RFID - Myth versus Reality

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The hype around the adoption of RFID as the hot new technology' continues—this is evidenced by the proliferation of trade shows, media events, and other magnets for those in the know and those looking to learn more. One of the recent events—RFID Live, hosted by the RFID Business Journal in Chicago in April—was reminiscent of the techno buzz and media fest' of the late 1990s—the days of the e-bubble!

Walking through the exhibit area, it was apparent that the concept of RFID had been firmly embraced by the providers of systems, services, and appliances that support the activities of supply chain management (SCM). New labels and solution descriptions have been applied to the providers of e-commerce offerings. Promises of supply chain rejuvenation, integrated process flows, and less specific value propositions tempted the attendees to spend time consulting with those administering the many booths that filled the aisles.

The hype was less prevalent in the presentations and discussions in which the early adopters and their partners shared tales of RFID implementations. The reality is that RFID, despite the fact that this is a relatively mature technology, is still far from mainstream. Issues related to tags, readers, and frequencies still create constraints to rapid adoption. Mandates from the DoD and Wal-Mart aside, the value propositions vary. Those engaged in Gen 2 pilots are restricting these activities to product or partner specific areas, while still others are adopting a wait and see' attitude—in anticipation of universal standards and ubiquitous reader networks.

A core compelling argument, irrespective of the mandates,' relates to the value of the granularity of data provided by RFID. A specific example is pharmaceutical supply chains (see Cold Chain report summary). Counterfeit and diverted prescription and even over-the-counter drugs have created concerns for manufacturers and wholesale distributors. Added to which are the potential health issues related to low potency and expired product being administered—especially to the growing senior population, who are lured into buying discount' products. The FDA has stepped forward and made various recommendations and suggestions, however, the line being adopted is still relatively soft'. An example of this is reflected in the following proposed timelines:

January - December 2004

  • Performance of mass serialization feasibility studies using RFID on pallets, cases, and packages of pharmaceuticals.

January - December 2005

  • Mass serialization of some pallets and cases of pharmaceuticals likely to be counterfeited.

  • Acquisition and use of RFID technology (i.e., ability to read and use the information contained in RFID tags and the associated database) by some manufacturers, large wholesalers, some large chain drug stores, and some hospitals.

January - December 2006

  • Mass serialization of most pallets and cases of pharmaceuticals likely to be counterfeited, and some pallets and cases of other pharmaceuticals.

  • Mass serialization of most packages of pharmaceuticals likely to be counterfeited.

  • Acquisition and use of RFID technology (i.e., ability to read and use the information contained in RFID tags and the associated database) by most manufacturers, most wholesalers, most chain drug stores, most hospitals, and some small retailers.

January - December 2007

  • Mass serialization of all pallets and cases of pharmaceuticals.

  • Mass serialization of most packages of pharmaceuticals.

  • Acquisition and use of RFID technology (i.e., ability to read and use the information contained in RFID tags and the associated database) by all manufacturers, all wholesalers, all chain drug stores, all hospitals, and most small retailers.

FDA plans to assist, to the extent necessary and appropriate, in facilitating the rapid, widespread adoption of RFID in the drug distribution system by working with stakeholders. However, they have yet to publish a mandate related to RFID adoption.

What does this all mean?
As the Bard would say, is this in fact, " much ado about nothing"?

The reality is that each technology that is embraced is another bridge on the digital highway that is linking the global enterprises and communities who share common interests in global trade. The key is to recognize which components make sense in a specific business context, versus following the parade. In other words, what is my destination and therefore what path should I take.

So, How to Proceed?

Common sense—relatively uncommon to this day—dictates that enterprises take a practical approach. A path forward could include

Create an internal team focused on the adoption of mass serialization and use of RFID technology.

  • Perform internal feasibility studies to gain experience with mass serialization and RFID technology, and to identify internal business issues requiring resolution;

  • Perform external pilot studies with stakeholders across the supply chain to gain experience, using mass serialization and RFID, and to identify opportunities, barriers, and external business issues associated with them;

  • Develop policy and a business case for the use of mass serialization and RFID;

  • Cooperate and work with other stakeholders and government agencies to develop infrastructure and information systems to use with mass serialization of pallets, cases, and packaged units.

  • Participate on standard-setting groups developing technical standards and business rules for use of mass serialization and RFID;

  • Work with government agencies and other members of the supply chain to identify and address regulatory and economic issues that could delay the adoption of mass serialization and RFID; and

  • Educate other members of the supply chain and government agencies about mass serialization and RFID.

RFID, like other convergent technologies, creates many potential opportunities—not the least of which includes leveraging investments in technology acquired during the Halcyon Days of the Y2K hysteria. There are benefits to be gained—fortune favors the brave!

This article is from Parallax View, ChainLink Research's on-line magazine, read by over 150,000 supply chain and IT professionals each month. Thought-provoking and actionable articles from ChainLink's analysts, top industry executives, researchers, and fellow practitioners. To view the entire magazine, click here.

About the Author

Carla Reed heads ChainLink's Global Logistics and Distribution practice. Ms. Reed brings deep hands-on experience, having design and managed numerous global distribution networks and warehouse facilities around the world. Before joining ChainLink, Ms. Reed founded New Creed, a business process and enabling technology consulting group which focuses on the global supply chain, linking evolving technologies and concepts to global business issues in existing and emerging markets. Ms. Reed was previously Director, Logistics Solutions for Sterling Commerce, General Manager, Sales and Marketing for Premier Freight, Johannesburg, South Africa; and has held various other positions in the international freight management area.

ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.

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