Tuesday, September 05, 2006

Aerospace Role in RFID’s Rollout

RFID Law Journal
Newsletter No. 6
September 5, 2006

The aerospace sector is on the front lines of auto identification initiatives within both the commercial and military supply chains.

Seeking greater control over their own supply chains, aircraft manufacturers Boeing and Airbus are working together to facilitate RFID’s deployment within the commercial aerospace supply chain. Their suppliers account for approximately 70% of all commercial aerospace manufacturers, and as such, their dual deployment effort is a key factor driving RFID adoption within this sector. Ultimately, if Boeing’s manufacturing supply chain for its 787 Dreamliner is indicative of the future, commercial aircraft suppliers would be wise to ramp up their deployments of auto identification technologies sooner rather than later.

Several leading air carriers, including Federal Express, are also seeking additional gains from RFID in order to improve their maintenance practices. RFID systems eliminate the ‘line of sight’ requirements of older, barcode-enabled systems, and as such, increase the visibility of a carrier’s spare parts inventories. In the late fall of 2003, Federal Express and Boeing started testing the use of passive RFID tags on certain aircraft parts on FedEx aircraft. Thereafter, in May, 2005, the FAA approved of the use of passive RFID in aircraft on the ground to enable improved transportation industry maintenance and inventory practices. Since the late spring of 2006, Federal Express has been testing active RFID tags for similar purposes, and it is expected that the FAA will review those test results during the fall of 2006. RFID deployment is expected to give these carriers greater insight into the cargo in their aircraft hulls and improve their controls over their vast inventory of spare parts, resulting in improved efficiency and safety and reduced operational costs.

Air carriers expect that their RFID initiatives will generate positive ROI. Several airports are following on the heels of deployments of RFID baggage systems at McCarran International Airport (Las Vegas) and the Hong Kong International Airport. The International Air Transport Association (IATA) is leading the initiative to use RFID tagging systems to track luggage, which, if successful, could represent hundreds of millions of dollars in annual industry savings. (According to IATA, baggage loss represents a staggering $800 million in annual expenses incurred by the industry.) RFID adoption is expected to increase system speeds, lower maintenance costs, facilitate faster baggage identification, reduce clerical costs and ultimately improve customer satisfaction. Indeed, it is expected that such investments may not only improve air carriers’ bottom lines but increase airline ratings.

Following on the heels of other successful StB (Simplifying the Business) initiatives (e.g., e-ticket), IATA is also rolling out its e-freight program, an initiative aimed at eliminating paper from international shipments. RFID is not a requirement for e-freight, but it could be an enabling technology. For example, instead of creating a bulky, paper contract of carriage, carriers could store relevant carriage information on a smart RFID tag. Radio frequency identification tags do not require line of sight for interaction, making them an appealing, enabling technology for IATA’s e-freight initiative. The e-freight program could substantially reduce – if not eliminate – the thick paper trail associated with international freight. IATA will begin piloting e-freight during 2007, with industry deployment scheduled to commence in 2010. In carrying forward the e-freight initiative, air carriers stand to not only improve their bottom lines but will also create ancillary environmental gains.

As mentioned in several recent newsletters, the DoD is also aggressively requiring its largest military aircraft suppliers to meet its RFID tagging standards. As the DoD pushes further into the second of its three-year rollout of its passive RFID tagging requirements, both military and commercial aerospace component manufacturers will increasingly face these requirements as an ordinary prerequisite of doing business with their end-customers.

For more information about the Department of Defense’s RFID mandates, you should read our DoD website presentations and links related thereto.

Learn more about IATA’s RFID goals at http://www.iata.org/whatwedo/rfid/index.htm.

© 2006 – RFID Law Journal, LLC. All rights reserved.
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