RFID in Manufacturing: The race to radio-tag is heating up in manufacturing

TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 3

Introduction 3

Key findings 4

RFID technology 4

Applications of RFID in manufacturing 4

RFID considerations 5

Implementation options 5

Competitor dynamics 6

The future decoded 7

Introduction 7

The RFID market, 2004-2010 7

Key findings 8

CHAPTER 2 INTRODUCTION 19

What is this report about? 19

Who is the target reader? 19

How to use this report 20

CHAPTER 3 RFID TECHNOLOGY 22

Introduction 22

Key findings 22

A brief introduction to RFID 24

RFID can be used in batch, process and discrete manufacturing 25

The report primarily addresses RFID software 25

RFID is being driven by mandates and a desire for more efficient supply chains 26

There are multiple mandates driving RFID uptake in manufacturing 26

Manufacturers are using RFID to make their supply chains more efficient 27

RFID hardware is comprised of multiple components 28

There are various types of RFID tags, each suited to different applications 28

Readers & antennas are responsible for scanning tags 31

RFID software is mainly made up of middleware, but edgeware is starting to grow popular 32

RFID middleware deals with the data coming from the tags 32

RFID edgeware deals with RFID data before it is sent to middleware 33

The EPC Global Network provides an indexing service for multiple parties in the supply chain 34

Conclusion 35

A magic price point of $0.05 is unrealistic � each business will make its own decision 36

Commoditization of RFID tags will not occur any time soon 36

Readers look to be an important developing technology 37

CHAPTER 4 MANUFACTURING APPLICATIONS OF RFID 38

Introduction 38

Key findings 38

Breaking down manufacturing helps for easier analysis 40

Production line applications provide significant benefits 40

Production line tracking allows for greater visibility into work in progress (WIP) 40

Production flow analysis helps reduce bottlenecks 41

Production & yard organisation reduces time spent locating products 42

Sensor-based RFID alerts monitoring systems to changes in critical conditions 42

Labor applications help increase efficiency by reducing human error 43

Asset management is a key area for RFID in manufacturing 43

Tracking and managing assets can help reduce production downtime and enhance maintenance 44

Inbound inventory and materials can be tracked using RFID 44

Ordering & distribution can be enhanced using RFID 45

RFID helps keep track of distribution assets through close monitoring 45

RFID tags help picking and packing processes become more accurate 46

RFID data from upstream and downstream partners can be used for better production forecasting 46

Conclusion 46

Business partner participation can affect the benefits received by an RFID-enabled manufacturer 46

Effective communication between RFID hardware and enterprise applications is crucial for manufacturers 47

Different applications of RFID will be adopted at different rates 47

CHAPTER 5 RFID CONSIDERATIONS 48

Introduction 48

Key findings 48

Other IT strategies might have a higher priority than an RFID implementation 50

The risk of excessively complicating business processes might detract from an RFID solution 52

RFID needs to live in harmony with existing manufacturing execution systems (MES) 52

Data quality could be the downfall of RFID deployments 54

RFID data storage is a small issue, but one that should be watched 55

RFID will not replace barcodes immediately � instead they will both be used for varied applications 56

The security of RFID data and tags is not a huge issue now, but one that could be in the future 58

Choosing the right RFID technology takes into account several factors 59

Selecting the right reader for each RFID application is key for complex production processes 60

The orientation of tags and readers could affect crucial read rates 61

Some materials affect the transmission of RF signals, and need different RFID setups 61

The amount of data generated by RFID requires a solid network base 61

Conclusions 62

CHAPTER 6 IMPLEMENTATION OPTIONS 63

Introduction 63

Key findings 63

A phased RFID implementation can spread both the risks and costs of a strategy 64

Phase 1: pallet & case tagging is being used particularly to meet customer mandates 64

Phase 2: asset & labor tagging can provide instant impact for manufacturers 65

Phase 3: unit-level ID tagging is the most in-depth type of RFID deployment and yields the most benefits 65

Manufacturers can focus on an internal RFID deployment, an external one incorporating partner integration, or a combination of the two 68

Conclusions 70

Datamonitor believes that larger manufacturers will implement RFID gradually, while smaller businesses may go straight to phase 3 71

Datamonitor expects internal RFID deployments to outnumber external in 2005 71

CHAPTER 7 VENDOR PROFILES 72

Introduction 72

Informatica 73

HP 75

Ascential 77

Oracle 80

Vizional 83

SAP 85

IBM 87

SUN 89

Conclusions 91

Expertise in retail could help software vendors selling RFID to manufacturers and vice versa 91

Education and demonstration must be key strategies for software vendors 92

CHAPTER 8 THE FUTURE DECODED 94

Introduction 94

Key findings 94

The RFID market, 2004-2010 95

Global RFID market to exceed $6 billion by 2010 95

North America to lead � EMEA and APAC to grow quickly 96

Germany and the UK are key EMEA RFID countries 97

China and Japan will lead APAC as it reaches a total $1.26bn by 2010 99

Manufacturing will account for 49% or $3bn of RFID investment in 2010 101

Pharmaceutical, CPG and the automotive industry will drive global manufacturing spend on RFID 103

Hardware comprises the bulk of RFID revenue with services playing a greater role in the future 109

CHAPTER 9 APPENDIX 112

Future readings 112

SPP writing team 113

How to contact experts in your industry 114

LIST OF TABLES

Table 1: RFID applications in batch, process and discrete manufacturing 25

Table 2: RFID tag types 29

Table 3: RFID vs barcodes 57

Table 4: Production line applications 66

Table 5: Asset management, inventory management, labor applications 67

Table 6: Ordering and distribution, up/downstream data flows 68

Table 7: By 2010, North America will have hit $2.6bn while EMEA will only just edge past $2bn 97

Table 8: EMEA RFID revenues 99

Table 9: APAC RFID revenues 100

Table 10: RFID vertical revenues 102

Table 11: RFID manufacturing revenues 104

Table 12: RFID cost split 2004 - 2010 109

Table 13: RFID hardware investment projections 111

LIST OF FIGURES

Figure 1: RFID software vendors from a variety of backgrounds 6

Figure 2: North America will be the biggest market for RFID from 2004 to 2010 8

Figure 3: An overall view of RFID technology 24

Figure 4: The report focuses on just manufacturing in the supply chain 26

Figure 5: A typical RFID setup includes readers, antennas and tags 32

Figure 6: RFID middleware stack 33

Figure 7: The EPCGlobal network relies on EPC Information Services 34

Figure 8: RFID affects different areas in manufacturing 40

Figure 9: In 03/04, 78% of manufacturers surveyed had decided to wait and see about RFID. 51

Figure 10: RFID and MES integration 53

Figure 11: RFID data integration will take time 55

Figure 12: Value generation: nternal vs external RFID deployment 69

Figure 13: RFID software vendors from a variety of backgrounds 72

Figure 14: An overview of HP 75

Figure 15: An overview of Ascential 77

Figure 16: An overview of Oracle 80

Figure 17: An overview of Vizional 83

Figure 18: An overview of SAP 85

Figure 19: An overview of IBM 87

Figure 20: An overview of Sun 89

Figure 21: North America will be the biggest market for RFID from 2004 to 2010 97

Figure 22: UK and Germany are the biggest European RFID countries, with 23% and 28% market share respectively in 2010 98

Figure 23: Most RFID revenues in 2004 were generated in Japan, but China is growing faster 99

Figure 24: Manufacturing is the largest RFID vertical, with 49% of investment in 2010, dropping from 54% in 2004 101

Figure 25: Pharma, CPG and automotive will generate the most global manufacturing RFID revenues from 2004 to 2010 103

Figure 26: CPG will grow its market share by 6% between 2004 and 2010 in EMEA 106

Figure 27: Pharma will grow strongly in North America, reaching 18% market share for RFID investment by 2010 107

Figure 28: High-tech and electronic RFID investment market share will increase by 2% between 2004 and 2010 in APAC 108

Figure 29: Hardware is the largest cost for RFID 109

Figure 30: Tags and labels will shrink from 48% of total hardware cost in 2004 to 39% in 2010 110