Getting A Good Read On RFID

The Gartner research firm, in fact, identified Radio Frequency Identification, or RFID, as one of the hot technologies of 2003. At its annual Gartner Symposium/ITxpo, the firm dubbed RFID as one of 10 key technologies ready for broader market adoption over the next 18 to 36 months, along with more mainstream applications such as instant messaging and network security.

So what's the big deal about RFID, and where's the opportunity for solution providers?

The small tags are built around an embedded computer chip that can wirelessly receive and transmit information from a reader. Unlike bar codes, which must be located by an employee and physically scanned with a reader, RFID tags can communicate with a reader from inside a box or pallet. RFID tags can send an alert to strategically placed readers when they are in range, eliminating the need for employees to log-in certain inventory and equipment manually.

With RFID and a reader, employees can find out exactly what's in a large box or pallet without having to open it or even locate its exact position in a warehouse.

Industry experts believe that by 2005, RFID will replace or exist side-by-side with bar codes, as well as a host of other applications, for inventory management.

That's why Vinny Luciano, vice president of product management for mobile computing systems at Symbol Technologies, Holtsville, N.Y., said that now is the time for solution providers to begin testing the technology.

"In 2004, we are going to see a broad range of serious [RFID] pilots," Luciano said. "We'll see full-scale rollouts of RFID systems in 2005. It's not too soon to start looking at the impact of RFID on business and what the opportunities will be."

A number of high-profile companies are already examining the business possibilities of RFID. Wal-Mart, Bentonville, Ark., is testing the technology in a number of warehouses, according to published reports.

And Federal Express, Memphis, Tenn., is testing RFID wristbands that can be used instead of keys to unlock the many different doors on delivery vehicles. The company said the loss of keys by drivers costs an average of more than $200 per incident.

Also, a number of supermarkets worldwide are testing the concept of "smart shelves," which use RFID tags and readers to alert workers when inventory is low.

These companies are exploring RFID now because the cost of the technology has become more appealing. Three years ago, tags were too expensive to be used in anything but high-value items. The U.S. military, for example, uses RFID to track tanks. However, the price of the tags has now dropped to less than $1 each, and experts say they will cost less than 5 cents within two years.

Supply chain solution provider Manhattan Associates, Atlanta, started an RFID practice about six months ago and expects the technology to dominate bar codes within five years, said Greg Gilbert, the company's director of RFID strategy.

"We are extremely dedicated to RFID," he said. "It's going to be replacing bar codes."

Manhattan Associates will be fully integrating RFID technologies into its supply chain and partner management applications by 2004, but the company has "already opened a lot of code to accept RFID transactions," Gilbert said.

The solution provider has made a business out of ensuring bar-code compliance with top retailers,a key to survival for any business that wants to sell merchandise in the United States, Gilbert said. Now, Manhattan Associates is gearing up to offer that same compliance when these retailers make the switch to RFID, he said.

"In older days, many resellers made a lot of money through compliance marketing,making sure manufacturers, and the retailers they sold to, complied with bar-code standards," said Symbol's Luciano. "That is going to start over again in the next 18 months."