Radio Frequency Identification (RFID) tags consist of a microchip, loaded with a unique code number, and a tiny antenna that transmits data from the chip to a reader. The chips can be incorporated into a range of products, and many view the use of RFID tags as an imminent replacement for barcodes. The reader is activated whenever the antenna comes into range and the data can be used to trigger an event – such as ringing up a purchase or ordering more stock.
The tags have already been used in the retail setting. Tesco used the tags in Gillette razor blade packaging in its Cambridge store as a form of security device; Marks & Spencer tested them to assist with stock control; and, perhaps most significantly of all, Wal-Mart is demanding that all of its suppliers use RFID tags by 2005.
From a retail point of view, the tags offer a means of navigating an increasingly complex global supply chain, allowing companies to track their products from factory to distribution centre, from warehouse to sales floor. The tags, it is hoped, will allow better inventory management and lower operating costs.
But META Group warns that the impetus provided by market leaders such as Wal-Mart, and public-sector models such as the US Department of Defense, is leaving many IT organisations scrambling for budget and guidance to make working RFID solutions without understanding the technology's actual capabilities and limitations.
META Group believes RFID may deliver many of its purported benefits. However, it warns that decision makers should not be enticed by the "low-cost tag" hype, and that RFID is not a one-size-fits-all approach with unlimited technical abilities.
The research concludes that organisations should keep initial RFID projects at a simpler scale. This might include single stage implementation, such as tracking cases or pallets within warehouses, or from warehouse to store, or acting as bar-code replacements. This level of understanding and experience will be necessary before moving to more complicated supply chain implementations.
Gene Alvarez, vice president with META Group's Technology Research Services, said:
"Many IT organisations do not immediately realize that even smaller RFID projects can significantly affect an entire IT infrastructure and application portfolio, so a readiness assessment must be performed early on. Starting with small projects will assist enterprises in climbing the 'RFID learning curve' and establishing standards that support efficient future product movement."
META Group further encourages IT organisations to create a task force responsible for gaining an understanding of the capabilities and limitations of RFID generally. META Group sees this task force as responsible for interweaving RFID technology with existing IT infrastructure and application portfolios as part of an overall strategy of implementing the technology.