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Auto manufacturers consider high memory
tags for maintenance, warranty programs

03/28/11 | John R. Johnson | email

In an effort to capture new customers and increase sales, luxury automakers are tempting consumers with free maintenance programs. Volvo, for example, is pushing a feature that covers all maintenance costs for the first five years of new vehicle's life.

In an effort to manage these programs, manufacturers are investigating high memory RFID tags like those being embraced by the aerospace industry.

Aside from Volvo, automakers like Jaguar, BMW, Audi and Lexus could all be turning to high memory tags in the next several years. Tego, a provider of high memory RFID tagging solutions, expects that the auto industry will be one of its major markets in three to five years. Tego CEO Tim Butler says the auto industry could consume tens of millions of high memory tags as manufacturers target better efficiencies for process control, production control, supply chain management, car distribution and managing maintenance programs.

"Initially we've seen interest from some very high-end auto manufacturers who do a lot of maintenance for automobiles," says Butler. "Lately we're seeing interest from the larger automotive companies as well."

Butler expects Tego will ink at least one automotive deal within the next six months. He sees the automotive sector emerging as one of Tego's top five markets down the road. The industry is looking at tags with 4 and 8 KBytes of memory to keep track of production numbers, VIN numbers, part numbers and supply chain information. Tags would be placed on car bodies or on any type of metal parts, and would travel with the car for its entire life cycle.

Manufacturers are also considering high memory tags for configuration management and to record product lifecycle data by tracking manufacturing information, product testing and any repairs that are conducted throughout the life of the part.

"The high-end auto manufacturer's assets are very high value," says Butler. "So they are also looking at this from an anti-counterfeiting perspective to make sure parts are actually genuine OEM parts."

Aside from aerospace and automotive, Butler says that the railroad, chemical, and oil and gas industries are all looking at adding intelligence to high value assets by utilizing high memory tags. However, the aerospace sector is far ahead of other industries. Initial reports of the airline industry using hundreds of thousands to millions of high memory tags have been pushed out another 12-18 months. Aerospace manufacturers will likely use the next 12 months to get their high memory tagging programs in gear, and then fully ramp up tagging during 2012.

And while Airbus is on record that each of its new A350 aircraft will carry 3,000 RFID tags, it's entirely possible that each new plane could carry up to 10,000 tags as Airbus starts to identify other use cases. The A350 is scheduled for delivery beginning in 2013.

"It's the same thing you see in automotive, but they are two years ahead of the game," says Butler. "They've done their due diligence and are starting to see where the applications fit and other use cases, so tagging starts to extend itself out."

While aerospace has clearly defined the ROI for most use cases, there is still a disconnect when it comes to return on investment for auto, primarily because of the misconception that users must spend millions on back end systems to accommodate RFID. While some infrastructure costs are needed, Butler stresses that they don't need to invest multi-millions on IT systems on the back end when they have the information needed on the asset.

"I can have someone with a handheld reader and a laptop out there getting the information without having to acquire all this back end [infrastructure], and then I can use those back end systems more efficiently," he says.

"The conversation we have with people is that this is no different from 25 years ago when PCs were coming along and it took people a while to understand the impact of distributed data. In this instance, it's just distributed data for assets. The value points and implications for new applications and efficiencies is just beginning, and people are just starting to realize this."

The other area where high memory tags are just scratching the surface is with the concept of putting applications onto the tags. With the additional memory of Tego's tags, enterprises could use the same model available today on an iphone to have downloadable apps.

"Our 32 KByte tag is just the beginning," says Butler. "We think there will be the ability to store a lot more information and provide more functionality."

The auto industry continues to work on standards for RFID tagging. The Automotive Industry Action Group (AIAG) is involved with a global standardization effort and recently unveiled RFID standards for returnable containers. AIAG is working with Europe's Odette International Ltd. and the Japan Automotive Manufacturers Assoc., on global standards for item level tagging of parts. The standards will identify memory and read range requirements.

Larry Graham, a principal at LG AutoID LLC, works closely with the AIAG standards body. He says the regs should be ready in June, although the natural disaster in Japan could delay the standards.

"The big thing that is helping all of this is having the Gen 2 tag to build standards around," says Graham. "Whether you use a tag for retail or industrial, we're all leveraging that same tag design. So by doing things in a standardized way, we get volumes up and drive costs down. Traceability is becoming much more important for us. You're talking about extending warranties, and usually suppliers are a partner in that warranty. All of this is going to enhance the as-built record for a vehicle."

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