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RFID gets manufacturing push from IBM

Tags:
RFID,
Manufacturing,
IBM

Matt Hines CNET News

Published: 14 Sep 2004 18:00 BST

IBM announced two new sets of radio frequency identification services on Tuesday that target companies in the industrial and manufacturing sectors, as well as midsize retail suppliers.

The company launched a handful of service packages aimed at specific industries, including automotive, aerospace, manufacturing, chemicals, paper and electronics. IBM asserts that by tailoring its radio tag services for each sector, it can help customers plan and build their radio frequency identification (RFID) infrastructures faster and more efficiently.

RFID tags are chips armed with radio frequency antennas; they provide detailed information about the products to which they are attached. Experts assert that the adoption of RFID will create more efficient tracking of inventory, thereby cutting costs and helping rectify supply problems. Much of the activity surrounding the burgeoning RFID market has been generated by a raft of mandates issued by retail chains such as Wal-Mart and Target in the United States and supermarket giant Tesco in Europe. All three chains have ordered their largest suppliers to adopt RFID systems.

IBM said the industrial RFID packages include tools for developing business strategies, internal pilot programs, partner integration and technology launches. As part of the programs, IBM's RFID customers will gain access to the company's RFID-testing sites in the United States, France and Japan. The effort will also be supported by the IBM Research business unit, which will aid in the design of customized RFID systems.

"We've been working with industrial-sector companies on RFID for some time, but this services launch is IBM taking the next step and offering applications that go beyond the mandates and offer additional business opportunities," said Eric Gabrielson, vice president of RFID at IBM Global Services. "We're helping companies apply RFID to improve work in process manufacturing in (the) automotive (industry) and to help electronics companies fight counterfeiting. The industrial applications of RFID are truly expanding."

As an example of its industrial RFID skills, IBM highlighted its relationship with customer Philips Semiconductors, which has been working on a radio tag system since November. The semiconductor maker is affixing RFID tags to all of its cases and carton packages of silicon wafers. The effort is based on a pilot program at Philips' manufacturing site in Taiwan and its distribution centre in Hong Kong, the companies said.

Researchers have predicted that manufacturers will continue to make significant investments in RFID over the next year. In a research report published Tuesday, Boston-based Yankee Group estimated that consumer goods manufacturers will spend an average of $6.9 million (£3.8 million) on RFID in 2005.

"Enterprises need to identify what they can improve and how RFID can help them streamline processes and improve material flow within and between their facilities," Michael Dominy, an analyst at Yankee Group, wrote in the report. "Most companies focus only on the cost to incorporate RFID technology into their supply chains. It takes much more effort to identify how RFID can drive business benefits."

IBM also launched its first set of RFID services designed specifically for midmarket suppliers, which Big Blue defines as businesses with fewer than 1,000 employees. Company executives said the midmarket represents a ripe opportunity for RFID because a growing number of smaller companies--specifically midtier suppliers to Wal-Mart and Target--are looking to install radio tag technology rapidly.

IBM said the midmarket packages target many of the same functions as the company's RFID services for enterprise customers, but the new packages include provisions for working with smaller budgets and fewer IT workers.

"Smaller companies need to be able to deploy RFID quickly and within a budget that is effective for their scale," Gabrielson said. "Midmarket companies are still trying to figure out how to approach RFID, and we're trying to help them understand the infrastructure demands and business case, and identify where the real value may be for them."