The wonders of RFID

COMMENTARY--Wal-Mart’s growth has been built on its supply-chainmanagement innovations, making them one of the mostefficient retail stores in existence. At 253billion USD in sales for 2003, they are thelargest retailer in the world, and that gives them theability to put a lot of pressure on their suppliers tocut prices. Not surprisingly, Wal-Mart has some ofthe lowest prices of any retailer, which benefitsconsumers, but forces Wal-Mart suppliers to beextremely efficient if they are to avoid losing money.

Their latest supply chain innovation, however, is amove to Radio Frequency ID (RFID) tags. At present,Wal-Mart’s mandate only applies to their top 100suppliers, with the deadline set for 2005. Furthermore, they aren’t demanding this on aper-product basis (just cases of product and pallets),a nod towards the costs they must realize they areimposing. Currently, RFID chips cost about0.20 USD per tag (registration for that link isrequired, but it’s free), which doesn’t include thecost of the antenna and packaging for the chip. Manyanalysts believe, however, that the growth in the sizeof the market for RFID technology, through pressurefrom Wal-Mart and the US Defense Department (who alsorequires such technology of its suppliers), will drivethe price to 0.05 USD very quickly.

At that price, Wal-Mart is likely to require RFIDtagging from all its suppliers, and may considerexpanding the requirement to individual products. Atthat point, the benefits of RFID tagging will movebeyond the supply chain into areas that directlyaffect consumers. Some think there are privacy issuesinvolved in such a move, as external entities coulddetermine your buying habits with little more than anRFID reader. In my opinion, however, the productivitybenefits of widespread RFID usage will outweigh anysuch risks, provided proper consideration is given towhere, and how, RFID technology is used.

Where do they get all those wonderful TOYS
Being a fan of technology, I’m always most excited bywhat that technology makes possible. RFID offers someserious opportunities for hardware companies andsoftware developers who recognize the revolution RFID represents.

First, consider what per-product RFID does to thecheckout line. Instead of having to wait for acheckout clerk to swipe each product across a barcodereader by hand, you would simply roll your cartthrough a set of RFID readers. Your total wouldappear on the display almost immediately. If you payby credit card, your interaction with a human beingwould be minimal, as at best the checkout person wouldbe responsible for comparing your signature to the oneon the back of your card. The entire process couldtake under a minute!

Another interesting area of innovation would be in thehome. I’ve heard people talk about internetconnections for a refrigerator, but had a hard timeimagining why that would be useful (though you wouldfinally be able to confirm whether the light ACTUALLYwent out in the fridge after you closed it). RFIDtechnology makes such a thing very useful.

Imagine running by a supermarket on the way home fromwork and not having any idea what you needed to buy(heck, that’s they way I ALWAYS shop). You can pullout your handheld or one of the new smartphones andASK your refrigerator exactly what it contains. Itwill know, assuming every product in the fridge has anRFID tag on it. Something similar might exist for thepantry, or even in the bathroom and kitchen cabinets,provided an RFID reader is placed near enough to allthese places.

Such an arrangement enables a level of inventorymanagement in the home which simply does not exist atpresent. I can think of a number of interestingsoftware applications that might find a market in suchan environment, but I’m not going to tell you whatthey are (ha ha).

Privacy Issues
I am not overly concerned about privacy when we’retalking about RFID tagging of products. RFID taggingmerely declares what the product is in a better waythan was possible with bar codes. Stores already canlink a particular customer to the products they buyusing bar coding. RFID tags, from a consumerstandpoint, merely streamline the process wherebystores process their customers.

Theoretically, someone could stand around outside astore with an RFID reader detecting everything youhave in your shopping cart. However, unless they askyou who you are, they’ll have no way to link you tothe products you buy.

Privacy issues only become a problem when RFID tagsare used to broadcast personally identifyinginformation, suchas credit card details. I don’t think it’s a goodidea for credit cards to be capable of any sort ofbroadcast, given that it opens a Pandora's box ofsecurity issues. There are few things as sensitive asyour credit card information, making RFID tags incredit cards a potentially large lump of sugar for the cockroaches to come after. Even if someone claimed bulletproof security for this information, it would be a target of computer crackers, and that simply isn’t worth the risk.

Other areas I want to keep clear of RFID technologyare my driver’s license or identity documents (such asa passport). Companies would have a large incentiveto send people to stand outside of stores with RFIDreaders if everyone was walking around withRFID-enabled driver’s licenses that enabled them tolink products to a particular person.

One area of privacy which would be hard to resolve isthe ability to determine from outside a house what aperson owns (at least, the things which have RFIDtags). Imagine a gym that drives around theneighborhood detecting those families that have a fewtoo many Twinkies in the pantry in order to send asalesperson to their door. I don’t have a solution tothis, short of the development of sheet rock thatblocks radio signals (the housing craze of thefuture?). I don’t think, however, that this mild lossof privacy outweighs the benefits generated from RFID technology.

Conclusion
People might want to ensure certain products are not identifiable in any way. For instance, Reverend Tilburn might not want someone to detect that copy of "Debbie does Des Moines" (guess she was bored) he keeps under the dresser so that Mrs. Tilburn won’t find it. In such cases, there are two options. One is a device that scrambles the signal so that it no longer is readable. The device to do such a thing could be cheap and available at local retail stores. Another is the decision simply not to use RFID tags on sensitive products. I would imagine the former option would be more appealing to retailers, as in a completely RFID world, it would be cheaper to use RFID in the supply chain than to fall back on older technology just to avoid creating an embarrassing moment for customers.

RFID is exciting technology that will enable newsoftware and hardware opportunities. It need notbecome a serious privacy issue, however, providedpeople are intelligent about the places, and themanner in which, RFID technology is applied.

biography
John Carroll is a software engineer now living in Geneva, Switzerland. He specializes in the design and development of distributed systems using Java and .Net. He is also the founder of Turtleneck Software.