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Defense Taps IBM

Vendor will help the department determine RFID policies and assist in deployments
The Department of Defense last week said it entered into a three-year contract with IBM Business Consulting Services to help incorporate radio-frequency identification technology into its supply-chain operations. The Defense Department has set a January 2005 deadline for its 43,000 suppliers to begin tagging cases and pallets of low-cost items and individually tagging items worth $5,000 or more with RFID chips. IBM's tasks will include overseeing pilot tests of the technology during the next few months.

The vendor, which launched an RFID deployment and integration practice last fall, also will help Defense assess costs and determine its ability to help fund some suppliers' RFID projects. As a federal agency, the department is required to purchase a significant amount of its supplies from small businesses, minority-owned companies, and other suppliers for whom the cost of RFID technology may be out of reach.

It's worth the cost for the government to track items from food to weapons systems through the supply chain, says Bruce Hudson, analyst and program director of enterprise applications at Meta Group. "In peacetime, the cost of losing a critical part is measured in lost training days," he says. "In wartime, it's measured in missed objectives, protracted engagements, and human lives. Turn that into a business case, and you have your ROI."

Like Wal-Mart and other companies mandating RFID usage by their suppliers, the Defense Department is working with EPCglobal, which is overseeing commercial and technical standards for RFID and the Electronic Product Code Network. "If you go back 10 to 15 years, the tendency for [Defense] was to have it done their way," says Bill Phillips, an IBM Business Consulting Services partner and defense industry leader at IBM. Now, "the intent by the [department] is to actively work with the standards body."