Welcome to the world of RFID

• Tags:
• Chips,
• Barcode,
• Retail,
• Privacy

John Carroll ZDNet.com

Published: 15 Jan 2004 15:30 GMT

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Wal-Mart's growth has been built on its supply-chain management innovations, which has made it one of the most efficient retail stores in existence. At $253bn (£137bn) in sales for 2003, it is the largest retailer in the world, and that gives it the ability to put a lot of pressure on suppliers to cut prices. Not surprisingly, Wal-Mart has some of the lowest prices of any retailer, which benefits consumers, but forces Wal-Mart suppliers to be extremely efficient if they are to avoid losing money.

Its latest supply-chain innovation, however, is a move to radiofrequency ID (RFID) tags. At present, Wal-Mart's mandate applies only to its top 100 suppliers, with a deadline set for 2005. Furthermore, it is not demanding this on a per-product basis (just for cases of product and pallets), in a nod towards the costs it must realise it is imposing. Currently, RFID chips cost about 20 cents (11 pence) per tag (registration for that link is required, but it's free), which doesn't include the cost of the antenna and packaging for the chip. Many analysts believe, however, that the growth in the size of the market for RFID technology, through pressure from Wal-Mart and the US Defense Department (which also requires such technology of its suppliers), will drive the price to 5 cents very quickly.

At that price, Wal-Mart is likely to require RFID tagging from all its suppliers, and may consider expanding the requirement to individual products. At that point, the benefits of RFID tagging will move beyond the supply chain into areas that directly affect consumers. Some think that there are privacy issues involved in such a move, as external entities could determine your buying habits with little more than an RFID reader. In my opinion, however, the productivity benefits of widespread RFID usage will outweigh any such risks, provided proper consideration is given to where, and how, RFID technology is used.

Where do they get all those wonderful Toys
Being a fan of technology, I'm always most excited by what that technology makes possible. RFID offers some serious opportunities for hardware companies and software developers who recognise the revolution that it represents.

First, consider what per-product RFID does to the checkout queue. Instead of having to wait for a shop assistant to swipe each product across a barcode reader by hand, you would simply roll your cart through a set of RFID readers. Your total would appear on the display almost immediately. If you pay by credit card, your interaction with a human being would be minimal, as at best the checkout person would be responsible for comparing your signature to the one on the back of your card. The entire process could take under a minute!

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