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RFID use exploding at HP

9/2/08 | John R. Johnson | email

Consumer electronics giant Hewlett-Packard is experiencing burgeoning growth in its RFID division. The company expects to consume about 15 million RFID tags this year -- up from the 10 million it used two years ago -- as it offers new commercial services and increases the number of products it tags. If usage continues to explode, HP’s consumption could climb dramatically.

"If you asked me a year ago I’d have said its not growing as fast as we’d have liked, but now the amount of interest that our customers have on this topic is incredible," said Frank Lanza, worldwide RFID director for HP.

HP is expanding both the number of products it tags for delivery to retail outlets, as well as the commercial solutions that customers are requesting, such as information technology asset tracking solutions. The company is adding staff to its RFID Services division, which employs 300 people involved in deploying solutions that include tags, readers, middleware and data integration.

HP tagged more than 19 million cases in 2007, and has 34 RFID-enabled facilities around the world, including a world-class site in Sao Paulo, Brazil that is attached to an EPC-certified RFID lab. The facility’s 100 RFID readers make more than 40,000 reads and writes each day, at greater than 99.5 percent accuracy.

"We’re continuing to work on RFID innovations both at our HP Lab and within our business units," says Lanza. "The ideas for new ways to use the technology that people bring forward to us are amazing. Companies are willing to spend money now and are thinking beyond slap and ship projects."

Look no further than DHL’s recent announcement that it will tag 1.3 million pallets a year for retailer Metro Group in an effort to gain better supply chain visibility. The program, which will begin this fall, will track all shipments to 89 Metro Cash & Carry stores in France, and is the largest RFID rollout in French retail logistics.

"This project is setting the trend for the whole logistics industry as it brings the era of pilot projects in the RFID technology to an end," John Allan, chief financial officer of Deutsche Post World Net, said in a release. "RFID is ready for everyday use."

In addition, Lanza points to Malaysia-based Sure Reach, a delivery company formed in 2004 that recently began offering RFID-based storage services. Many storage providers keep documents in huge warehouses, and it is often difficult to retrieve them. Sure Reach is attaching RFID tags to pallets, cases, file folders and individual documents, which makes finding articles a snap. Law firms that might be wary of shipping valuable paperwork off to a warehouse can request a reader image of their documents at specific time intervals, and receive documentation of exactly where their information is stored.

"This is a case more about improving business and generating new revenue as opposed to just using the technology to improve the supply chain or for cost reductions," says Lanza.

HP is seeing some of the hottest activity around information technology asset tracking. This summer the company launched its Factory Express RFID Service to track critical data center assets such as HP factory-built servers, storage devices and rack enclosures. For a fee of between $5 and $10 per tag, HP will tag equipment at its factory so customers can monitor the equipment as soon as it is received at their facilities.

Lanza says it’s hard to tell if the company has benefited more from the commercial RFID services it provides, or from the tags it affixes to products that streamline the supply chain as items make their way to retail outlets. Currently, HP affixes RFID tags to approximately 70 SKUs bound for Wal-Mart, Target, Metro, Best Buy, and others. However, that number can vary greatly from week to week.

"When you look at the amount of work we’ve done for retailers and how we’ve improved our out-of -stock position with retailers … it’s pretty significant when you think about the large retailers and the number of stores they have," says Lanza.

He says that since the technology has become more affordable, companies now have collected significantly more data to work with, another factor that is driving growth in the industry.

"There is a lot more data being captured and there is interest from some of our customers to consume some of that data at the enterprise level versus keeping it separate in a data base and running queries on it," says Lanza. "There just hasn’t been enough data until now. But you look at companies like P&G that probably have greater than four terabytes of RFID data, and it starts to get interesting."

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