RFID Today and Tomorrow The Workshop included a comprehensive discussion of RFID’s various current and anticipated applications. Both private and public sector users of RFID explained how they are applying this technology to improve their delivery of goods and services. Privacy advocates also addressed the implications of these initiatives, sounding a cautionary note about some of the emerging uses of RFID and their consequences for consumer privacy. A. Current Uses of RFID Workshop participants described a number of RFID applications that consumers may already be using. For example, some consumers are familiar with employee identification cards that authenticate the pass-holder before permitting access. A related use of RFID is for event access – to amusement parks, ski areas, and concerts, where tagged bracelets or tickets are used. Panelists also explained how RFID is being used in a variety of transportation-related contexts. Many automobile models already use RFID tags in keys to authenticate the user, adding another layer of security to starting a car. Another example, the "Speedpass," allows drivers to purchase gas and convenience store goods from ExxonMobil stations. RFID is also transforming highway travel, with the advent of E-ZPass in Northeastern and Mid-Atlantic states and similar programs in other regions of the country that allow drivers to pass through tolls without stopping to pay. An active tag on the vehicle’s windshield lets a reader installed at the tollbooth know that a tagged vehicle is passing through; information flows from the tag, to the reader, and then to a centralized database, where the prepaid or checking account associated with that vehicle is charged. B. RFID in the Supply Chain To the extent that the much-touted "RFID revolution" is underway, it is occurring somewhat out of public sight – in warehouses, distribution centers, and other stages of the supply chain. Workshop participants discussed how RFID’s impact on the flow of goods through distribution channels has implications not just for manufacturers, suppliers, and retailers, but also for consumers. Many panelists reported that as a result of more efficient distribution practices generated by RFID use, consumers may find what they want on the store shelves, when they want it, and perhaps at lower prices. Workshop participants representing manufacturers and retailers described the anticipated economic benefits of RFID. According to one panelist, the retail industry suffers losses between $180 and $300 billion annually because of poor supply chain visibility – the inability to track the location of products as they make their way from manufacturer to retailer. As a result, this panelist stated, retailers are not always able to keep high-demand goods in stock, or they may have inventory that they can’t move. Participants discussed how RFID may help prevent these lapses by improving visibility at multiple stages of the supply chain. RFID readers can gather information about the location of tagged goods as they make their way from the manufacturer, to a warehouse or series of distribution centers, and to the final destination, their store. Also, as one workshop participant explained, RFID enhances the accuracy of information currently obtained through bar code scanning, which is more vulnerable to human error. According to this panelist, access to more – and more accurate – information about where products are in the distribution chain enables retailers to keep what they need in stock and what they do not need off the shelf. Workshop participants also touted the discipline that RFID imposes on the supply chain by, for example, reducing "shrinkage," or theft. One panelist explained how RFID may lower costs by keeping shipping volumes leaner and more accurate. Other panelists described how RFID tags can be read much faster than bar codes, citing tests indicating that RFID’s scanning capability can result in goods moving through the supply chain ten times faster than they do when bar codes are used. According to another participant, RFID will facilitate quicker, more accurate recalls by enabling the tracking of a product’s origin and its location in the distribution chain. Further, this panelist asserted, RFID will enhance product freshness by monitoring expiration dates of consumer goods, so retailers know when not to offer items for sale. C. RFID Use in the Public Sector Panelists also discussed how RFID is being used or contemplated for use by government entities to meet objectives similar to those their private-sector counterparts hope to achieve. Workshop participants discussed a variety of ongoing and proposed government RFID applications, from the U.S. Department of Defense’s ("DoD") October 2003 mandate requiring its suppliers to use RFID tags by January 2005 to local library systems deploying this technology to track and trace their books. DoD’s initiative reportedly will affect 43,000 military suppliers. And, according to panelists, public libraries in California, Washington State, and elsewhere have implemented internal RFID systems to facilitate patron usage and manage stock. One Workshop panelist, representing the U.S. Food and Drug Administration ("FDA"), highlighted that agency’s RFID initiative. Although the FDA itself is not using this technology, it recently announced an initiative to promote the use of RFID in the pharmaceutical supply chain by 2007. For now, drug manufacturers will primarily tag "stock bottles" – those used by pharmacists to fill individual prescriptions – but eventually consumers may be purchasing packages labeled with RFID chips. The core objective of this initiative is to fight drug counterfeiting by establishing a reliable pedigree for each pharmaceutical. The FDA believes that this goal can most effectively be accomplished by its target date through the adoption of RFID, which offers distinct advantages over other identification systems that require line-of-sight scanning and are not as accurate or fast. Another government entity turning to RFID is the U.S. Department of Homeland Security ("DHS"). One program described by a DHS official at the Workshop uses RFID for tracking and tracing travelers’ baggage. Both individual airports and airlines will use RFID technology to identify and track passenger luggage, from check-in to destination. Another DHS initiative addressed at the Workshop involves the agency’s "US-VISIT" (U.S. Visitor and Immigrant Status Indicator Technology) program. That initiative will test RFID at the country’s fifty busiest border-crossing locations by using RFID to read biometric identifiers, such as digital photographs and fingerprint scans, embedded in U.S. work visas issued to foreign nationals. According to the DHS representative, this program is expected to facilitate some of the approximately 330 million border-crossings each year by getting "the appropriate level of information to the right people at the right time." As this panelist noted as well, U.S. passports will also soon carry an RFID chip embedded with identifying information, including biometric data. D. Emerging RFID Applications The Workshop also addressed emerging RFID applications and when such uses are expected to be implemented. According to panelists, one sector that is the focus of extensive RFID research is health care, where RFID devices can be used to track equipment and people within a medical facility. Other proposed applications contemplate using RFID in different ways. For example, one ongoing study discussed at the Workshop is exploring how RFID can enhance the quality of elder care. By tagging key objects in a senior’s home – such as prescription drug bottles, food items, and appliances – and embedding small RFID readers in gloves that can be worn by that individual, that person’s daily habits can be monitored remotely by a caregiver. This system would develop more accurate record-keeping for medical treatment purposes and could facilitate independent living for senior citizens. The Workshop also addressed the anticipated timeline for the adoption of item-level RFID tagging in the retail sector. According to one participant, some retailers are currently experimenting with embedding RFID tags in individual consumer goods, and cited as an example German retailer Metro AG’s controversial use of RFID in its "Future Store." However, many panelists concurred that widespread item-level tagging of retail products was not imminent. The most commonly cited reason for this delay was cost: according to one panelist, the current price per tag of between 20 and 40 cents makes item-level RFID too expensive to deploy widely in the near term. Workshop panelists also asserted that the target cost of five cents per tag will likely not be realized until 2008. Even then, other costs may slow the evolution of item-level tagging. According to one Workshop participant, hardware costs account for only 3% of the expense of deploying RFID. Expenditures for developing the software necessary to interpret and store information generated by RFID constitute nearly three-quarters of the cost of implementing this technology. According to Workshop participants, other factors that could inhibit the evolution of item-level tagging include the lack of standardization for RFID frequency and power; inadequate end-user knowledge about how the technology works; and technical challenges, such as reader accuracy and interference from external substances (like water and metal). << Previous: The ABC's of RFID Next: Consumer Perceptions and Privacy Concerns >> Back to Pat's Planet.net