RFID (Radio
Frequency Identification) is a generic term for technologies that
use radio waves to automatically identify objects.
An RFID chip comprises a microchip and a tiny antenna that
transmits data from the chip to a reader. The reader is activated
whenever the antenna comes into range and the data can be used to
trigger an event – such as raising an alarm or signalling that a
pallet of goods has arrived in a warehouse. Usually the range is no
more than a few feet.
The chips can be incorporated into a range of products and have
an advantage over barcodes in not requiring a line of sight between
the chip and the reader. They offer a means of navigating complex
global supply chains, allowing companies to track their products
from factory to distribution centre, from warehouse to sales
floor.
The EIU report, ‘RFID Comes of Age’, sponsored by The North of
England Inward Investment Agency, shows that the use of RFID is
gathering momentum.
The decision taken by leading global retailers to mandate use of
RFID by their suppliers, aided by the emergence of global technical
standards, have eliminated any doubt that the technology will be
used on a broad scale, says the report. Pilot programmes in retail,
consumer goods, logistics, life sciences, automotive and government
are under way and are already producing tangible benefits such as
reduced costs, better inventory control and improved responsiveness
to consumer demand.
The supply chain is becoming smarter as a result of the
technology, with companies like Wal-Mart, Tesco and Gillette using
it to track inventory and improve stock replenishment. But to
fulfil its potential, the technology needs to be integrated into
operational management tools such as ERP (enterprise resource
planning) software, says the report.
It highlights RFID's role as a catalyst for much greater
collaboration between companies along the supply chain.
For example, it says, a retailer referring to a specific product
with one numbering system and a department store that refers to
that same product – but with a different numbering system – have no
idea that each is selling the same item. By utilising RFID
technology the two companies could change that situation by sharing
consistent data that would allow collaboration through purchasing,
development and promotion of the product.
Outside of the supply chain, a range of other applications are
emerging, especially in applications that enhance customer
convenience, such as "contactless payment" systems. Another growth
area will be in identifying and authenticating people or items for
safety or security purposes, such as within passports or to verify
a patient's identity at the operating table.
But there are concerns that such applications will breach the
privacy rights of individuals.
In general the RFID chips are too small to be removed, and if
they are embedded in the product itself – clothes or shoes – rather
than the packaging, then they will remain in it. It is also
possible for them to remain trackable and this, say some privacy
groups, is an unacceptable breach of privacy. They worry that
criminals, governments or other agencies will be able to identify
and track an individual by the RFID tags on his or her person.
The authors of the report reckon that privacy can be protected
without killing RFID. They stress that some of the concerns raised
by activists overstate RFID's capabilities, but recognise that
there are genuine issues to be resolved.
The report therefore concludes that legislators should
require that RFID tags be deactivated at point of sale to
allay privacy concerns, but not require the permanent "killing" of
stored data, as this would limit users' ability to opt-in to
interesting post-sale applications that benefit consumers as well
as businesses.
Speaking to Electricnews.net, the report's editor, Gareth
Lofthouse, explained that members of the public have been happy in
the past to reduce their levels of privacy in order to benefit in
terms of price or convenience.
"The analogy that we make is that customers are already giving
up some of their privacy rights when they sign up for supermarket
loyalty cards," he said.
The report also warns of a range of technical, business and
political barriers to RFID's development.
It notes that standards bodies and academic institutions need to
harmonise hardware and software standards globally, while companies
should lay out a framework that helps them understand and address
the process changes required to get value from the technology.
