The Future of RFID

RFID is a technology with enormous benefits. Yet, its potential has not been fully realized by end users. What market activities are preventing RFID from gaining the acceptance it deserves?

RFID could be considered the redheaded stepchild of automatic identification and data collection technology. And, end users don't want to work with RFID vendors because of their redheaded, freckle-faced progeny. What those end users don't realize, however, is that the red-headed step kid is a genius waiting to flourish — if given a little attention and opportunity.

RFID technology has been around since the late 1940s when the U.S. military developed it for tracking equipment. Despite a long standing history and many useful applications, the technology's potential has yet to be fully realized. There are a number of reasons for its delayed acceptance.

Big Promises, No Delivery
RFID tags are in widespread use — for applications such as vehicle security systems and recognition technology (e.g., pay at the gas pump, toll passes). According to Susy d'Hont of Texas Instruments, "There are over 100 million tags in vehicle security systems, and the speed pass application currently has more than 4 million users."

It's not as if the tags aren't being used. It's just that, from a supply-chain, manufacturing, or warehouse standpoint, they still have limited applications. "RFID has been fraught with a lot of overpromising and underdelivering," explains Tom Upshur, senior director of RFID marketing at Checkpoint Systems. "Many vendors have gotten end users excited about applications that are, unfortunately, undeliverable. A good example would be shopping cart checkouts. For this application, RFID is still more expensive than bar codes, and there are problems using the tags on metal objects. Still, someone extended undeliverable promises rather than refining these issues. These scenarios have really hurt the credibility of our industry."

ROI On RFID: Not Always Apparent
A return on investment (ROI) is not always a straightforward calculation. Some people lack this knowledge, and Tom Upshur from Checkpoint Systems explains how it can hurt your business. "Most people look at the face value cost of RFID technology — ‘RFID costs $1 per tag, but gee, I can get bar codes for a nickel.' Well, that's just foolish. You have to look at all of the benefits of the technology before you can implement it."

For example, a bar code might be able to identify a vial of tissue samples as it sits on a rack. But, RFID technology could identify the same vial without having to open the box it was in. Those samples might be dangerous or materials that are sensitive to exposure. If the box is sealed and shouldn't be opened, then RFID would be a better choice — even if it were more expensive. Weigh the marginal cost of the RFID tags against the cost of breaking a sealed box and ruining specimens.

Another example of the unforeseen value in RFID would be its use in the supply chain. For a nominal price, an RFID tag could follow a product from manufacturing all the way to a retail setting, and even into the hands of the consumer. The tag could be attached to the product in the initial stages of manufacturing and then follow the product down the supply chain. There, it could again be scanned while in a box or crate, saving labor. In a retail setting, the tag could serve as the price tag. And, consumers could count on the tag for warranty information after purchase. These are things that cannot be done with bar coding.

RFID Versus Bar Coding
There is a big debate over the competition between bar code and RFID technology. Who will win out? Which technology is better? Generally, the consensus among RFID experts is anything but the biased answer you might expect. "I think RFID vendors are fooling themselves if they think they are going to take bar code applications — with established ROIs and cost effectiveness — and replace them with RFID," says Tom Upshur of Checkpoint Systems.

Rather, most experts agree that RFID and bar coding will probably work in conjunction with one another. Each application has its strong points — features that the other technology is not capable of.

A House Divided: Competition Among RFID Vendors
Perhaps one of the biggest detractors from the success of RFID technology is the vendors themselves. A lack of standards in the industry has led to competitors trying to quash one another all in the name of their own welfare. As a result, the technology has suffered. Without this internal conflict in the industry, RFID's foothold in the marketplace could be much stronger.

Texas Instruments' Susy d'Hont explains. "RFID is a very complex auto ID technology. It has so many degrees of freedom. You can do so many things with it to benefit a particular application. That is definitely its good side. However, there have been a variety of tags developed by every single supplier. It is hard to cast any one approach into a standard if it might exclude certain capabilities or features. So, it has been hard to come to a standard."

Industry members are not unaware of this situation — or the long-term harm it is causing the technology. In response, vendors are trying to agree on a core set of features for the technology, something that they could all support. With a standard established, individual vendors could then add enhancements and features on their own. This approach would unify the industry, yet still allow for competition among vendors. "At the current stage, this industry needs to focus on a team effort between integrators, end users, and manufacturers," says Frank Binzoni, VP of sales and marketing at SCS.

Assessing RFID's Future
Many regard RFID as a technology in its infancy with as yet untapped potential. This assessment seems true. The technology has many benefits to offer. Its stumbling point seems only to be a variety of issues outside the technology itself: marketing problems, false promises, and a lack of standards. Industry members, however, have become painfully aware of these problems and are trying to do something to remedy the mistakes of the past. If they are able to successfully unify the industry with standards, deliver on future promises, and convince end users of the technology's benefits, then RFID's future looks favorable.

Doug Campbell