Bar codes, cashiers will be so yesterday

The Detroit News | December 28 2004

The same technology that allows drivers to unlock their car with the push of a button will one day let shoppers instantly pay for a full cart of groceries without having to go through the checkout lane.

Until then, it's helping automakers cut down on costly recalls and better manage their supply chain.

Similar to a wireless bar code, radio-frequency identification, known as RFID, uses microchips to transmit serial numbers or other identifying information. But in contrast to bar codes, which are the same on identical products, every RFID tag can carry a unique code.

It's useful for tracking parts as they move through a factory, keeping accurate inventories and, in the case of keyless entry devices, identifying a specific item.

At Ford Motor Co. plants in Dearborn, Cleveland and Windsor, RFID tags on pallets that carry engines along the assembly line are able to record details about every action workers perform. If necessary, Ford can print out a 30-page "birth certificate" for each engine that tells everything from what path it took through the plant to how much each bolt was torqued.

If problems arise after the engine is installed in a vehicle, information tracked by the tags can determine what went wrong and identify exactly which engines were affected.

"Instead of having to recall 30,000 engines, you're looking for three engines," Ford spokesman Joe Koenig said.

In the wake of the Firestone tire recall, tire companies have started using the microchip tags to track their products more easily. A tire with an embedded transponder can record where and when it was made, its maximum inflation pressure, and other specifications.

"That's basically a portable database on the tire," said Morris Brown, program manager for materials management at the Automotive Industry Action Group in Southfield.

The auto industry is the largest user of RFID, but it has enormous potential in retail as well. It's essentially the technology behind those stickers on clothes, CDs and books that sound an alarm unless they're deactivated by a cashier.

ExxonMobil's Speedpass, a plastic key tag that customers wave in front of a reader on the gas pump to automatically pay with a credit card, is a more complex application of RFID.

Wal-Mart, the nation's largest retailer, is requiring its top suppliers to have microchip tags on cases of their products starting in January. Eric Michielsen, a senior analyst with ABI Research who covers the RFID market, said the technology will make it much easier for Wal-Mart stores to keep their shelves stocked and let vendors know when more shipments are needed.

"This allows associates to not focus on what's missing but on figuring out how to fill what's missing," Michielsen said. "It's about getting costs down and increasing performance."

RFID technology has been around since the 1940s, when Great Britain used it during World War II to distinguish friendly planes from enemies. But it is only recently that the cost of such a system has declined enough to make it practical for many businesses.

Still, most tags cost between 40 cents and a few dollars each; eventually that price is expected to be only a few pennies. Until then, most companies that use the technology attach the tags only to shipping containers or large cases so they can be reused many times.

"If we're making a million engines a year and they're a buck apiece, that's a million bucks," said Graham Harris, launch manager for the F-150 three-valve engine at Ford's Essex and Windsor engine plants, which installed RFID readers as part of a recent, $485 million upgrade. "We're not at the point yet where we can just give them away."

Advance Group Inc., a Wal-Mart supplier that has watch- and pen-making divisions in Warren, is trying to figure out how it can start using the microchip tags without raising its prices. Wal-Mart, the company's biggest customer, is requiring Advance to tag shipments by 2006.

"It's obvious how it helps Wal-Mart," said Steve Bolin, vice president of operations at Advance. "What we don't know yet is how it's going to be a benefit to us."

As costs continue to decrease, warehouses in a variety of industries are expected to begin using the tags. Readers can be installed around a loading dock to log items as they're received and shipped out.

"Eventually you know exactly what you've loaded and nobody had to get off the forklift," said Robert Bunsey, president of Barcode Data Systems in Cleveland. "And most importantly, you didn't leave anything on the dock inadvertently."

That same concept will eventually allow stores to replace some or all of their cashiers with RFID readers around the doors. The system will tally up a customer's purchases by reading microchips on each product -- instead of someone having to look for a bar code and manually scan it -- then automatically deduct the total amount from a credit account.

Experts foresee countless future applications for RFID. Hospitals soon could begin using the technology to track patients and log their medical records.

In the coming decades, it could allow refrigerators to track the expiration date of their contents and drivers to receive messages in their vehicle about the speed limit of a road or status of a traffic signal ahead.