28-04-06 08:28
Age: 2 yrs

BY: SCHMITT, PATRICK; MICHAHELLES, FLORIAN; FLEISCH, ELGAR

This paper presents an adoption strategy for an open RFID standard for the automotive industry and points out why to differentiate between open and closed loop systems for RFID applications. The automotive industry is facing multiple challenges simultaneously. Firstly, vehicle manufacturers (VM) and their suppliers are struggling to save costs in an unfriendly industrial economy. Secondly, the automotive industry has to invest in new technologies like RFID in order to meet the requirements of new laws and regulations. Furthermore, the industry has to satisfy emerging demands of their customers for new and more services in order to retain customers’ loyalty. In closed loop systems RFID is already in use. The well-known example for container tracking and management clearly shows the value of RFID applications for the automotive supply chain. The payback period is less than one year and a positive return on investment of more than 350% is be generated after three years of implementation.1 For closed loop systems there is no initial need for an open and global standard. For the use of RFID in internal operations and 1:1 relationships with suppliers the number of users/participants is small enough that it is possible for the automotive industry to develop an own data structure and to manage the number range for these applications. In contrast to closed loop systems, RFID applications in open loop systems as in the automotive aftermarket require an open and global standard because of the global scale. In order to meet the demands of the upcoming laws and regulations of the European Commission the vehicle manufacturers will have to establish an open standard anyway. In addition to that, the enormous number of users, associations, and manufacturers all over the world will make it unreasonable and costly to develop and to manage a proprietary standard while an open and global standard already exists. In contrast, the use of an open and global standard in open loop systems will lead to decreasing costs for hardware and software (tags, readers, etc.) supporting the selected standard. From a mid-term perspective it would than make sense to apply the same equipment, and possibly the standard as well (because subscription/license fees are already paid), also to closed loop systems. This would save additional costs of RFID adoptions. In conclusion the adoption strategy for an open RFID standard should not be to approach closed loop systems but rather to go for applications in open loop systems like the automotive aftermarket. Resulting savings for hardware and software by an increasing number of users/participants could establish closed loop applications without exerting an influence.

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