RFID's Finest Hour

The nature and magnitude of threats to the supply chain have also changed. Today's supply chains face ever-increasing disruptive threats such as theft, diversion and counterfeiting, along with the unpredictable acts of governments, port operators and other entities in their supply chains, plus extreme acts of nature (such as Hurricane Katrina) or, worse still, terrorism. As an example to highlight the magnitude of these threats, the World Health Organization (WHO) estimates that 5 to 10 percent of the world's pharmaceuticals are counterfeit. The economic impact of this counterfeiting is estimated at $1 billion to $12 billion. The bigger picture across all global trade is that product counterfeiting now accounts for 5 to 10 percent, or roughly $350 billion. In addition to counterfeiting, theft and diversions alone affect 1 to 3 percent of all goods in the supply chain.

Throughout history, the military has had to respond and adapt to new threats and continually transform itself to deal with new, asymmetric threats as it has moved from fighting a well-known opponent to being ready for an attack that can occur almost randomly, at any time and any place, and against any target. Today's businesses must also redefine their security posture to mitigate these risks and ensure business continuity for their global supply chains.

To ignore these risks and imperatives would be too costly for both the United States and individual corporations. A recent war-game scenario estimated that closing the nation's ports for as few as 12 days would lead to a 60-day container backlog and a cost to the economy of approximately $58 billion. What's more, the impact on an individual company can be equally devastating. A senior executive of a Fortune 50 company has stated, "If an act of terrorism were committed using one of our containers, we believe it would be a company-ending event."

As an enabling technology, RFID offers tremendous potential to help address these challenges. While much attention in the past several years has focused on RFID's application for supply chain efficiency and support for DOD and retailer mandates, it can actually play an equally important role in helping raise the security posture of nations, governments and businesses. RFID can help provide the end-to-end visibility we need for goods and assets moving through the supply chain, as well as the identification—and, hence, authorization—we need to keep the good guys in and the bad guys out. An investment in RFID can, thus, serve two purposes: as a business accelerator in terms of supply chain efficiency, and as an enabler for improved security.

Some examples can help to illustrate RFID's potential, and businesses can learn from some of the long-standing and recent programs within the U.S. government.