RFID technology is having a tangible impact on a wide array of industries across the globe, according to a report by the Economist Intelligence Unit (EIU). But the briefing warns that industry must still address privacy concerns.
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.
