TECHNOLOGY SPECIAL REPORT

RFID Emerges to Threaten the Bar Code

In the film “The Recruit,” Colin Farrell portrays a CIA agent who escapes a double agent by removing a radio frequency identification (RFID) tag placed on him and surreptitiously placing it on the collar of a dog he stops to pet on the street.

Alhough most of its uses are not as dramatic as those shown in “The Recruit,” RFID tags are being used today by corporations to track people and products in just about every major industry. They transform everyday objects — like cargo containers, car keys and even clothes on the rack at your local shopping mall — into mini nodes on a network. Databases then can record the location and status of these network nodes to determine product movements.

Researchers say that the market for this technology might top US$3.1 billion within five years and that the technology will eventually replace bar codes for inventory tracking as manufacturers place RFID chips in their products to track them without human interaction.

The Supply Chain

Supply chain management is perhaps the most promising application for RFID. “Corporate resources are better spent refining RFID technology for use in the supply chain, where the ROI is obvious and quantifiable,” said Paula Rosenblum, an analyst at AMR Research. “Given the pricing challenges of readers and chips, item-level RFID for consumer products is still many years away.”

Because of the benefits, several major manufacturers are testing — or are already deploying — RFID technology. This week, for example, Provia Software announced full RFID support for its warehouse-management system, called ViaWare WMS. A global consumer products manufacturer and client of Provia’s is testing the technology to ship and track its items as they are delivered to retailers.

John Pulling, Provia’s chief operating officer, said that giving clients the ability to track tagged items throughout the supply chain will increase the “visibility” of the supply chain. “This improved visibility will yield many benefits for users, including increased shipping accuracy, inventory accuracy and reduced inventory shrinkage,” he told TechNewsWorld.

Activity Array

Provia’s RFID tag technology supports an array of warehouse and manufacturing activities, including pallet and case tracking, automated receiving, put-away verification, picking verification, cycle counting and kit building. At any stage in the manufacturing or shipping process, the RFID devices can transmit electronic product codes wirelessly to Provia’s tracking system.

One of Provia’s clients is Gillette, the razor manufacturer. Gillette is employing RFID on its Mach3 razors to track inventory and reduce in-store theft. Studies have shown that these razors are among the most-stolen items in drugstores and other retail environments.

Meanwhile, discount retailer Wal-Mart has been moving toward RFID technology implementation as well. In an ARC Advisory Group research report called “Wal-Mart Sets RFID Priorities for Itself and Industry,” ARC analyst Adrian Gonzalez said suppliers to Wal-Mart are starting to take steps to implement the retail giant’s requirements for RFID technologies in their supply chains.

Changing Norms

Most professionals in the manufacturing industry have widely perceived RFID technologies as a threat to bar codes, so bar-code technology purveyors have begun to embrace the new RFID technology.

For example, Nasdaq-traded Zebra Technologies — whose past technologies traditionally have revolved around bar-code applications — has entered the market, working with standards-setting bodies like MIT’s Auto-ID Center and the Uniform Code Council to help develop the technology and its applications.

Zebra believes the tags can be used to track retail buying habits and can even help patients keep track of their prescription bottles. The technology easily could be deployed by amusement parks to track lost children.

Suzette Sexton, Zebra’s spokesperson, noted that RFID technologies do have their limits. “RFID is not a GPS system and cannot track individual tags from long distances,” she told TechNewsWorld.

Other firms involved in development of RFID technologies include Sun Microsystems, Phillips and Texas Instruments. Many new RFID technologies are expected to debut this fall at September’s Frontline International Supply Chain Week conference in Chicago.

On the Horizon

Many developers acknowledge that privacy concerns have emerged because of the tracking technology. These concerns have caused some retailers to back away, at least temporarily, from RFID.

“The fashion house Prada was going to embed RFIDs into all of its clothes and accessories so it could track the wanderings of its customers within its stores,” said Jamie Powers, an attorney and founder of a firm called Data Rights and Privacy Advisors. “Perhaps [Prada just wanted to] track someone wearing Prada RFID-enabled clothes; they bailed when word got out.”

Powers acknowledges that — despite the Orwellian connotations — there are several positive uses for RFID. “The U.S. military put RFIDs on most of the Iraq war material sent abroad,” he said. But he remains concerned that programmable RFID “guns” could be developed that would function much like a police scanner to track individuals’ comings and goings.

To protect consumers from having their privacy invaded, a researcher at RSA Laboratories, Ari Juels, recommends that a formal security model for authentication and privacy for RFID tags be developed.

“[A security framework for RFID would] take into account both the natural computational limitations of these devices and the likely attack scenarios for RFID tags in real-world settings,” said Juels.

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