By Mark Roberti

April 1, 2004—A year ago, radio frequency identification was hardly on the radar screen of most CEOs. Today, many are treating it like a blip on the IT department’s screen, an added expense that must be borne to keep big customers happy or to keep pace with key competitors. While it’s important to deploy RFID to meet deadlines or to keep from falling behind industry leaders, many CEOs are acting without considering the full impact the technology could have on their company.


“If you don’t have a strategy and you don’t know what the payback is going to be, effectively you’re asking your board of directors and your shareholders to underwrite an ongoing cost that could undermine your profitability,” says Jonathan Loretto, global technology lead for RFID at Cap Gemini Ernst & Young. “The impact on a business, if RFID is done right, can be significant, but the impact if it’s done incorrectly can be devastating.”

Each company’s strategy is going to be different, depending on whether it’s an industry that’s moving quickly toward broad adoption of RFID, such as consumer packaged goods, or one that’s moving more slowly, such as agriculture or construction. The strategy will also depend on whether a company stresses a high level of customer service and support or focuses on execution and efficiency. And it will depend on whether the company makes, moves or sells high-value goods, such as consumer electronics, or low-cost goods, such as canned foods.

There will be overlap among strategies. All companies want to cut costs and boost revenue. But it’s critical that the CEO establish an overarching RFID strategy that marries the way RFID is deployed to the company’s larger goals. For instance, Wal-Mart stresses everyday low costs and has developed an RFID strategy that focuses on using the technology to cut costs wherever possible. Other retailers, such as the Metro Group in Germany, are examining how RFID can improve the customer experience in the store.