If you haven’t yet developed a radio frequency identification (RFID) technology strategy, don’t rush.
Chances are, if you have just such a strategy, it’s likely to fail to deliver on all its objectives, cost a lot money and wind up being an expensive investment in a technology that doesn’t really solve any easy-to-define problem. That’s the conclusion of a recent contrarian note penned by a director of Heavey Radio Frequency Data Systems Ltd., a Dublin-based integrator that installs and maintains wireless systems.
The note — released last week and entitled “RFID. Bomb?” — was originally targeted at Irish companies, according to its author, Ronan Clinton, managing director at Heavey RF. However, in e-mailed comments, he said it’s true elsewhere. “The problems with RFID are global,” he said. “A deployment in smaller Irish companies is less justifiable than in big American companies, but the cost and technical boundaries remain the same. I maintain that it will not be possible to roll out RFID in the supply chain globally.”
In his note, Clinton said he is a fan of RFID technology, having been involved in a number of successful implementations. But, Clinton said, RFID “simply cannot do what people expect it to do from the hype that has been generated over the last decade. It is not a magic wand that will tell you where all your products are in real time. It is not as reliable as bar coding, and can never be as cost-effective.”
For starters, he said, although RFID has been around in various forms for decades, it still isn’t as reliable as its rival, the bar code. Some reports have indicated that even the next-generation, industry standard Ultra High Frequency Gen 2 RFID tags are read accurately only 60per cent of the time at the case level. And RFID is never going to be as cheap to use as bar codes. For instance, Clinton asserted, there will never be a highly affordable 5 cent RFID tag because so many types of tags with different specifications are needed. Wal-Mart Stores Inc., for example, demands that suppliers use a UHF tag; pharmaceutical makers want high-frequency (HF) ones. This means no one tag will become the de facto industry standard and permit the bulk mass production that would lead to lower prices, he said.
An RFID investment can also be precarious, Clinton said. What happens, he asked, if a U.S. company required by Wal-Mart to use a UHF tag also receives a mandate from another company to have an HF tag? “Everything has to be reinvented,” he said. On the other hand, bar code scanners are much more flexible in reading different sets of code configurations and wouldn’t require a major overhaul.
Despite his concerns, Clinton said that for certain types of deployments, RFID can be useful. These include closed-loop installations, which are done internally at a company for things such as assembly line operations. Open-loop installations, by contrast, involve using RFID to tag items such as cases that will be shipped to partners.
Even in closed-loop deployments, careful cost analysis is important, Clinton said. Should RFID use be mandated by a government or a major partner such as Wal-Mart, companies should actually wait as long as possible before rolling out the technology and learn the ins and outs first, said Clinton.
“Given that bar coding still hasn’t been fully deployed after 40 years in the supply chain, I find it hard to accept that this much more expensive, infinitely more complicated and not-yet mature technology is going to be any different,” Clinton said of RFID.