• August 1, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

RFID: Beyond Concept

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There's no question that RFID has left the lab and is becoming part of business. Questions do remain about how best to implement this "new" technology, how to allay fears that tagging will lead to a loss of privacy, and when its pricing will allow for widespread use. "RFID is ready for prime time, but that depends on just what you mean by prime time," says John Cummings, managing director of BearingPoint's commercial services practice. RFID meets resistance because of the cost per tag, which varies widely: 20 cents to 60 cents per passive tag (which only responds when polled by a tag reader), and $6 to $20 for battery-powered, active tags. "At present RFID deployment is at the case-and-pallet level for inventory tracking and a more consumer-driven supply chain," says Tim Paydos, worldwide strategy and marketing executive for trading partner collaboration at IBM. Cummings says we won't see item-level tagging soon, although industries like apparel will have it in place by the end of 2005. "The price per tag will have to get down to 5 cents or less before there's truly widespread adoption." IBM has been marking out the adoption path with initiatives like industry-specific RFID starter kits, which help consumer product makers and retailers manage inventory status, shipping reports, pallet verification, and order reconciliation. Also, IBM is already distributing cheaper tagging with its recently released Infoprint 6,700 family of tag printers. For low-margin products, Cummings believes the price will have to be much lower, and will probably involve RFID tags that aren't silicon-based. Paydos maintains that RFID uptake will also be consumer-driven, with item-level tags letting shoppers pay for their purchases without a cashier. The ability to track a product throughout shipping and receiving also holds benefit to the consumer: Tracking medication shipments to make sure the right product comes from the right manufacturer and isn't expired, or following a shipment of chicken or beef while monitoring its temperature, and instantly recalling it if there's evidence of spoilage. Cummings notes that RFID also can be used for tracking individuals. Similar to the implanted chips used to identify stray pets, Cummings says there are "substantial opportunities in human tagging, whether to monitor where employees are and how they move throughout the day, or to be able to find individuals in a crowd or disaster scene." But this type of monitoring worries some consumers, which in turn spooks retailers and wholesalers. IBM has launched an RFID-specific privacy consulting practice to deal with concerns. "The issue of privacy has been badly overhyped, but it does exist and customers want to know how to address it," Paydos says. The privacy issue, he says, is mainly the concern that some agency will be able to track consumer purchases and movements for nefarious purposes. The fear of black helicopters hovering over your house is unrealistic, according to Paydos, as RFID readers don't have that kind of range. "That sort of thing already exists, but customers are choosing it in the form of security and convenience services," he says. "If you have OnStar in your car, or a cell phone, some company knows exactly where you are."
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