RFID's Wild Ride

Well, that was an interesting year. We got to experience the entire hype curve for RFID (radio frequency identification). Even though Wal-Mart and DoD (Department of Defense) initiatives were laid out in the middle of 2003, vendors' marketing machines didn't ramp up until early 2004. By the time RFID World rolled around in mid-April, the buzz surrounding RFID had reached a fever pitch -- a potent combination of marketing hype and end user confusion. At the fall EPCglobal U.S. Conference five months later, reality had seemed to set in. End users were more educated, mandate deadlines were fast approaching, and vendors had started to talk about real pilot projects and some production successes.

So, what's 2005 look like?

Standards, Product Availability, And RFID's Fate
Two issues will probably dominate the RFID-in-the-supply-chain discussion in 2005: standards and product availability. The two are obviously linked and critical to the successful widespread deployment of RFID technology. As of this writing, there is no ratified UHF Generation 2 specification for the tags that suppliers need to apply to crates and pallets to be in compliance with Wal-Mart. Even after the spec is ratified, there are other issues that need to be addressed. ISO ratification of the EPC standard, for instance, looms on the horizon. Until that hurdle is crossed, the work done by EPCglobal will not have international implications. Speaking of international implications, there is a growing sense in China that the country has been left out of conversations held by EPCglobal. That may become an even more interesting story as companies plan to apply RFID tags at the manufacturing site. (According to industry sources, about 70% of nonperishable products delivered to Wal-Mart are manufactured in China.) And, we haven't even begun to sort through the IP (intellectual property) issues and how patents will be enforced.

Needless to say, there is plenty of action taking place on the standards front. As those issues are slowly resolved, production of true UHF Generation 2 products can take place. The tags themselves are at the heart of this issue. Many vendors within the industry estimate that it will take a minimum of six months to actually produce the tiny chips (according to the new spec) that sit within the smart labels. A more realistic timeframe might be nine months. In any event, there's going to be a delay between the time a new standard is ratified and the time a supplier can actually purchase compliant tags. You'd better have sharp purchasing folks and good relationships with key vendors.

All of these issues aside, there is no indication that the intense interest around RFID will wane. Quite the contrary, actually. Companies will continue to learn more about RFID and accumulate hands-on knowledge. The technology will evolve, and real -- yes, real -- ROI cases will be made. Some of them will be compelling. By the end of 2005, you'll start to see some winners and losers.