Column addon: RFID

By | July 31, 2003
  Further to my column in today’s FEER (subscription required) about the possibilities and pitfalls of Radio Frequency Identification, or RFID, here’s the full text of answers from Alan Melling, Symbol Technology’s Senior Director, of EPC Solutions.
What are the real benefits of this technology? 
Without a doubt, the ability to achieve 100 percent real-time asset visibility without the cost of human intervention to perform tracking activities. This visibility and the information it generates translates directly into supply chain efficiencies – such as lower stock-out rates and fewer rush orders – that go directly to both the top and bottom lines of traditional retailers.

Inventory tracking/retail behaviour/product theft/non-retail fields?
Inventory tracking at the pallet and carton level are almost certain to be the applications that “prime the pump” for RFID in retail. There are a lot fewer pallets than individual items, less cost sensitivity – and pallets have no privacy concerns.
Once the tags make it to the item level, their primary function will still be for inventory control – quickly detecting that a particular brand of shampoo is out of stock, for example.
However, the technology can also be used in the store for theft detection and identifying shopping patterns, but consumers will first need to be educated on the benefits TO THEM of the technology when used this way. For example, if RFID could be used to let you know when you pass your favorite brand of peanut butter in the supermarket aisle, and it is on sale, would that perceived as plus? For some consumers yes, and for others no. The key to success will be to put the control where its belongs – in the hands of the consumer.

What’s your view on privacy concerns about RFID? 
Privacy is a very real issue. To a certain extent the fears expressed to date are somewhat overblown – the technology simply does not support doomsday scenarios such as the government scanning the books you just purchased from a truck in the street – the tags just are not capable of it. What is very real, however, is every consumer’s right to understand and be comfortable with technologies applied to products they may buy. Everyone involved in the RFID industry understands and respects this – which is why the most popular tags – EPC tags – have an in-built “Kill” command that can and will be used to render them inoperative before they leave the store.
Are there issues which have not been addressed?
There are many issues that are still in the process of being addressed. Standards need to be finalized, costs need to come down further, reading equipment and systems need to be made more reliable, more RFID software solutions need to be developed, and privacy concerns need to be addressed to name a few. However, with the emergence of a strong new standard for retail and supply chain applications – EPC (Electronic Product Code) – the general tone of converstion has switched from “if” to “when” the technology will make its mark in retail. There is a general sense that the remaining issues are all very solveable, and that it just a matter of time.
How do you see the future of this technology?
The future of RFID in retail and supply chain applications is a bright one, but one that will perhaps be slower and more incremental in approach than many suppose today. In particular, some have positioned RFID as an immediate “replacement” for bar code. The reality is that it is not designed as a one-for-one bar code replacement – it does more than a bar code, but also costs more than a bar code. The companies that benefit from RFID will be those that successfully integrate RFID and bar code technologies – using each where it is the most cost effective.
Almost certainly, the first broad applicatiions of RFID will be in the backroom of stores and distribution centers – on relatively unglamorous items such as pallets, crates, cartons, and plastic containers. Over time it will become more visible on individual items on the retail floor, but this will take time – years – and will require that concerns about privacy are effectively addressed.

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