7 min read

Business Technology: RFID Is Already Proving Its Value

The adoption of radio-frequency identification has reached such a critical mass across a diverse range of applications that we're about to see indisputable evidence of the power of RFID and related technologies, Bob Evans says.
Beware the curse of a solution in search of a problem. Like some new cars that seat four but have 36 cup-holders and a 12-screen cineplex and that run on used vegetable oil and feature solid rubber tires with 2 million-mile guarantees that save the planet by cutting down on the number of used tires tossed into landfills. Sure, after a 30-minute ride your butt feels like it's been pounded on by a gorilla swinging sledgehammers, but nobody ever said the bleeding edge was all cushy-cushy, right?

And I have to tell you that over the past three years, that gorilla has wailed on me every now and then in the form of letters to the editor protesting--often ridiculing--the vigorous coverage of RFID and related technologies that InformationWeek has pursued. Some of you have felt those articles about RFID deployments and initiatives and products and research and mandates have all been a lot of nonsense because the chips are too expensive or there won't be any common standards or the readers won't work if they're placed behind lead walls or they're fragile or they'll spit out too much data or the wrong types of data or no data or sensitive data. RFID will never catch on because it violates the privacy of those who work with it, those who think about it, and every person who ever walks into a retail store. Some believe these RFID secrets will be fed into a massive GPS network designed by Enron and powered by the Ministry of Information that will bend, fold, spindle, and mutilate our privacy by broadcasting on C-SPAN what type of light bulbs we buy and how much sweetener we put in our coffee and whether we buy ultrastrength toilet paper.

Well, maybe--after all, the White Sox won the World Series, so clearly anything is possible, right? But I think the adoption of RFID technologies has within the past few months reached such a critical mass across an amazingly diverse range of applications that we're about to dispel once and for all these X-Files scenarios and begin to see indisputable evidence of the power of RFID and related technologies. And even more important than the adoption of the technologies is the equally rapid uptake in understanding by business executives of the breakthrough business value that can be generated when RFID systems are used to enhance visibility, optimize supply chains, reduce latency, and eliminate paperwork and outdated and irrelevant processes.

Here are some examples from just last week:

  • VeriSign last week acquired Retail Solutions, a specialist in point-of-sale data, and will combine its capabilities with the RFID expertise VeriSign gained when it purchased R4 Global Solutions earlier this year. The result: real-time visibility and demand-side data for consumer-goods companies such as Kimberly-Clark and Gillette and retailers such as Wal-Mart, Target, and Albertsons.
  • J.P. Morgan Chase is issuing 2 million RFID-encoded credit cards that can be waved at readers, rather than swiped through a track. The advantages: speed and convenience, along with a greater feeling of security for customers who can now keep the cards in their possession at all times.
  • TechWeb's Laurie Sullivan reported last week on the latest development contributing to an unprecedented wave of RFID adoption in the global maritime industry: One of the world's largest shipping companies has agreed to participate in a track-and-trace supply-chain pilot in Asia with RFID at the center of the project. "It's expected the project will provide ways to tighten security through U.S. customs, as well as border crossings between south China and Hong Kong," says Cindy Braun, general manager of Maersk Logistics."
  • Also last week, Sun Microsystems unveiled a packaged RFID system for tracking physical assets. Developed initially to keep tabs on the billions of dollars worth of equipment Sun uses in its 1,500 labs across the world, the new technology set is now being aimed at commercial applications. Wrote Sullivan, "Jim Clarke, chief RFID architect at Sun, said companies most interested in this asset-tracking system are hospitals to track IV pumps and beds, airports to keep track of travelers' luggage and equipment, and large companies that just want to track PCs and printers."
  • At Wal-Mart's annual meeting with financial analysts last week, the company's superstar CIO, Linda Dillman, told the audience that RFID technology has helped the retailer increase its revenue by reducing out-of-stock merchandise by 16% in the past year, according to The Associated Press. Dillman also said the company can restock RFID-tagged items three times as fast as nontagged items. And as of today, 500 Wal-Mart stores will be using RFID, AP says.
  • Other Voices

    In fact, I'm starting to get a little uneasy about technology permeating everyday life and wondering where it will all end. It seems a day never goes by that I don't have to tell my kids to shut off the computer, a testament to the addictive power of the Internet. My concerns about technology's influence on our nonwork lives grew stronger today, in response to this report on how Major League Baseball games will be coming to cellular phones and other mobile devices early next year through streaming video.

    -- Tom Smith, InformationWeek Blog, Oct. 25

    So do we have a case for RFID or not? Will the sky-is-falling crowd buffalo some otherwise aggressive companies into avoiding RFID? It's easy to hack into Wi-Fi networks, but that doesn't seem to be slowing down adoption. Mobile phones are being targeted as easy access points for cybercriminals to claw their way into corporate networks or access personal information, but I haven't heard any TV-loving senators pounding the podium to demand an immediate investigation into this extremely serious threat to the privacy of American citizens.

    So why all the angst over RFID? I think there are several anti-RFID drivers, each with comparable levels of (in)validity: The chips themselves are tiny and weird-looking, and therefore threatening to some in the tinfoil-hat brigade; unlike Wi-Fi nets or mobile phones, the chips can't do anything on their own, so they can't show an obvious bright side to their alleged dark side; Wal-Mart loves RFID, which means the legions of Wal-Mart haters must hate RFID with the same meritless zeal they apply to the employer of 1.4 million people; and it's unquestionably new and faintly scary, just as all new technologies are, which leads some people to assume the worst, particularly when that technology is being embraced by not only Wal-Mart but other large corporations and even the (shhh!) Department of Defense.

    So I think what we have here is not a solution in search of a problem, but rather a breakthrough technology that's not only blowing past the hand-wringers but also--and much more importantly--creating quantifiable, unmistakable business advantage across a huge spectrum of industries. The obvious question is this: Has your organization put together an assessment of RFID possibilities for your customers, partners, and suppliers? And if not, just what exactly will you say when your competitors have used it to outflank you, and your CEO wants to know how in the name of heaven you didn't recognize the potential of this new business tool that so many other companies are using to such great advantage?

    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.