, passive RFID, active RFID, voice picking, it could be any of those and all of those in one system. So, for us it is exciting.

And it is going to be applied to a combination of what people call asset tracking, what may actually end up being inventory control with working process applications, physical assets being moved, or it could be people. So, all of those are being combined together.

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