The Obstacles to RFID Adoption

The second issue, secrecy, is inhibiting adoption because many companies are sitting on the sidelines, refusing to adopt EPC technologies either until they're forced by a customer to do so, or the benefits become clear to them. A few early adopters have championed EPC and been vocal in sharing their stories, including Kimberly-Clark, Metro Group, Procter & Gamble and Wal-Mart. Many other firms, however, have great stories to tell but aren't telling them. I hear about these implementations off the record, either from end users or frustrated technology partners that would love to get their customers to open up.

This is not unique to EPC, of course—with all new technologies, companies are reluctant to share early successes and give competitors insight into what they're doing. That's understandable, but I believe such firms need to weigh the benefits of secrecy with those derived from openness. The advantages to keeping successful projects secret can include getting a cost advantage over a competitor, or increasing sales of promotional items in stores. But these are short-term benefits, as competitors will certainly figure out how to use EPC successfully, and it's unlikely such benefits would be so huge they'd translate into a real competitive advantage in the first place. Companies compete mainly on brand loyalty, price, product quality and so forth.

The disadvantage of maintaining secrecy is that it slows technology adoption, limiting the potential benefits a company can achieve. Early adopters sharing their success stories believe they, and the industry, will gain from their experiences. Bar codes saved an estimated $17 billion annually in the grocery industry, for instance, because everyone could use them to capture data more accurately and effectively. Moreover, widespread adoption is needed to generate the volumes of tags and readers required to bring prices down, which benefits everyone.

Let's say a manufacturer and a retailer working together could increase sales by using EPC technology to reduce out-of-stocks, or to ensure that promotional displays are on the floor when advertising hits. If these companies are not willing to discuss such benefits, both lose out. Why? Because fewer manufacturers are willing to tag goods for the retailer—or, if forced to do so, they proceed as slowly as possible—and fewer retailers adopt the technology, preventing manufacturers from getting the same benefits working with other retail chains.

I once asked a senior Wal-Mart executive about this very issue, and his response was that the company was willing to share its learnings to promote adoption, knowing it would keep innovating faster than its competitors. The long-term benefits of promoting success stories clearly outweigh any short-term advantages that might come with keeping them under wraps.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.