RFID's Finest Hour

Apr. 17, 2006—The Dubai Ports World controversy has highlighted the fragility of our global supply chains and some of their weakest links. Despite all the media attention, the real issue is not about the ports or who manages them, but rather the end-to-end journey of goods and the people, processes and technology that conduct, manage and protect global trade. As we explore these strategic issues, the extent of RFID's ability to help secure this supply chain and fuel growth and innovation for its participants is only now beginning to be realized.

In recent decades, the perfect storm of globalization has opened up the free flow of trade, capital, people and knowledge across developed and emerging markets. Businesses have access to global markets from which to source their goods and services, and to export their finished products in order to grow revenues, reduce costs and improve performance. The world stage provides the opportunity to gain economies of scale, competitive advantage and the differentiation needed to produce the steady incremental growth required by capital markets.


However, the price of admission to this world market is for businesses to tackle increasingly such complex issues as compliance, collaboration, communications and competition. In terms of compliance, businesses must abide by an expanding number of regulations and mandates from a governance, industry and privacy perspective. A typical supplier, importing from overseas, may have to deal with Sarbanes-Oxley (SOX), the Customs-Trade Partnership Against Terrorism (C-TPAT) and possibly both the U.S. Department of Defense and various retailer RFID mandates.

Section 404 of SOX requires companies to have controls in place to protect against adverse, preventable events—including those within their supply chains—that could impact their value. C-TPAT requires companies to take responsibility for the security of their own supply chains. While C-TPAT is voluntary, the consensus is that it may well become mandatory in the near future.

In light of this increasingly complex supply chain and regulatory environment, businesses today are even more pressed to ensure they balance the agility needed for competitive advantage and operational efficiency with the assurance needed for the safety and security of their shipments. Globalization, decentralization, outsourcing and the Internet have, in effect, created a divide between agility and assurance. Businesses are operating with increased agility, yet their security mechanisms are outdated. Too often, security has been an afterthought layered on top of new and existing applications and processes.