CIO — Ready or not, radio frequency identification—or RFID—tags are poised to show up in a supply chain near you. These tiny chips will revolutionize inventory logistics, but the prospect of their deployment into retail environments is already giving privacy advocates the willies. The bad news: Commerce will trump privacy concerns. The good news: While deployment into the back end of commerce is imminent, the economics of RFID will delay consumer point-of-sale presence for some time. The only certainty about RFID deployment is that it’s going to be a turbulent ride.
Blame much of RFID’s buzz on Gillette, whose order for 500 million RFID chips earlier this year thrust the technology into the news. Wal-Mart further fanned the flames by informing its suppliers that it wants all the products it supplies to contain RFID tags. Even Microsoft is getting into the act with an announcement that it intends to develop software and services to support RFID use in the retail and industrial sectors.
Those ambitious plans are driven by the belief that RFID will revolutionize the tracking and management of everything from industrial equipment to pharmaceuticals and even heads of lettuce. Stick an RFID chip onto a part or a package and a previously inert object can now account for itself whenever it is tickled by a radio signal from a questing sensor. Industries with special problems will be early adopters: Gillette’s interest in RFID stems in no small part from its desire to solve shoplifting of razors, while cigarette manufacturers want to enlist RFID in an effort to stop interstate cigarette smuggling. At its most extravagant, RFID represents nothing less than the successor to the ubiquitous bar code.
While the trajectory of RFID is clear, the speed of its adoption is less certain. The cheapest RFID chips today still cost more than two and a half cents in quantity. Cheap in comparison to what gets stuffed in a laptop, but horrendously expensive when contemplating a chip in every milk carton or box of detergent. Then there is the cost of the tag readers and the dizzyingly complex infrastructure required to collect, sift and move the vast amounts of data RFIDs generate. Little wonder that Wal-Mart backed off its previously announced deployment plans.
Sorting all this out is a decade-long task, but the industry has a running start. Thanks to the leadership of the MIT Auto-ID Center, in effect a multi-industry consortium of companies pioneering RFID use, there exists a widely accepted RFID standard.
