RFID Gains Acceptance

Tiny radio-frequency ID tags are giving companies such as Coca-Cola, Gillette, and Procter & Gamble unprecedented control over logistics such as inventory and shipping.
On a USAirways shuttle from New York to Washington, the man in 3D leans across the aisle to the woman in 3C passing a copy of InformationWeek with a story on radio-frequency ID chips on the cover. "Can you believe people think this stuff will actually work?" she said with a tone that would make you think the cover proclaimed "Pigs Can Now Fly." Her question was met with a snicker and a head shake.

Now, I'm not sure if these folks know what RFID is all about, and I resisted the urge to lean forward in my seat and start lecturing them on the technology behind RFID and how it will help revolutionize the supply chain (and that it's a darn good cover story!), but in case those folks are reading here--yes, people believe this stuff can work.

The tiny RFID tags are designed to track products from the early stages of manufacturing until they're purchased and every step in between. Companies such as Coca-Cola, Gillette, Johnson & Johnson, Kraft, Pfizer, Procter & Gamble, Unilever, and Wal-Mart are getting on board. The real-time data that's generated by the tags can give suppliers, manufacturers, distributors, and retailers unprecedented control over logistics such as inventory and shipping.

Case in point, Gillette is attaching RFID tags to Mach 3 Turbo razor blades that it ships to two Wal-Mart stores. The stores are equipped with "smart shelves" that are capable of reading signals from the chips and tracking the merchandise's location. When supplies on store shelves run low, stock clerks are alerted to refill them; when stockroom shelves run low, the system orders more. The trial, which began last month, will run throughout the year (see Gillette Razors Get New Edge: RFID Tags).

Procter & Gamble is also betting big on the tags. "Over the next 12 months, there will be a proliferation of tests between trading partners," CIO Steve David says. By next year, he expects the tags to be on many of the company's pallets and shipping cases in North America. And by late 2004, as chip process drops the price of the tags to 2 or 3 cents each, he expects the tags to be on items such as CDs and cosmetics. Eventually, every tube of toothpaste or pack of Pampers will sport the tiny tags. Not only will this provide better visibility into the supply chain, but it could aid consumers by speeding their check-out time in stores (an otherwise valueless exercise). "If done properly, consumers will find that it adds tremendous value," David says. Likewise, the tags could help minimize theft and counterfeiting.

He notes that more input, education, and standards are needed to resolve concerns over privacy issues. For example, some worry that a product they purchase can be tracked once they leave the store. But, David notes, there will be methods for deactivating the tags once a purchase has been made. He says the proximity between the tags and the devices that read them is also shallow.

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