The increasing standardization of frequency ranges that has taken place in the RFID sector in recent years simplifies the application on the one hand and enables the use of RFID along the value chain on the other. At the same time, however, standardization is also intensifying competition - with the result that prices continue to spiral downwards.

Volume and growth of the RFID market in manufacturing

© ARC Advisory Group

Basically, an RFID system consists of two components, a reader and a tag, with the reader optionally having a separate antenna. The information on the tag can be read and changed. The serial number of the tag makes it possible to identify the workpiece to be processed. Three-component systems in which the reader is located on the top-hat rail and an antenna is installed close to the object are also popular, especially in automation. In this case, the antenna is usually similar to a classic proximity switch.

The most important criteria for the tag are its durability, robustness and memory size. Passive tags have established themselves in production; active or battery-assisted tags (BAT) hardly play a role here. One of the main reasons for this is the interference with BATs and active tags and the fact that passive tags with UHF generally have a sufficiently long range.

The frequencies

Although there are still minor regional differences in standardization, RFID frequencies can be clustered as follows:

• Low frequencies (LF) with 125 kHz to 134.2 kHz: This frequency only affects a small niche in manufacturing; it is more at home in the logistics sector - partly because the prices of the tags are very low and their range is short.
• High frequencies (HF) with 13.56 MHz: Here the range is up to 20 cm. HF is very popular with machine builders as interference is virtually eliminated and the system works reliably regardless of the environment.
• Ultra-high frequencies (UHF) with 860 MHz to 960 MHz: This is the fastest growing market segment with ranges of up to 8 m. However, the technology is not without its problems and plug & play is not feasible.
• BATs or active tags use other frequencies and are rarely used in production.

Other technologies also enable identification - essentially QR codes and barcodes. However, RFID offers decisive advantages over these: it is easier to guarantee the correct scanning process, which saves time. As the information can also be stored directly on the tag with RFID, a network connection is not always necessary. RFID tags are also much more robust and can even be embedded in the workpiece. However, QR codes and barcodes come out on top in terms of price, which RFID will not be able to match in the future.

In the more distant future, it is also conceivable that vision systems will take over identification tasks - but they are currently still too rigid and require too much computing power on site.

RFID fields of application

The performance of the systems differs depending on the wireless technology used.

© ARC Advisory Group

ARC Advisory Group also classifies the RFID market by application. This excludes all pure logistics applications, insofar as RFID tags in the supply chain of consumer goods in particular are a large market that differs greatly from that in factory automation: The technical requirements are lower and the price pressure is many times higher. Many of the RFID providers for automation give logistics a wide berth - which is not the case the other way round.

The most common application for RFID in manufacturing is product and material flow. Here, RFID already acts as a link between production and the MES level. These applications are particularly widespread and established in Western Europe and Japan, while the USA and other regions still have some catching up to do. This field of application will therefore remain a growth market in the future.

With regard to 'Industry 4.0', production control in particular is an interesting growth market. Here, RFID is used to trigger production steps or to monitor whether a step has already been completed. Production control is primarily a UHF application, as longer ranges are required. Ideally, an ID is created from the MES system that is linked to an end product. Through networking and intelligence in the factory, a product is then manufactured around the RFID tag. - Although this development is still a dream of the future at the moment, production is already being realized in this way. This vision is linked to the one-tag strategy, which states that a single RFID tag accompanies a product from the beginning (planning) to the finished end product. Ideally, this tag would also remain on the product after delivery so that it accompanies it until the end of the product life cycle (recycling). For many manufacturers, this would also mean that they could more easily implement new business models such as services and leasing.

One way in which RFID is also finding its way into the process industries is asset management. Here, RFID can be used to identify products and to optimize and ensure maintenance and servicing. Especially in remote areas and extensive plants, RFID helps to save time and money. When it comes to remote maintenance and support, RFID guarantees professional execution even with less well-trained personnel.

Machine manufacturers also rely on RFID when it comes to warranties and guarantees. In particular, RFID can serve as a digital fingerprint to ensure the use of original spare parts.

ARC Advisory Group forecasts healthy growth of over 5% for the RFID market over the next few years. This makes the RFID market one of the fastest growing markets in factory automation. This is particularly true if the continuing sharp fall in prices is taken into account - unit growth is already almost in double figures. In 2015, growth was negatively impacted by currency caprices in particular, as the euro depreciated rapidly against the US dollar.

Growth driver on the market

Growth drivers include smaller batches and improved maintenance and servicing, closer integration of production into the IT landscape, increasing complexity of production processes and flatter value chains. As many end customers have now installed the infrastructure, the conditions are in place for the tag market to continue to grow in the future and for affiliated end customers to start using RFID more.

However, there are also negative aspects: RFID will never be able to compete with barcodes and QR codes in terms of price, so there will always be applications where RFID is not used for cost reasons.

For automation companies, there is also a 'threat' from logistics. With increasingly flatter value chains, more and more logistics providers are pushing their technology and their technology providers into the factory halls. There is a clear price differential here, especially with RFID. With logistics providers, the competition is virtually free. In the short term, the technological lead of the production automation companies will certainly last a little longer - in the long term, however, only increased application know-how and close cooperation with customers will help. Despite all the positive growth prospects, the RFID market is therefore in the process of changing from a growth market to a saturated market.

Author:
Florian Güldner is Director of Research at the ARC Advisory Group in Düsseldorf.