10 Things CEOs Must Know

Understanding the benefits is even more difficult, particularly for manufacturers who don’t have complete control over when and how the benefits will be realized. For instance, just putting an RFID tag on a case won’t reduce inventory or prevent an item from being out of stock. Retailers have to change their processes. So CEOs of manufacturing companies need to engage their retail partners to ensure that both parties are working in tandem to achieve benefits that can be measured over time.


Privacy is a serious issue.
Few CEOs have really considered the privacy issue because few companies are planning to tag individual items within the next few years. But privacy is a critical issue to all companies even today. “The importance of privacy concerns can’t be underestimated,” says Cap Gemini’s Loretto. “Even though we are talking about tagging within the supply chain, the issue is still in the customer’s mind, and it can be warped [by RFID opponents] to damage a company’s brand.”

A.T. Kearney’s Donnan suggests that companies work with industry bodies such as EPCglobal and trade organizations to address privacy concerns. He also says that companies need to educate consumers about the benefits they will derive from the technology. Among the issues that will resonate with consumers are RFID’s potential to improve food safety, reduce the counterfeiting of prescription drugs, and provide better access to return and warranty information.


The implementation must be assessed periodically.
As with any major IT deployment, it’s important to establish milestones and assess progress. It’s particularly critical with RFID because the deployment, including changes to network infrastructure, enterprise resource planning systems and specific applications, will likely be a three- to five-year endeavor. CEOs need to hold the steering committee accountable for ensuring that measurable benefits are being achieved at each stage.

The deployment also has to be reassessed based on what’s happening in the marketplace. “We’re all assuming that this technology will improve, and the price of tags and readers will drop,” says Donnan. “That’s probably a good assumption, but what if the price doesn’t drop as fast as expected? There need to be points of reviews that accelerate or slow down the deployment.”

Jack Welch, the legendary former chairman of General Electric, undertook several campaigns during his long career to remake his company—Workouts, Six Sigma and E-business among them. He championed these initiatives internally and drove change throughout GE’s many divisions. As a result, he was able to cut costs, improve the company’s ability to execute and deliver consistently high returns to shareholders. CEOs who want to achieve dramatic benefits from RFID should emulate Welch and turn their RFID deployment into a corporate-wide campaign. Those who do may transform a good company into a great one.