RFID chips have the potential to produce huge amounts of information. How will companies recognize valuable data and avoid getting buried by what they don't need?
Within 10 years, it's expected that billions of radio-frequency identification chips will be attached to shipping pallets, boxes, and even individual items, each generating a silent "here I am" signal at least three times per second. Those signals will be picked up by 300 million RFID readers located in warehouses, distribution centers, and other facilities worldwide. Some predict that RFID-related traffic could predominate on company networks in as little as five years, particularly in the retail and consumer packaged-goods industries.
Are we ready for this? And what are we going to do with all of the data RFID chips generate? Business-technology managers who are designing and implementing pilot RFID systems deserve kudos for taking the lead on a promising new technology, but alarmingly few of them can answer those questions. If businesses don't start planning for which technologies they'll use to collect and manage the data RFID chips and readers generate-or consider whether their supply-chain and warehouse-management applications can scale to handle the additional information-the result could be a chaotic data overload.
Many are taking the first critical step of acknowledging that data-management problems could result from RFID. "Yes, we're going to have more data, and we're going to have scalability problems in our industry," admits Tony Scott, chief technology officer at General Motors Corp. "We have a long way to go here."
GM uses RFID to track carriers that move auto chassis and materials around assembly plants. Eventually, assuming the price of RFID chips drops substantially and RFID data standards are forthcoming from the Automotive Industry Action Group, a consortium of car-parts manufacturers, GM may use RFID to track inventories of individual parts, Scott says. And rewritable RFID chips at some point could be built into cars to maintain vehicle-maintenance histories, he adds.
The potential for data overload may be years away, but the foundation is being laid today. Kara Romanow, an analyst at AMR Research, predicts that many of the early RFID systems that Wal-Mart Stores Inc.'s top 100 suppliers are building to comply with the retailer's demand that they have RFID on pallet shipments by January will have to be ripped out one or two years later. Their architectures will be too limited to handle future RFID applications, she says.
Shortsightedness also creates the potential that companies won't take advantage of what could be valuable information. Consumer packaged-goods manufacturers expect that better data generated by RFID systems in the supply chain will help them predict demand for products as never before. But before that can happen, they'll have to make some implementation decisions about technologies, such as the middleware that manages the readers, filters the supply-chain data RFID tags generate, and passes relevant information to the supply-chain and warehouse-management applications that act on that data.
If technology advances to the point that RFID tags are coupled with sensors that record temperature, motion, light, or other data, the amount and value of the information collected will increase dramatically. That could create scalability problems for operational applications, similar to what many companies experienced in the 1990s when they implemented first-generation systems for enterprise resource planning. GM's Scott foresees challenges in developing business-process workflows between RFID systems and business applications and with data archiving.
He isn't the only business-technology executive thinking about the risks of data overload. "Yes, it's possible, maybe even probable," says Barry Sommerville, VP of IT at drugmaker Pfizer Inc. Pfizer, like other pharmaceutical manufacturers, is exploring the potential of using RFID to closely track drug shipments to combat the rising problem of counterfeit drugs.
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