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Closed-loop RFID Applications (Part 1)

Monday, December 10, 2007

by Adi Tedjasaputra

Open-loop RFID applications are still the most challenging RFID applications in different areas of retail supply chain. With the ultimate goal of achieving complete supply chain visibility, open-loop RFID applications are still facing the challenge of 100 percent read rate requirement beyond pilot projects and trials. In addition, the time to achieve full Return on Investment (ROI) in open-loop RFID applications is typically longer than closed-loop applications. The understanding of closed-loop RFID applications can better prepare end-users and vendors to plan RFID adoption strategy while preparing for successful open-loop RFID applications.

Several months ago, a consortium of GS1 Australia and RMIT claimed the achievement of 100 percent read rate during a two-month RFID pilot in Australia. During the pilot of National EPC Network Demonstrator Project (NDP) Extension, the team tagged each pallet to produce electronic proof of deliveries (ePODs).

Last month, the world's fourth largest retailer - Metro Group announced the completion of operational rollout of RFID technology in its 180 stores and warehouses in Germany. The rollout is the largest RFID project in the European retail sector after claiming 98.5 percent read rate in trials across its distribution centers early this year.

While we hear more good news about the successful pilots and rollouts of open-loop RFID applications, some RFID vendors have already shifted their efforts to cater the demand for RFID technology in closed-loop applications, rather than open-loop RFID applications in retail supply chain sector. The change very much reflects the fact that the current demand for RFID technology in supply chain sector is still very much less than expected. On the other hand, the demand for RFID technology in diverse close-loop applications has grown significantly during the past few years.

What is Closed-loop RFID Applications?

Loop.

Closed-loop RFID applications is the use of RFID technology by an organisation to achieve specific goals or solve specific problems, usually through process re-engineering. Different from open-loop RFID applications that require tight and also often complex cooperation with different stakeholders in different organisations, closed-loop RFID applications benefit from the possibility to execute RFID technology adoption plans according to a time frame decided solely by an organisation - usually the end-user itself.

On the RFID system level, the infrastructure required by closed-loop RFID applications is often simpler than open-loop RFID applications. There is no issue or less issue of data sharing and ownership among different organisations compared to open-loop RFID applications. The RFID system security requirement is usually less complex than open-loop RFID applications.

The second part will provide some examples of closed-loop RFID applications that can deliver values for different end-users.

The writer is the Founder of RFID Asia - The Prominent RFID Community in Asia.

Send your comments and discuss.

Labels: closed-loop, project, rfid, scm, security, technology