RFID reality check

The first retail item ever barcoded was a pack of Wrigley gum back in 1974, but the Chicago-based manufacturer is not interested in chewing up a lot of internal resources when it comes to RFID. “We don’t want to be the person to drive this. We want to buy it and use it to make more money,” said Donald Ham, a technology research analyst for the company.

The sticking point is that “ROI and RFID are two acronyms that are not too friendly with one another right now,” said Ham, speaking at IDC’s RFID conference last week in Boston.

Other companies at the conference agreed on several points — RFID has great potential, it can bring about fundamental improvements in core business processes, and every company should be engaged in RFID pilot projects. But speakers also agreed that the business case today for RFID is shaky at best, and that an out-of-the-box RFID starter kit is many years away.

Steve Georgevitch, supply chain manager for Boeing, said he has taken a hard look at various RFID scenarios and hasn’t come up with an ROI plan to support the spending. “We’ve gone down some paths, but haven’t gotten it to work yet.”

Georgevitch added that Boeing has several in-house scientists working on the “physics” of RFID, and simply getting RFID sensors and readers to work isn’t even the biggest issue.

He points out that RFID adds another wireless data stream to networks that are already carrying data from laptops, BlackBerries and cell phones. “The network is the key to enabling our business today, and as soon as you get past the physics, you get to the next overwhelming stage, which is the data. The pipes aren’t wide enough to handle the RFID data.”

Richard Morrissey, director of ebusiness strategy development at American Power Conversion, said he has been working on an RFID pilot program for the past two years. He said the technological hurdles are daunting; even something that seems relatively simple, such as determining where on the box or pallet to put the RFID tag so it can be read, has been a major issue.

From a strategic perspective, Morrissey has made sure to include business units, IT and even business partners in the pilot project. He has built a portable RFID set-up that he uses at the company’s West Warwick, R.I., plant. But at this point, APC has no plans to go beyond the pilot, according to Morrissey, who estimated that it would be 10 to 15 years before the company realized the full benefits of RFID.

Buffy Dorpinghaus is leading an RFID pilot project for El Paso County, Colorado, in which RFID tags and readers are being used for asset management and tracking of PCs. While the pilot program was successful in helping the county keep tabs on its PCs and when their warranties expired, there were glitches.

She said the battery life of the readers was disappointing and when IT staffers put the readers down, the batteries would become dislodged and all the data was lost. She said duct tape solved the problem.

“RFID isn’t quite there for mass consumption,” Dorpinghaus concluded. But she plans to expand the RFID asset tracking program to include bulletproof vests for the county sheriff’s office as well as heavy equipment owned by the county.

Ham and others at the conference said the benefits of RFID could be enormous. Imagine “smart shelves” that could sense when inventory was running low and notify the appropriate people along the supply chain.

Or imagine the marketing potential for a company like Wrigley if you had an RFID chip in your cell phone that “remembers” that you typically buy a pack of Juicy Fruit at the checkout counter and alerts you, in case you forget.

Of course, these applications are far off in the future. As Pete Abell, senior partner at the ePC Group put it: “Be prepared for a long process.”

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