Feds, Wal-Mart Drive RFID Adoption

News Analysis: Radio frequency identification (RFID) tags are gaining momentum with retail giants and the military. But analysts pointed to growing pains with the technology.

While still in its infancy, radio frequency identification technology is gaining momentum in business and now with the federal government. One thing is certain, the tags will be arriving on shipments in a couple of years.

The Department of Defense last week instituted a policy to require its suppliers to install radio frequency identification (RFID) tags on individual parts and pallets by 2005, a federal stamp of approval on the technology. The tags will enable an operator to wirelessly scan a package for asset management and tracking data.

This move by the military follows on the heels of the worlds largest retailer, Wal-Mart Stores Inc., which recently decided to require RFID from its suppliers by January 2005.

/zimages/6/28571.gifClick here for a close look at Wal-Marts experience with RFID. This case study follows the retail giants progress and problems with early trial deployments.

The difference between the two announcement, analysts said, is that the military will be able to overcome any technical hurdles by throwing wads of cash at problems that may arise. However, it will be unlikely, they predicted, that American consumer-goods suppliers will have more than a token RFID effort in place in 2005.

The DODs Defense Logistics Agency plans to host an "RFID Summit for Industry" in February 2004, to work more closely with suppliers in developing RFID strategies. However, the DOD also warned the industry that its RFID policy and implementation strategy will be finalized by June 2004.

Currently, the military mandate requires that radio frequency (RF) tags be installed at both the crate and pallet level, not on individual items, according to DOD spokeswoman Marcia Klein. The agency will work with its almost 24,000 suppliers to deploy the individual tags and the systems to monitor and analyze the data, she said.

"Right now were trying to figure out the best way to get those details done," Klein said. To her knowledge, the DOD has not released a public estimate on the costs or benefits of the RFID deployment, she added.