The pros and cons of RFID Data analysis
ithin the next ten years, all product-based businesses will need to be well aware of the latest advances in a technology known as RFID. Radio frequency identification, which could be described as an update to barcoding, takes the form of a small tag containing electronic product code (EPC) data. This data, which may include details of cost, date of production, date of shipping, expiry date, and so on, can be picked up by an EPC reader and then transferred to a database to be used in various ways. For example, if each carton within a shipment is tagged, the shipper can easily and accurately monitor the number of units, their location, value and contents. Or, to cite another use, in a warehouse RFID tags can make managing stock levels more efficient.
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RFID is not as new as is often believed. It has been used for a number of years to track large ocean-going containers and in military equipment applications. Yet the price of a tag has dropped from $2 to just ten cents, and therefore using RFID more widely is an increasingly attractive and viable option for a lot of firms. Wal-Mart, for instance, is insisting that all its suppliers begin to use RFID technology if they are to continue doing business with them.
Improving the supply chain The advantages are numerous, and many revolve around improving the efficiency of all processes in the supply chain. The problems caused by human error in terms of counting and monitoring stock are eradicated, and the temptation to steal from pallets is checked by the knowledge that the whereabouts of each carton is constantly being tracked. The opportunity for saving time is another big plus: News International Ltd, the London-based publisher of the Sunday Times, the News of the World and The Sun, won an industry award for its new material handling techniques, which reduced time cycles in the logistics chain – invaluable to a product whose creation, distribution and shelf-life are all over within 24 hours. Automated receiving and scanning, reduced labor requirements, more effective use of capital and more frequent updates regarding status have also been cited when making the case in favor of RFID. Beyond that, since 9/11 the threat of terrorism is felt globally, and RFID offers the possibility of tamper-proof containers to help alleviate that threat. The Customs-Trade Partnership Against Terrorism (C-TPAT) was set up in the US in 2001 and offers procedures for tracking goods and security measures for peace of mind. RFID, however, is a necessity.
‘‘ Data protection is going to be a huge issue as RFID becomes more commonplace. ’’
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DOI 10.1108/02580540510594048
‘‘ Using RFID more widely is an increasingly attractive and viable option for a lot of firms. ’’
The drawbacks Yet just as RFID can be used to aid security, it also, in a different way, puts security under threat. A company needs to be aware that the more data it holds about its products, their value and their whereabouts, the easier it is for a rival or criminal with a RFID reader to access that data remotely and use it to that company’s detriment. Data protection is going to be a huge issue as RFID becomes more commonplace and as yet there are many question marks surrounding how this issue is going to be addressed. A related drawback is the consumers’ reaction to the idea of having so much more data about them stored and available for manufacturers’ use. At the moment, most of the companies moving towards RFID are investigating it at only a carton and pallet level, but as the prices of technology drop even further putting a tag on every product will become an option. Clothes manufacturer Benetton, for example, announced in 2003 that it would tag all clothes produced under the Sisley brand and track them through the supply chain to 5,000 stores worldwide. Privacy groups immediately called for a boycott and the company had to backtrack. So strong, in fact, is the negative feeling towards RFID among some consumers, that a group called CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) has formed actively to fight against the use of the tags. One study showed that 78 percent of the public are opposed to RFID on privacy grounds, objecting to the fact companies will be able, if they choose, to track every product a customer buys, how much they spend, what happens to the product after purchase, and so on. In response, many manufacturers are insisting that RFID is not about playing big brother but increased efficiency, but it is unlikely that the consumer will ever be comfortable with the technology unless tags are removed as soon as products hit the shop floor. What manufacturers also need to think about, though, are the potential drawbacks for themselves that could come with holding all that data. CASPIAN founder Katherine Albrecht recalls how a family in Washington managed to sue a grocer who sold them beef infected with mad cow disease. They argued that their loyalty card for the store should have informed the grocer of all those that had bought the infected meat, and therefore he had ignored his responsibility to get in touch with customers and tell them. This case is just a hint towards the huge potential for liability risks that will come with wide usage of RFID tags. Companies considering RFID, then, are encouraged to capture only what they really need to use, although how data will be aggregated and managed to the best effect is still very much under debate among IT specialists and consultants. Firms should also think about the cost involved – at the moment compliance will cost around $150,000 to $300,000 at least, with tags on top of that. Considering the rapid changes that will happen over the next few years, with technologies soon becoming obsolete as RFID is developed, these figures sound like very heavy investments. Unless funds spent on introducing technology now will balance monies lost through inefficiencies in the supply chain, the controversy and uncertainties surrounding RFID at the moment mean that firms considering it should proceed with caution.
Comment This review is based upon ‘‘Tagged – the risks and rewards of RFID technology’’ by William Atkinson, ‘‘Getting ready for RFID’’ by Hallie Forcinio, ‘‘Material handling moves up’’ by John Teresko and ‘‘RFID growth poses a data management challenge’’ by Rick Whiting. William Atkinson considers the pros and cons of the changes that RFID technology may bring. After explaining how RFID devices work, and that they have been in existence for
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some time, Atkinson goes on to describe how this technology is now being much more widely used to improve how supply chains are monitored. As advantages, the article cites the potential for supply chain theft reduction, reduced number of suppliers, improved efficiency, the avoidance of human error and anti-terrorism measures. It describes how Wal-Mart has insisted suppliers use RFID technology at carton and pallet level, and then considers the implications of using chips on all products. This idea has led to high levels of consumer backlash, and Atkinson stresses the potential drawbacks of using RFID technology beyond the stock room. As well as customer disapproval, other drawbacks include the possibility that collecting data will risk security, as an outside party with a reader could steal valuable information. ‘‘Getting ready for RFID’’ discusses the plans of Wal-Mart and the US Department of Defense to insist that its suppliers apply RFID tags to cases and pallets if they wish to continue doing business with them. It explains that this is because both want to improve the visibility of goods from point of vendor shipment to point of sale, hoping that labor requirements and stock shrinkage will decrease and that more timely and accurate data about the movements of good within supply chains can be collected. The article goes on to offer advice to companies finding themselves in the position of having to comply to the demands, urging managers to choose the exact product they use wisely, consider fully the investment required when technologies will advance quickly and become obsolete, and capture only the data that is really needed. ‘‘Material handling moves up’’ reports that materials handling has become more important to US manufacturers, especially as lean production techniques mean inventories are slimmer than ever. The article refers to the award-winning system for handling materials at UK newspaper publisher, News International Ltd, and then goes on to consider the growing popularity of RFID. It states that companies will have to improve their processes to deal with RFID, and offers 15 questions a company should answer when thinking about modernizing its materials handling capabilities.
Keywords: Data handling, Data security, Supply chain management, Innovation
‘‘RFID growth poses a data management challenge’’ predicts that within ten years the retail trade will be dominated by RFID systems, with tags attached to shipping pallets and individual items that can be read remotely by 300 million RFID readers in warehouses and distribution centers worldwide. Whiting discusses the pros and cons of RFID implementation and illustrates the discussion with particular reference to a case study involving Scottish & Newcastle, the UK brewer, which began using RFID several years ago to track the two million barrels of beer, it ships to distributors, retailers, bars and restaurants.
References Atkinson, W. (2004), ‘‘Tagged – the risks and rewards of RFID technology’’, Risk Management, July, pp. 12-29, ISSN: 0035-5593. Forcinio, H. (2004), ‘‘Getting ready for RFID’’, Managing Automation, Vol. 19 No. 2, pp. 23-5, ISSN: 0895-3805. Teresko, J. (2004), ‘‘Material handling moves up’’, Industry Week, Vol. 253 No. 3, pp. 42-9, ISSN: 0039-0895. Whiting, R. (2004), ‘‘RFID growth poses a data management challenge’’, Computing, February 26, pp. 29-30, ISSN: 0307-8965.
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