The following is one of two different perspectives regarding today’s Wall Street Journal article indicating that Wal-Mart expects to track certain clothing through the use of RFID enabled smart tags. This commentary is in the context of the supply chain perspective.

Well here we are yet again, another business headline involving Wal-Mart and a new RFID initiative that promises great value.  The real question is have we as a supply chain and broader business community learned from all the previous RFID endeavors? According to the Journal article, removable RFID smart tags are to be initially placed on underwear and Wrangler jeans at the point of manufacturing, and if successful, expanded to other products.  Wal-Mart is indicating that it will subsidize the costs of the tag sensors, but suppliers will have to invest in the tracking infrastructure.  To alleviate consumer privacy concerns, the retailer is further demanding that suppliers affix the tags to removable labels or packaging, instead of embedding them in the apparel.  But alas, that does not calm the fears of consumer privacy advocates. The article rightfully points out that RFID tracking is not new to retailing, and is successfully done in other regions, most notably certain retailers in Europe.

Having observed supply chain related RFID initiatives since the very beginning, I offer the following perspective.  First, I have always been of the belief that auto-ID tracking technology can pay tremendous dividends to supply chain business and customer fulfillment processes.  The opportunity is the ability to literally connect the physical supply chain by electronic means, providing all kinds of benefits in inventory management, tracking, replenishment and fulfillment programs.

There were many obstacles in previous initiatives. These included the high cost of the tags themselves, the expensive cost of the scanners, the ability of software applications to process real-time data, the lack of consistent identity standards, and fears from consumer privacy advocates.  Some years later, much is changed.  Individual tag prices have come down, certain software applications are RFID enabled, and the standards have improved.  Technology vendors have also ratcheted-down the hype that RFID cures all ills. The consumer issues still remain.

At this juncture, all of us should be a lot smarter and more pragmatic on the proper rollout, deployment and adoption of smart tag enabled inventory tracking across the various tiers of the supply chain.  We have learned that suppliers cannot be the sole subsidizer for the benefit of a single customer.  We have hopefully learned that consistent standards benefit all.  Auto-tracking is first and foremost a supply chain efficiency initiative, not a sales and marketing initiative to gain insights on consumer buying habits.  Finally, we should have learned that consumer concerns about privacy are genuine and real, and had better be addressed in any rollout initiative, especially involving Wal-Mart.

I applaud initiatives that improve inventory item tracking and more responsive customer fulfillment tracking processes.  Technology such as RFID smart tags can be effective enablers to such processes, if deployed correctly.  Unfortunately, the name Wal-Mart associated with such initiatives still evokes multiple concerns.

Bob Ferrari

When RFID technology first came upon the supply chain scene in 2005, there was quite a bit of hype attributed to the technology.  Similar to the introduction of the bar code label, this technology had the potential to deliver untold benefits in the ability to once and for all connect the identity of a physical item with supply chain inventory tracking, planning, and analytical software applications.  There was much hype, driven by the infamous Wal-Mart and U.S. Department of Defense RFID mandates requiring suppliers to conform to tracking, as well as all sorts of technology companies who recognized the potential of this technology.  Our timing however, was somewhat premature. 

The context of RFID as one other option for deploying sensory network tools was overshadowed, while the economics of RFID investment were not attractive, and the momentum stalled.  The promise of RFID tags in the five cent per tag range that could justify item-level tagging were just not evident in the time horizon, and RFID deployments have for the most part been limited to asset and specialty item tracking.

It is interesting to note however that technology developments for RFID are continuing, and that goal is getting closer toward achievement. The ability to reach the elusive five cent goal, in my view, was pegged more toward printed label technology rather than semiconductor device laden tags.  Avery Dennison for one has been rolling out various RFID printed labels targeted for specific industry and product sectors.  An article penned by Steve Johnson of the San Jose Mercury News notes that another company, privately-held Kovio, is about to launch what is believed to be the first manufacturing plant for printed semiconductors.

Founded originally in 2001 by scientists at MIT, the company has now shifted its focus from flexible displays to printed semiconductors.  It is also interesting to note that the article also notes that Hewlett Packard has also been working on various printed electronics applications. While Kovio’s planned labels are not as complex and powerful as many other RFID chips, its CEO notes that the biggest benefit is cost, well within the five cent per tag range or lower.

The message for our community is to not give-up on RFID as another potential enabling technology for deploying sensory networks.  Printed semiconductor technology is advancing and similar to all other silicon-based technologies, there will come a time where the economics of RFID item tagging will come into play. The question will be when.

Bob Ferrari

You may have read the latest announcement from Google introducing a new social location service for mobile devices.  A posting in SiliconValley.com outlines the features and purpose of this application, which will be termed Latitude.  This new web application will enable people with mobile phones or other wireless devices to be individually and precisely tracked within Google maps.

Think about it.  Would you like your spouse to know where you are at any given moment?  Where are the kids?  Where are my employees located right now?  Who is in our neighborhood?  Think of the possibilities. Many will speculate on the array of privacy concerns this technology will trigger.  I’ll leave that up to you, the reader, to voice your own opinions.  But it would be interesting to reflect a bit on certain parallels the past, and in particular, RFID technology.

Those of us who dwell on the future capabilities of information technology to enhance supply chain visibility have long discussed the possibilities of merging the physical location of items within supply chain applications.  It was sometimes referred to as merging the physical and digital supply chain, with the ability to locate or track any item anywhere.  RFID technology was the most promising step toward this capability. Active or passive RFID tags, having the ability to broadcast or store specific information, could indeed integrate with various supply chain software applications. The tracking of inventory could be truly real-time, and location-specific.

The first outcry regarding the potential use of this technology came from consumers who had legitimate privacy concerns.  I recall those arguments.  How much information is going to be tracked?  What limits will there be as to specifically identifying a consumer, or that person’s buying patterns?  The groundswell of concerns caused companies such as SAP, Wal-Mart and others to scale-back their original pilots.  In Germany, consumers were threatening to boycott any Metro Group stores that utilized RFID technology. Consumers in the UK similarly expressed vocal privacy concerns to retailer Tesco.  IBM went so far as to announce that its researchers came up with an RFID tag that provided consumers the power of privacy, by literally “turning-off” certain features of the tag.

My how far we’ve come- or have we really changed our perspectives on individual privacy.  The tracking of an individual down to a specific geographic coordinate is really “cool”, and may instantiate that former supply chain vision of merging physical with digital.  Google indicates that individuals can voluntarily select which tracking option they want to enable.  But in this particular case, I’m of the belief that such an application crosses the line of privacy.  Too much of our personal identity is being shared on the Internet without reflection of the implications.  Let’s observe if Google can overcome issues of individual privacy.  Obviously, there is previous learning to turn to.

No thanks Latitude, not this time.  Where I and my family goes, and what I do is my business.  I hope and trust that Latitude doesn’t sour future applications leveraging RFID.

Let’s hear from you- what’s your view on Latitude?

Bob Ferrari