Imagine a card you can attach to your golf bag that allows the clubhouse to know you've begun your round, without ever having to check in. Or park paths that coordinate with the walking sticks of the blind to allow them to safely tour the area unassisted. And what about a chip, surgically implanted under your skin, that allowed you access to some of the most exclusive clubs in the world and allowed you to pay for drinks at the bar—without your wallet—when you arrived.
These things may sound futuristic, but they're all examples of how cutting-edge radio-frequency identification (RFID) and electronic product code (EPC) technology are being utilized today. RFID is the latest in product tracking and identification technology, a large step ahead of the traditional barcode, because RFID does not require line-of-site reading and can carry a great deal more information.
A few years ago, these automated activities would have sounded like pie-in-the-sky ideas. EPC and RFID have mostly been used in recent years as replacements for the barcode—ways for manufacturers and retailers to keep track of their merchandise.
Learning from the RFID masters
Wal-Mart, generally regarded as the industry leader in RFID merchandise-tracking implementation, was one of the first major retailers to utilize RFID. It mandated in 2003 that its top 100 suppliers tag their cases and palettes of merchandise. In turn, this forced many companies who depend on Wal-Mart to invest in RFID technology.
Not all suppliers were eager to comply with Wal-Mart's mandate.
"Companies feel it is an extra expense that benefits the retailer more than the supplier," said Mark Roberti, editor of RFID Journal. "It is a natural reaction, like a reflexive opposition to regulation. Most companies under mandates haven't really done the math to find out what the benefits will be."
When companies choose to use RFID for their own benefit, however, Roberti said he hasn't seen backlash and no real downside to implementing it.
Despite its effort to make RFID usage a priority, less than one percent of Wal-Mart's suppliers use RFID and only 25 percent of its stores use the technology.
The man in charge of Wal-Mart's RFID efforts, Simon Langford, recently told NetworkWorld.com that the technology has led to reductions in out-of-stock items and improvements in inventory data.
RFID adoption remains limited
While Wal-Mart remains on the cutting edge of RFID use, along with companies like Kimberly-Clark and Proctor and Gamble, the tipping point for more businesses and organizations to invest in RFID has yet to be reached.
"The tipping point, in my view, is when companies decide that it is more cost effective to tag all their products in the supply chain, rather than have tagged and untagged inventory," said Roberti. "We are a long way from that. But clearly many companies understand now that there are different types of RFID, not just EPC, and that there are many different ways to use the technology and many applications. I am continually astounded by the new applications companies come up with."
Roberti said that most companies don't fully grasp the potential return on investment when it comes to adopting RFID technology. He said these systems provide the data companies need to manage their operations more effectively.
"Some consumer packaged goods companies have seen a 20 percent increase in sell-through on promotional items because they are able to make sure the promotional displays are on the retail floor when their advertising hits," he says. "But there are many different and innovative uses of RFID, from monitoring bridges for structural defects to helping the blind navigate a new environment."
With any cutting-edge technology comes the inevitable unforeseen problems. Chief among the problems is the ability of hackers to clone certain RFID chips and steal valuable data. Palo Alto-based Verayo Inc. claims to have created the world's first unclonable RFID chip to prevent counterfeiting.
These chips use "active" RFID, meaning they have their own internal power source. The drawback to this is that they become more susceptible to corrosion than their passive counterparts.
Moving into the consumer realm
The next logical step for RFID use is a vast increase in consumer applications. The common example that is used when talking about consumer implementation is the ability to walk through a grocery store checkout line without a clerk having to scan each individual item you're purchasing. But there are many more practical uses of the technology that will make the entire consumer marketplace smarter and more efficient.
DiscoverRFID.org is a Web site run by EPCglobal, the industry association that is working to promote mainstream consumer use of RFID.
According to EPCglobal, emerging RFID technology has the power to keep us healthier, allow us to travel more intelligently, have a more informed and efficient shopping experience, improve the quality of the food we eat, protect natural resources and various animal species and make our communities safer.
So, what's next—the short-term answer
The world has only begun to see the impact that RFID technology is going to have on every aspect of business. The main barrier to entry for most businesses remains the unknown return on investment. While there's plenty of data available to suggest a strong ROI for early adopters, reluctance remains.
Industry insiders, meanwhile, contend that a company's future survival could depend on implementing EPC and RFID technology.
Dan Gilmore, editor-in-chief of SCDigest, recently had this to say in his "RFID State of the Union": "A growing number of companies are mentally committed to the path of knowing where everything is, all the time, in near real-time. This is a game-changing and far-reaching development—and RFID will be at its center. I don't know whether that will take 5 years or 20, but it's coming.
"We just need to understand what to do with that level of visibility, and as companies, to work to ensure that you aren't one of the last ones to the party."
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RFID in supply chain management
RFID in healthcare
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