Radio frequency identification (RFID) has made inroads in the retail and supply chain industries, allowing companies to track millions of items at many different levels. It is also seeing rapid uptake in healthcare. Although RFID also has been used for years to track physical records, its expansion in other industries has elevated its visibility and prompted more IT and business executives to explore its potential application to their own organizations. Empirical evidence supports this. Industry analyst Frost & Sullivan predicts that retail RFID applications will expand to nearly $4.2 billion by 2011, with 40% of the market in North America.

Why RFID?

On the surface, the benefits of RFID seem obvious. Encoded data can be rapidly scanned. RFID speeds this data into systems, concurrently eliminating the manual errors that are introduced by hand-keying.

There are three elements in any RFID system: an antenna or a coil; a transceiver/decoder; and an RF tag transponder that is programmed with unique information. The RFID transponder tag has an information chip no larger than a pencil tip. Radio signals and identification are transmitted between the tag and a reader through use of a radio frequency.

Low-frequency RFID typically has short reading ranges and lower costs. It is commonly used in security access, asset tracking, and identification applications. High-frequency RFID systems have high reading speeds at ranges over 90 feet. They are used for tasks like railroad car tracking and automated toll collection.

Regardless of application, RFID systems offer non-contact, non-line-of-sight technology that can read tags through a variety of substances. RFID's substance penetration potential makes it superior to alternate technologies like barcode.

Business Centric and Support Applications using RFID

The most successful RFID technology deployments have reduced costs, cut process times and eliminated the possibility of manual errors. Many of these applications have concentrated on automating data capture and tracking the movements of persons and inventory.

Retail

In retail, RFID provides measurable improvements in inventory management, product reordering and protection; and in customer service.

For any given store item, an RFID tag can contain date of manufacture; time spent in transit; location of distribution center holding the item; name of the last person to handle the item; amount for which the item was sold; payment method used in buying the item; expiration date; last date of service and· warranty period. RFID can tell a store if items are out of place and if they need to be replenished. It can also track large ticket items that are showing movement in the store, ensuring that these items are being purchased and not carried away. RFID can be used to track item expiration dates so that store personnel can move these items to the "front lines" of store shelves and displays for consumption. It can streamline item checkout by customers and clerks by eliminating the need to remove items from a cart or basket. For merchandising purposes, RFID can also track consumer shopping behaviors by tagging carts and baskets with RFID so data can be collected and used to map paths typically followed by shoppers through the store.

RFID technology makes positive contributions to retail's ability to manage operations and reduce operational costs. As an example, a 2002 Food Marketing Institute study showed that store out-of-stock conditions averaged 8.3% and caused a typical retailer to lose 4% of sales. RFID reduces this loss exposure and also combats stock shrinkage, which tops $50 billion annually and can result from employee theft, shoplifting, administrative and paper errors, and vendor fraud.

The most publicized example of RFID in retail has been Walmart, which launched its RFID initiative in 2003, when it announced that it would require all its suppliers to put RFID tags on pallets and cases. This transition to an all-RFID system has been slower than first anticipated-but it has transformed the business model of retail to where RFID today is a staple in the majority of large retail environments.

Healthcare

Healthcare is using RFID technology for assistance in asset tracking. In one example, a hospital is using RFID to track its IV pumps. With RFID, it is not only able to locate the pumps, but also to know when they were last cleaned.

In other cases, healthcare is beginning to refine its business processes to deliver better service to patients. In one case, a large east coast medical center is creating and using patient wristbands with embedded RFID tags in two of its acute care wards. The wristbands enable doctors and nurses to use a portable PC with an RF reader attachment to review and edit patient records.

One of the reported benefits of this implementation is the elimination of keystrokes because doctors and nurses need to enter information into a patient's record only once. Previously, they had to manually update patient records while at the patient's bedside and also enter the information into a computer at the nurse's station afterward. Most importantly, RFID's automated data capture eliminates manual errors in data entry that make their way into patient records and that potentially affect healthcare decisions. The medical center pioneering the technology anticipates that RFID will save it $1 million annually and will provide nurses more time with patients.

Law

Law firms are starting to add RFID to their operations for purposes of tracking files and documents. An end result is the ability to locate critical files rapidly. This saves time and is yielding an immediate return on technology investment. One trademark practices firm reported an annual cost savings of $144,000.

Asset Tracking Simplified

Cisco's Wireless Location Service now tracks high-value assets by applying RFID from directly within wireless LAN infrastructures. This asset tracking is likely to be adopted by IT departments with significant numbers of IT assets to track and to control.

RFID obstacles

Although RFID is rapidly expanding, it is not without its concerns for companies and for network professionals. Below are several areas where it is important to have a plan of action before implementing RFID:

Privacy

In retail, there are consumers and consumer groups that are objecting to being tracked around stores with RFID technology. They are concerned that their privacy rights are being violated with the development of marketing information that they have not authorized-and fearful that others with RFID monitoring technology have the potential to capture their personal information and to exploit it fraudulently.

IBM recently addressed the issue with the introduction of a new wireless identification tag with a notched antenna that consumers can tear off. Removal of the antenna reduces the readable range of an RFID tag from about 30 feet to less than two inches. This leaves the tag intact for returns and other purposes, while eliminating the possibility of security attacks from a distance.

Signal Noise

Some RFID tags cannot be detected by the antennas if they are shielded by the hand or the body. RFID signals can also be disrupted by environmental noise from power sources and water. Many sites hire environmental consultants in advance of implementing RFID to identify the "noise" factors that exist in their physical environments and to mitigate these factors.

Cost

The cost of RFID has dropped dramatically over the past few years, but RFID still presents significant costs for startup. Most companies establish return on investment models that are teamed with business objectives and goals to justify the technology before they acquire it. Many also adopt a phased approach to RFID implementation that confirms a proof of concept pilot project and that also phases in the costs of technology acquisition more gradually by rolling out RFID in project phases.

Compliance

Companies considering RFID technology should work with established vendors to ensure that the RFID technology solutions being proposed comply with federal standards. Most RFID systems operate in frequencies that have their own bandwidth regulations. Certification of FCC compliance signifies that an RFID device not only operates within FCC-regulated frequencies, but that the device works within maximum permissible exposure and specific absorption rate limits of HF and UHF energy on the human body.

RFID Integration

RFID typically uses databases to house captured information. This means that corporate databases have to be able to integrate with RFID. Sometimes, this integration work requires the development of application programming interfaces (APIs), and warrants the services of highly specialized systems integrators. The challenge is a shortage of qualified integrators for RFID, since few companies have internal staff that have integration expertise in this area.

Where do We Go from Here?

Since RFID requires specialized IT skills, many organizations already faced with daunting workloads would like to ignore it. Nevertheless, an increasing number of industries are moving to RFID technology because they see a business advantage in doing it. Retail is the major activity area-but RFID is also being deployed by car rental companies for car check-ins; by special event concessions to scan value-added cards; and by healthcare to update records in hospital wards and other medical facilities. As wireless networks expand, RFID will also be a part of that expansion.

The keys for RFID are a strong business case with cost recapture, scalability to the needs of the enterprise-and an IT team with the planning, implementation and support skills for RFID technology.

NaSPA member Mary E. Shacklett is President of Transworld Data. She is listed in Who's Who Worldwide and in Who's Who in the Computer Industry.