Automotive Industry Trends
December 2005
An Overview of RFID in the Automotive Industry
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RFID, Radio Frequency Identification, is a revolution just waiting to happen. RFID devices, tiny microchips no bigger than a speck of pepper and their associated readers and data integration systems, are nearly ready to forever change the way supply chains are managed and the way products are tracked from end to end of their life cycles. As the revolution progresses, other advances will take hold. Chips will monitor and report everything from pressure in tires to proximity of other vehicles. Today, a chip can be packed with hefty amounts of information and then be attached on or in the product or affixed by a tag to a case or pallet. When a reader queries the chip, it reports back with everything from the name of the manufacturer and when and where the product was made to its serial number, type, product code, and precise location in the facility at that moment. RFID provides real-time data that otherwise would be unavailable until end-of-month reports are filed.
Though early forms of the technology for this process have been available for decades, the adoption of RFID as a prevailing business practice across the globe is only now beginning to take off. The move toward adoption in the United States has been driven by mandates from key organizations, such as the Department of Defense, Wal-Mart, the Food and Drug Administration, Target, and many others, compelling their suppliers to make a rapid transition to RFID. However, the automotive industry has already been using this technology for years. For example, in 2001 the Automotive Industry Action Group (AIAG) developed its Tire and Wheel Label and Radio Frequency Identification Standard B-11, the first item-level RFID standard. One of the tasks of the standard was to comply with the TREAD Act of 2000. Numerous rollover accidents prompted Congress to pass the legislation, which required that VIN numbers and Department of Transportation tire numbers match. The use of RFID replaced twelve labels per tire with one tag. Since the AIAG modified B-11 for broader application in 2004, the automotive industry has become RFID’s largest single user.
Various other industries are now taking steps toward full conversion to RFID. More standards, from IEEE 802.11 (Wireless LANs) to ISO 18000 (RFID Air Interface), have begun to address the issues of interface and interoperability that discouraged many business from exploring RFID’s usefulness. Despite significant barriers, primarily the enormous cost of initial implementation and the prohibitive cost of the tags themselves, more than 50 percent of respondents in a recent study declared that they had begun or planned to begin implementation of RFID within the next 12 months. Leading the trend, 59 percent of respondents in the automotive industry confirmed that they would deploy the technology in the next year.
The RFID revolution will most likely happen in stages, not in one fell swoop. There will be no slash-and-burn of legacy systems, and most enterprises will initiate RFID technology in pilot projects to evaluate its effectiveness. The automotive industry, having already built its transitional foundation, will introduce dozens of innovations while others are still testing the waters.
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