Let’s take the example of smart tags on luggage. What if the tags worked great in London but couldn’t be read in Los Angeles? Or they worked in Beijing but not Johannesburg? The current solution is to add more antenna to RFID tags so they can be read in multiple location. But that adds cost.
“RFID tags have to function on luggage in Berlin, Moscow or New York,” said Reding. “Therefore, we must have strong relations and must reach a world agreement on standards for RFID.”
But such a world agreement is still a long way off. Cresanti and Reding are doing a lot of traveling to find common ground that will simplify global implementation of RFID. It’s unlikely, though, that EU and the U.S. will agree upon a unified radio spectrum.
This barrier may well be an insurmountable as it is probably impossible now to have the USA, Europe, Russia, China and other nations alter their existing spectrum systems. Maybe a few will, but one global standard is beyond even the best diplomacy.
“It is vital to establish a set of international ground rules,” said Cresanti. “I am sure we can get it right trans-nationally and prevent RFID dislocation.”
This spectrum issue also ties in to perhaps the biggest challenge ahead: bringing the cost of RFID down to below one-cent-per tag; the level at which it becomes affordable for just about any product. This type of tag will have to be printed using special electronic inks. These might not be seen in widespread use for another five-to-ten years, though.
It takes more than a few tags and readers, though, to harness RFID in a business context. According to Wayne Kernochan, an analyst at Illuminata of Nashua, NH, tapping into the real value of RFID requires the right architecture, including hardware, software, and business processes.
“RFID can indeed pay off in the real world, but it also hints at the limits of today’s technology,” said Kernochan. “These limits make industries that involve large objects with relatively high prices, and strong inventory/distribution improvement needs, good candidates for RFID; other industries, not so much.”
Ongoing projects seek to combine business intelligence, enterprise resource planning (ERP), supply chain and other top level management systems in order to utilize smart tags along with high-level business processes.
“The real long-term value of RFID is using it to improve business processes,” said Kernochan. “With RFID, for the first time, you can track product components not only throughout your organization’s production process, but also outside the organization throughout the supply chain—and then analyze that data to improve the process, in part or as a whole.”
That work is already underway. IBM, for example, works in collaboration with the European Union (EU) on several major RFID R&D projects. In the pharmaceutical field, IBM is working on temperature-sensitive tags to monitor shipments in transit. IBM is also involved in IT FoodTrace to track food from the field to the plate in order to monitor its proper use and disposal, and reduce red tape in regulatory reporting.
This same idea is being applied to shipping containers to maintain security and reduce customs delays. Shopping, toll booths, banking systems, entrances to theme parks, home deliveries and inventory tracking are a few other possible uses. And SAP is with an RFID vendor on a system that ties smart tags to end-to-end business processes, united in an ERP-like framework.
“RFID is a major international commerce issue,” said Cresanti. “If we don’t get it right, it could put all kinds of kinks in the system that would seriously hamper trade.”