Business & Finance
Commentary
10/10/2003
05:29 PM
Bob Evans
Bob Evans
Commentary
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Business Technology: Don't Let Protesters Scare You About RFID

The subject: RFID. The question: Will privacy hysteria render RFID DOA? Or will CHP (cooler heads prevail)?

First, let's take a quick look at some efforts centered on RFID by some organizations that do not take privacy lightly.

"Agents from the Food and Drug Administration and U.S. Customs Service intercepted international shipments of medicine this summer and found that 88% of those drugs weren't approved for use in this country." Scary? Consider what might then happen if one of those unapproved imported drugs gets into the market but isn't able to do what the patient needs it to do: "A person stricken with cancer or AIDS who's prescribed Johnson & Johnson Corp.'s Procrit can develop an infection of the bloodstream if the potency of the drug is diluted."

So wrote my colleague Larry Greenemeier in a news story posted on our site last week on the efforts by pharmaceutical companies and law-enforcement officials to use new technologies to crack down on the spread of counterfeit drugs (The New Drug War, Oct. 6, 2003). And one of the most-promising of those new technologies is RFID: radio-frequency identification. Eli Lilly is among many pharmaceutical companies eagerly exploring sweeping new applications of this technology, according to Greenemeier's story. "RFID is probably the hottest area of discussion for tracking distribution and preventing counterfeiting," says Dillard Howell, the company's director of global product protection whose professional experience includes 12 years with the FBI.

Last month, IBM unveiled a suite of RFID software, services, and consulting aimed at retailers and consumer-packaged-goods makers looking to find better ways of tracking products from suppliers all the way through to consumers. The company, which is basing the new business within IBM Global Services, said demand is escalating for RFID expertise because that new wireless technology is helping customers in consumer-packaged goods and retail derive tangible and substantial benefits in reducing costs, improving customer service, and optimizing their operations.

That's a space in which Manhattan Associates, a provider of supply-chain execution software and services, has played for some time. One of the first enterprise software companies to incorporate RFID technologies into its offerings, Manhattan Associates has expanded its Retail Compliance Guarantee--which it says ensures that suppliers can meet the shipping and labeling requirements of the top 100 U.S. and global retailers---to include new and emerging RFID standards. As the company puts it, "With the potential to transform tracking technology as we know it and revolutionize efficiencies across the supply chain, RFID will eventually become a requirement for doing business."

OTHER VOICES
"This newfound success has sent shares in [voice-over-IP] companies skyrocketing--and sounded a warning to established telecom operators. Internet phone service is almost completely unregulated for now and requires little capital, and the improvements in technology make even the smallest startups a credible threat."

-- Front-page news story in The Wall Street Journal, Oct. 9


And some of the biggest noise around RFID has come from Wal-Mart, which is requiring its 100 top suppliers to comply with its first wave of RFID standards starting in January 2005. It would be very, very short-sighted to think that the ripple effect from such an effort won't stretch out to thousands or even tens of thousands of companies very rapidly.

Ah, but there's always a catch, and in the case of RFID, it used to be the price of the tags: until about a year ago, upwards of $5 per unit. Now, however, the fly in the soup is no longer cost--the sweeping acceptance by the companies mentioned above and their customers is rapidly driving down high-volume prices--but rather, concerns over privacy. Or in some quarters, ungrounded hysteria over privacy. Looking to allay some of those fears, MIT is hosting on Nov. 15 an event called the RFID Privacy Workshop. As a description of the event on the MIT-affiliated Auto-ID Center Website says, "Issues surrounding the use and deployment of RFID technology are quickly moving from business needs to the political .... Last year, Benetton withdrew its plan to put RFID chips into some clothing after activists garnered international attention by pointing out that Benetton was about to deploy a technology without thinking through the privacy implications."

Now at the risk of sounding, oh, I don't know, maybe "insensitive," I say shame on Benetton for letting a bunch of single-minded and intellectually inflexible loudmouths scuttle the company's efforts to move forward. "Activists," indeed.

I don't mean to soft-pedal the privacy implications; they exist, they're valid, and they won't evaporate just because some technology shows tremendous promise. In fact, it's precisely the explosive nature of current and future RFID applications that makes it essential for every company considering these new tools to be aware of and fully prepared to deal with privacy implications. But awareness cannot be equated with paralysis--the changes RFID will trigger in a huge range of industries and across an equally broad set of processes are going to arrive with stunning suddenness, and it will thereafter be quite simply a matter of who's prepared to lead the innovation and who's going to be face-planted on the ground with lots of footprints up his back.

We live, each day, with innumerable potential causes for concern all around us. (Maybe bricks should be banned--they do, after all, emit radioactivity.) The best companies will find ways to identify and plan for all appropriate RFID-related privacy considerations while also driving forward to embrace new technologies that improve processes, make customers happier, reduce costs and waste, and help identify new opportunities. The "activists" will never be satisfied, so listen not to them--listen instead, as always, to your customers and your markets.

Bob Evans
Editor
bevans@cmp.com


To discuss this column with other readers, please visit Bob Evans's forum on the Listening Post.

To find out more about Bob Evans, please visit his page on the Listening Post.

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