Bruce Hudson is the Program Director for Enterprise Applications at META Group. I thought his take on RFID implementation was particularly interesting, so invited him to summarize it here. Enjoy!
Radio frequency identification (RFID) technology gets a lot of techies hearts racing. Its a new technology for most organizations, and IT departments are experimenting extensively with RFID hardware and software. In many cases, the final application has not even been defined, giving IT leeway to test out its ideas as it refines its skills.
Some companies have demonstrated quite a bit of ingenuity. Tesco, a leading retailer in the UK, linked video surveillance cameras to RFID readers. When certain products were removed from the shelf, the cameras were triggered to record the movement. At checkout, the video was compared with the person buying the article.
Clever. However, newspapers and the protestors that picketed the Tesco store were not so impressed. Tesco quickly ended that trial and reassured customers that their privacy was secure. It still continues to experiment with RFID, albeit in a much quieter manner.
Wal*Marts mandate to suppliers that by 2006 all cases and pallets must be tagged with RFID labels where feasible has pressured many companies to revamp their supply chain operations.
Our research reveals that most organizations view this as strictly an IT issue. We often see organizations lines of business toss the RFID mandate over the fence to IT. As in the Tesco case, this is a bad idea.
What do you get when you combinE a poorly understood technology and invisible consumer benefits with eager technologists under pressure to please the worlds largest retailer? A recipe for disaster.
The level of mistrust and misunderstanding in the marketplace is high, and backlash is inevitable for companies that do not try to understand consumer fears. Remember the fear surrounding “cookies” at the beginning of the internet age? We are at a similar juncture with RFID.
Next page: What companies can do to avoid RFID backlash.
What can companies do
to avoid RFID backlash”>
What can companies do to avoid RFID backlash?
RFID projects are more than technology deployments. Successful organizations will look beyond the IT implications of RFID and consider its impact on corporate brands, consumer perception, organizational behavior and business processes. The following six bullet points should be incorporated into any RFID project to increase chances of success:
- Protect your brand – manage the projects and deployments at a corporate level: RFID is currently surrounded by FUD (Fear, Uncertainty, and Doubt). Unresolved privacy and security issues pervade the space. Currently the techies are running the show; consequently public relations and brand impact is an afterthought. Dont risk your brand and end up like Tesco, in PR damage control mode. Involve PR, marketing and the lawyers in the projects and manage RFID projects as enterprise initiatives.
- Implement RFID as an addition to other auto-ID technologies, not as a substitute: Although RFID can certainly substitute for bar-coding, there are many cases where it makes no sense economically or from a process perspective. Retailers know that tagging low value, low risk items with tags that exceed the item cost yields little benefit; however, tagging cases and pallets improves inventory control.
- Identify the real problem before deploying the technology: A manufacturing company had repeated trouble in its warehouse with missing inventory and inaccurate counts. They looked to RFID technology to solve the problem but discovered that even with RFID, they encountered the same problems. Further investigation showed the cause was labor problems and only when that was resolved did the RFID technology deliver its intended benefits.
- Focus on the software and database management: These costs will far exceed the hardware costs of a RFID project. For companies that deal with regulated or safety related products–such as pharmaceuticals or aircraft parts–the system must be designed to meet the certification requirements applicable to their industries. Failure to do so will cost a lot more than the project costs.
- Manage expectations: Every RFID project is a custom project. From tag selection to reader location to integration with supply chain management systems, every implementation requires detailed analysis of the solution. Experimentation is part of the process and necessary to tune the system. Expect systems integration costs to exceed hardware and software costs.
- Dedicate resources to the project: The market for RFID system integration is far greater than the number of experienced RFID system integrators out there. As a result, there will be a lot of flux as companies come and go, and as experienced RFID engineers move from company to company. A company can reduce its implementation risk by dedicating resources to the project and by creating a knowledge management strategy to capture know-how before your employee becomes a consultant.