Chemical Industry Explores ROI for RFID

By Beth Bacheldor

Aug. 17, 2007—The Chemical Industry Data Exchange (CIDX)—a trade association made up of more than 80 chemical producers, suppliers, marketplaces and industry consultants—is encouraging members to avail themselves of a business model designed to help chemical companies more quickly establish a return on investment (ROI) from their EPC RFID deployments. In a white paper it recently published, CDIX describes the ROI model and spells out ways in which the association is aligning itself more closely with EPCglobal North America, which developed the ROI model with input from CIDX, and how it hopes to involve itself in the development RFID standards addressing the needs of the chemical industry.

"Even though RFID technology is being used by chemical companies, especially those that provide products and services to Wal-Mart and the [U.S. Department of Defense], its uses, to date, are limited," says Ken Hutcheson, CIDX's standards director. "CIDX is driving an industry-wide initiative to examine the potential of RFID and find business scenarios where it might provide additional value to the industry. CIDX is also representing global chemical companies in organizations such as EPCglobal to ensure that chemical companies' needs are being considered as standards are being developed."

According to Hutcheson, the benefits RFID can provide to chemical companies include reducing accidents and injuries; improving the management, maintenance and repair of assets; enhancing inventory management; and tightening the security of railcars, trucks and logistics.

About a year ago, CIDX published a previous white paper on RFID technology's potential in the chemical industry (see Chemical Industry Studies RFID's Applications). In that paper, the authors—a team of experts representing Dow Chemical and other member companies—recommended that the 20-year-old organization establish a relationship with EPCglobal. Since then, the two groups have signed an affiliate agreement, granting CIDX membership to EPCglobal. Consequently, Hutcheson says, EPCglobal representatives have joined CIDX project teams charged with investigating RFID applications and issues, and CIDX officials have attended EPCglobal meetings and events to stay abreast of its efforts.

Currently, EPCglobal is forming the Chemical Industry Action Group (CIAG), which will serve as a vehicle for EPCglobal membership to develop EPC RFID standards that meet the needs of chemical companies. CIDX plans to participate in the CIAG, and to provide documentation on some CIDX standards (called Chem eStandards) used within the chemical industry to buy, sell and deliver chemical products—essential processes within a supply chain. The standards are comprised of business process guidelines, message specifications, envelope and security specifications, implementation tools and technical white papers.