Midrange Stuff, OS/400 Edition

Manhattan Associates has committed to developing new software that will allow companies to plug radio frequency identification, or RFID, technology into any ERP or warehouse management system, on all major platforms. Manhattan says its new product, RFID Middleware, will meet the increased demand for RFID technologies that it expects in the future. Much of this demand could stem from one company, Wal-Mart, which recently announced it will require suppliers to use RFID technology by 2005.

RFID is not new. The technology has been around in some form or another since World War II. Since the 1980s, RFID's capability to track movement has spawned uses in a variety of industries, from fleet management and automobile manufacturing to garbage collection and animal husbandry. More recently, as miniaturization has progressed, the distribution industry has given RFID another look, as a potential replacement for the ubiquitous barcode label.

In the supply chain, RFID technology would enable a company to put product data on an RFID tag, which is basically a small electronic device composed of a microchip and an antenna. This tag is then placed on the product the company wants to track, which could range from the individual item level to the crate or pallet level. Whenever that product enters a warehouse, or leaves the store, an RFID reader would automatically detect the event and another piece of software (such as Manhattan's forthcoming middleware) would update the database.

This approach holds several advantages over traditional barcode labels. RFID tags can be read from practically anywhere and do not require the reader to have a clean line-of-site to the item, as barcode label scanners do. Additionally, one RFID reader can read multiple RFID tags. The RFID tags can also be updated wirelessly, over the airwaves, and the tags can contain much more information than a barcode.

It's this extra room for data on an RFID tag that could allow a company to manage its inventory more efficiently, especially if it tracked all products at the item level, proponents of the technology say. Even with no more data than exists on a barcode, RFID technology will reduce the number of data entry errors and lower human labor costs in a distribution center, they say.

While the technology certainly sounds promising (if a little utopian, in a Big Brother sort of way), there are some limitations to widespread RFID rollout at this point in time. First, there is no agreed-upon RFID standard. The Auto-ID Center has worked with the standards bodies Uniform Code Council and EAN International to come up with the electronic product code, but it is not yet considered a standard (although it is the leading contender). Additionally, at 50 cents a pop to manufacture, RFID tags are just too expensive for widespread use.

But now that Wal-Mart has thrown its heft behind RFID, solutions to these limitations may be found sooner, rather than later. Two weeks ago, Wal-Mart, the largest company in the world, announced plans requiring its top 100 suppliers to put RFID tags on shipping crates and pallets by January 2005.

Wal-Mart's mandate is expected to address both major limitations associated with RFID technology. First, it should accelerate the development of the electronic product code as the RFID data standard. Second, the demand that Wal-Mart has created for RFID tags should drive down the price. Wal-Mart says it will need one billion RFID tags, and that should drive the price of the tags down to 5 cents each. Industry observers say that's a bit optimistic. Ten cents per tag is more realistic, they say.

While RFID has been on Manhattan Associates' agenda for about six months, its first major RFID-related product announcement occurred, coincidentally, the same week that Wal-Mart made its announcement. In fact, Manhattan made two RFID announcements.

First, Manhattan announced it has developed an "RFID in a box" solution with its partner Alien Technology, which sells RFID readers and RFID tag-manufacturing technology. This solution includes RFID hardware, services, and a limited edition copy of Manhattan's Windows-based Trading Partner Management application. This solution is designed as a starter pack: Companies can get involved in RFID without spending a lot of money on a full implementation.

It's Manhattan's second announcement--to deliver an "RFID Middleware" offering in the third quarter of 2003--that holds the most promise. While product plans were scarce, and Manhattan officials were unavailable for comment at press time, a spokesperson for the company confirmed that the plan is for RFID Middleware to work with all versions of Manhattan's Warehouse Management System (formerly PkMS), including the versions that run on OS/400 and open systems. In addition, the RFID Middleware software will connect RFID hardware to warehouse management systems or supply chain execution systems developed by Manhattan's competitors.