Japan Logistics 2006: Part IV

Continuing what is becoming my series on Japan logistics in 2006, the next segment is on RFID. Although the R&D behind RFID and its application of progressed quickly in the USA, and perhaps Europe as well, Japan has only recently deregulated frequency standards that will allow RFID to be utilized across its domestic industries. Consequently, RFID has lagged in terms of speed to market, total R&D investment, and practical application.

With recent deregulation, more and more firms are anxiously exploring the use of RFID in their domestic supply chains. The discussion in this portion on Japan logistics forms around the title:

"A Logistics Configuration that Supports the Life of the People"

"The High Expections and Remaining Issues with RFID"

Watanabe: In logistics, the "end game" is not the firm's benefit, but the benefit of the consumer. One factor in this securing traceability. Regarding the RFID technology to support that, this is an area that is of particular concern amongst the members of JILS. Based on the member survey, the service industry especially showed the most interest in this theme.

Seien: Yes, these 2-3 years, the interest towards RFID has become higher and higher. There are primarily four purposes to RFID. The first is visibility. When managing processes on the production floor, since one would be able to grasp position information at all times, this is moving forward greatly in factories such as those producing medical supplies. The second is efficiency. Since non-contact, multiple-simultaneous recognition is possible, one can then, for example, run auto-inspection of product riding pallets. However, due to insufficient reliability in terms of ID reader accuracy, this type of usage has yet to completely spread. The third is safety, which can also be incorporated into traceability. In America, the purpose is theft prevention. The fourth purpose is service improvement. At places like supermarkets, producer information can be identified. It could also perhaps be applied in public services as well, you know.

RFID's greatest characteristic is the non-contact, simultaneous identification. Besides that, most of the other areas can be covered with bar codes. So as long as the differences deepen and the cost becomes cheaper, I believe it will spread quickly.

Hironaka: In our position, on a daily basis we are flying loads of parts to all over the world. If for example one automobile contains 10,000 parts, with an annual 4 million autos we are considering approximately 40 billion parts. Including other products and after-service, that takes the annual number up to around 100 billion components. To perfectly get a handle on this is next to impossible. In the future, I think innovative objects using "log technology" will be necessary, but right now there are no good ideas tying that directly to RFID. We are "raising our antenna" so to speak in keeping an eye out for new ideas that can manage this integration.

Watanabe: With RFID, really the tough part is the cost aspect, right.

Seien: When two-dimensional bar-coding appeared, those corporations that introduced it made investments in-line with the system changes. Even if RFID systems become cheaper, considering the IT technology associated with such systems, there will be many corporations that won't immediately jump on the bandwagon.

Hayashi: Although there is demand for traceability, there is certainly a large portion of logistics that can satisfy such demand through using bar codes versus RFID. With our medical device customers, tracing has become intense with reforms in the Pharmaceutical Affairs Law. As a result, RFID is being used in manufacturing processes, but in subsequent processes demand is being met with bar-coding. Where input data volume increases or changes are necessary, there seems to be a definite future for RFID.

However, at the current moment, there are issues remaining with RFID. As we heard from Mr. Seien, added to the technological problems involved with simultaneous ID inaccuracies and manufacturing costs, there is the social consideration of leaked individual information. Internationally, standards are converging on those established in the West and so Japanese makers are having a tough time. Environmentally, there is absolutely no area specializing in recycling of RFID components at the current stage.

The most important problem is utilization. Since it feels like the tool has appeared first without a use, from here on just how this will be used is for the world of imagination. I am wondering whether RFID will have real utilization value in a "simple to use anywhere by anyone" ubiquitous sense. I'm also wondering if cell phones won't target the role of RFID expansion. If RFID tags could be ID'ed with cell phones, which are quite ubiquitous, then for example, vegetables with RFID could be ID'ed with cell phones at the supermarket enhancing traceability. If RFID becomes easy to use in such a way, I would feel the the era of RFID had arrived.

Keeping that in mind, in November of 2005, three new companies were given permission to start cellular businesses, including Softbank. With the participation of such companies as Softbank, it is expected that an environment where a variety of information fed through cell phones will further expand. In the Fall of 2006, cell phone users will be able to change service providers without changing their cell phone numbers, a new number portability system. With a variety of events converging in such a way, it seems the path for RFID will come about.

Takahashi: There is certainly a lot being expected of RFID, but it seems its introduction is a meandering path. If you take a look at the survey, there are the high expectations by the service industry, but first considering the leaking of individual information there are areas that touch upon the actual life of citizens. In figuring out what range of use is appropriate, an understanding of our national society that includes safety is necessary.

COMMENTARY: There isn't too much I want to comment on at this point. My firm was once part of a bid proposal that included utilizing RFID here in Japan. Although the bid fell through due to the potential client's reconsiderations regarding Japan operations, it was a good chance to see what kind of environment might be appropriate for RFID use here in Japan. Having been in presentations about RFID by firms like Accenture since 2002-2003, USA-based operations are much further along in terms of its application and potential, including R&D. But the cell phone comments are interesting. My own phone can be used as a bar code reader, and I can even download directions, websites, etc. from my computer screen when bar codes appear on certain Japanese websites. Then I just access the information on my cell. I haven't used it much, but I'm sure I will after a bit longer in Japan.