RFID Goes Vertical

By Andrew Price

In 2006, end user companies will focus on technological solutions that can solve problems within their specific vertical industry.

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For most of the past few years, radio frequency identification has been something of a generic technology. Vendors of tags, interrogators and software have offered generic products and left it to end users or systems integrators to figure out how to make these work for specific applications. Even those vendors that have offered solutions have targeted broad horizontal markets, such as inventory management or asset control. But as RFID technology matures, end users are increasingly looking for solutions that solve specific business problems in their particular vertical industry, and vendors are starting to respond.

Within the consumer product goods industry, the end users’ shift toward vertical industry applications is being driven by their need to achieve a return on investment. Many early adopters of Electronic Product Code technologies have found that tagging cases and pallets for a retail customer simply doesn’t deliver enough improvement in supply chain efficiency to justify the cost of the tags. Thus, they have begun exploring applications that solve a specific problem, such as out-of-stocks.

Hardware providers, software companies and systems integrators are teaming up to create complete solutions.

In other industries, different factors are also at work. Pharmaceutical manufacturers, distributors and retailers in the United States, for instance, are being required by the introduction of legislation in Florida and California to record the movement of pharmaceutical drugs through the supply chain. This is a costly and time-consuming exercise to do manually, so many companies would like to find ways to do it electronically using RFID.

Hardware vendors are responding to the changing marketplace by introducing tags and interrogators that can be used in specific industries. Intermec and Symbol, for instance, have announced plans to introduce new form factors for interrogators, and a number of RFID label makers are introducing labels designed for specific applications, such as tagging individual bottles of prescription drugs or metal airplane parts.

Software vendors are also shifting their tactics to focus on vertical industries. A number are targeting hospitals and clinics, which are using RFID asset tracking systems to find expensive equipment. Systems designed specifically for hospitals could also help them better service and maintain equipment. This is one reason why the Lahey Clinic in Burlington, Mass., is looking to upgrade its active RFID system from GE Healthcare.

GE Healthcare resells active RFID transmitters, interrogators and locating software from WhereNet under its own IntelliMotion brand. The latest tags are smaller and thinner and can be used on more equipment. And GE Healthcare has recently integrated that locating capability with its own AssetPlus enterprise application, which was designed specifically to help health-care providers manage inventories, service histories and compliance requirements. So the new system will let the Lahey Clinic not only determine the location of assets but also alert engineers when those assets need routine or preventative maintenance.

TrueDemand, a startup based in Los Gatos, Calif., has developed predictive applications that use RFID and other data to help companies already tagging goods in the supply chain boost sales by better managing replenishment, promotions and new product introductions. Kimberly-Clark has been using TrueDemand’s software to respond to near-real-time information about the location of products in the supply chain, so it can react more quickly to prevent a situation where its products are out of stock.

OATSystems, a startup based in Waltham, Mass., has developed software that lets CPG manufacturers confirm that they have precisely matched a purchase order from a retailer before shipping goods and then use RFID to create an electronic proof-of-delivery. This could help them save tens of thousands of dollars in chargebacks annually.

In the pharmaceutical industry, SupplyScape, a startup based in Woburn, Mass., has developed a software application and service that enables pharmaceutical manufacturers, distributors and retailers to create an electronic pedigree-a secure document that traces the chain of custody-that can help prevent counterfeit drugs from entering the legitimate supply chain.

Purdue Pharma, a manufacturer of Schedule II narcotics, is already tagging individual bottles of Oxycontin (see Purdue Pharma Gets Down to the Item, January/February 2005). It worked with distributor H.D. Smith on a pilot in 2005 that showed SupplyScape’s software could be used to collect and manage the data to create an electronic pedigree.

Major systems integrators are partnering with these startups to provide industry-specific solutions. IBM, for instance, has partnered with both OAT and TrueDemand to serve CPG manufacturers, and Unisys has partnered with SupplyScape to serve the pharmaceutical industry (it worked on the e-pedigree pilot). It’s likely that makers of RFID tags and interrogators will also join partnerships and provide new types of tags and interrogators that can be part of an industry-specific solution. That’s good news for end user companies, because they don’t want technology-they want solutions that deliver an ROI.