India tests RFID waters

By Chitra Giridhar, Contributing Writer -- Electronic Business, 11/7/2006

Sabare International, a home furnishings textiles exporter headquartered in the small South-Indian town of Karur is using RFID tags to reduce its operating costs.

Having completed proof-of-concept, companies are currently evaluating the ROI and feasibility of large-scale RFID roll-out with both customers and suppliers.

“We wanted to have better control over our inventory,” says Melpakkam Venkatraman, executive director, Sabare International, who is spearheading the project.

Sabare’s $25,000 pilot project was implemented by Gemini Traze RFID (a subsidiary of Gemini Communication), which supplied five mid-range RFID readers, antennas and handheld readers operating at 13.56 megahertz. The passive, read-write laminated RFID tags are used in the raw material section to keep track of inventory and in the stitching department for quality monitoring. Data from the tags is used to update the ERP system and to give managers information they need for making decisions such as how the work-in-progress should be matched to shipping and customer order schedules and what measures need to be taken to reduce manufacturing defects.

According to Melpakkam Venkatraman, production efficiency at the plant has improved by about 5 percent, and the percentage of defects in manufactured goods has declined from 3 percent to 2 percent. For companies operating in the fiercely competitive textiles business, these savings are nothing to be sniffed at. Not surprisingly, enthused by the success of the pilot project, Sabre plans to install RFID tracking in the first half of 2007 at its five manufacturing facilities and 10 warehouses.

Sabre is one of many companies looking at using RFID as a way to cut inventory costs.

More recently, NXP Semiconductors, Smartag and Gemini Traze have collaborated to implement a “hands-free” RFID ticketing solution for a sporting event—the ICC Champions Trophy Cricket tournament—hosted by the Rajasthan Cricket Association (RCA) in Jaipur. NXP has provided the IC chips that are embedded in the Smartag tickets, and Gemini is installing the reader terminals and, “walk thru” gate antennas, and providing the system integration expertise. Spectators holding these special tickets can enter the stadium gates, quickly and conveniently. After evaluating this pilot, the RCA plans to expand RFID ticketing to all ticket holders for future events, and its cricket academy.

“We have also initiated several pilot projects in the retail segment. We see a lot of interest from exporters that want to RFID-enable their tagging process—“slap & ship” is the mantra,” says Vijay Kumar, chairman of Gemini Communication (the holding company for Gemini Traze). Gemini has completed about 75 RFID implementations over the last two years in asset management, including tagging books, and production monitoring systems (work-in-progress) for the automotive and apparel industries.

Short on skilled workers

Growing interest among Indian enterprises is evidenced by the turnout at recent RFID-related events and trade shows where engineers, CIOs and supply chain professionals gathered to discuss trends and technologies and learn from peers about pilot applications of RFID tags.

“Our perception is that there is a large demand in the identification space [attendance monitoring, access control, and so on],” says Mohandas U, managing director, Sparr Electronics. The company manufactures RFID readers as modules for OEMs.

Another area where there is a huge opportunity is in RFID data analytics for the retail industry, according to Agneeswaran Gurusamy, head of RFID at Wipro Technologies.

 “We are researching ways to make RFID work with other retail technologies such as digital signs, electronic shelf-labeling, information kiosks and PDAs,” he explains.

Indian companies in the RFID space are mainly in consulting, systems integration and implementation services. They must contend with a dearth of people capable of building a business case and executing turn key RFID implementations.

“Most Indian solution providers don’t have much experience in designing RFID enabled systems,” admits Ashish Vikram, managing director—India, OAT  Systems India. This view is seconded by Bimal Sareen, founder & CEO, AVAANA and founding president of the RFID Association of India. He says, though, that software companies and systems integrators are working to create complete solutions, but that there is a shortage of software developers in India who know how to develop end-to-end, mission- critical RFID applications. “You can’t expect a pure software engineer to become an RFID expert overnight,” he says.

Despite many successful pilot tests, many retail and pharma companies in India have not progressed to full-scale deployment of RFID, because of the following:

1. The low cost of labor in India makes manual stock -taking and monitoring quite cheap.
2. There is not much motivation to replace bar codes—which work well enough for their needs. Logistics and distribution in India are much less sophisticated than in the U.S.
3. Most Indian companies are already stretched to the limit by the boom in the Indian economy. They are focused on expanding production and IT facilities-and don’t have much time or bandwidth to pilot and /test new technologies.
4. Exporters that do not have any mandate from buyers such as Wal-Mart to implement RFID are in no hurry to implement. Although they are running a few pilot projects, there is no serious economic motivation to adopt it immediately.

“The value RFID will bring is not considered very critical at this time,” says Gurusamy. And suppliers’ lack of any RFID mandates from their buyers that they need to comply with only exacerbates the situation, he says.

“Indian technology companies are usually involved in application-level software. Only a few do embedded solutions and middleware,” observes Krishna Moorthy, director, India Design Center, National Semiconductor.

Moorthy says the real opportunity lies in offering an integrated system solution at the wholesale and retail levels.

Overcoming technical challenges

Besides the high cost of implementing RFID solutions, which is deterring prospective users, there are also technical challenges that need to be overcome before RFID gains widespread currency.

 “Reading tags over a long range and reading multiple tags really fast are the important ones. We can expect RFID to really take off when this happens,” says Mohandas U. Gemini says it is working on sensor-enabled tags that record temperature and, pressure and detect motion. “We have already completed development of packaged RFID tags that work on metals and other materials that are prone to electromagnetic inference, and we are developing integrated antennas for tags as well as readers,” says Kumar.

Tag manufacturers and system integrators are also pinning their hopes on government initiatives to popularize RFID technology. Gemini Traze has scored a big order from the Indian government to deploy RFID tags for people identification, library management and asset tracking. Although the current Indian RFID market is minuscule when compared to rest of the world market, industry experts are optimistic that it could reach $1 billion if the government goes ahead with its initiatives. Sareen agrees that the India market is now beyond the hype phase, and early adopters are moving forward with clarity of purpose. IDC estimates that the Indian RFID market will grow at a CAGR of 70.2 percent between 2005 and 2009.

Kris Gopalakrishnan, COO of Infosys Technologies, says his company is implementing a pilot to enable a client in the health care industry to tackle supply chain problems for high value items and to automate supply chain processes. Infosys has also assisted CHEP, a global pallet and container pooling services company that handles more than 2.5 million equipment movements per day, with an RFID-based track-and-trace solution. “We think there are lots of opportunities to leverage RFID in other industries too,” Gopalakrishnan says.

To cash in on the emerging opportunity, Gemini Traze is investing in a $5 million plant to manufacture RFID tags at Sriperambadur, Chennai. “Once the plant is operational, the cost of the tags is likely to come down by 25 to 30 percent from its current 60 cents,” says Pradhyumna Venkat, CEO of Gemini Traze RFID. 

The plant, scheduled to be in operation next month, has the capacity to produce 45 million UHF tags annually. Venkat, however, concedes that the cost of tags needs to decrease to about 5 cents before companies consider investing in high-volume item-level tags. He predicts that this could happen over the next three to five years.

The International Organization for Standardization (ISO) recently amended its existing passive UHF RFID standard to include the EPCglobal Gen 2 standard. This means that Gen 2-compliant RFID hardware will be considered compliant with ISO standards.

“The Indian industry needs to get involved in the EPC standards setting activity, so that standards that are relevant to local businesses can be factored in. It will also give the Indian industry a head start in designing systems—not only for local applications but also for the global market,” advises Moorthy.