Collaboration Can Accelerate RFID Adoption

By Mark Roberti

Competitors working together can speed up the adoption of radio frequency identification, by agreeing on standards and how to implement them—which benefits all players.

I've written a great deal about Geoffrey Moore's theory of the technology-adoption cycle, and I strongly believe he is right about many things. One issue he does not address in any significant way, however, is the role that collaboration among businesses plays in technology adoption. The tributes to Alan Haberman, who died recently (see Remembering Alan Haberman), got me thinking about this topic, and I'd like to share my thoughts.

Haberman, as his many obituaries pointed out, was the head of the industry committee in the 1960s that selected the type of bar code that would be used by the grocery industry. That committee, made up of executives from that sector, unified the industry behind a single bar-code standard, and helped to propel the technology's adoption.

According to Moore, a new technology "enters the tornado"—that is, goes through a phase of rapid adoption—when critical mass is reached. In other words, when enough companies adopt a single type of technology, everyone else jumps on the bandwagon as well. Bar codes didn't really reach critical mass until the early 1980s, when Wal-Mart Stores and K-Mart adopted them, and required that their suppliers use them on everything. Those two big retailers created the critical mass necessary to make the bar code ubiquitous in the United States.

When industry leaders get together and decide industry-wide that adoption will benefit everyone, collaboration can unify an industry around standards, and provide guidelines regarding how those benefits are implemented. This can greatly reduce the amount of time that it takes to achieve critical mass.

We're seeing this in apparel retail today. Most companies that tag clothing have chosen to use passive ultrahigh-frequency (UHF) tags based on GS1's Electronic Product Code (EPC) standards. Some are putting their own numbers in EPC tags. But industry leaders have realized that everyone will benefit if all apparel retailers and suppliers utilize EPC standards. That is why Dillard's, JCPenney, Jones Apparel, Macy's and Walmart are working together through the VICS Item-Level RFID Initiative (VILRI) to promote the adoption of EPC standards, and to agree on how they should be implemented.

These industry leaders understand that if only one retailer adopts EPC technology and standards throughout its supply chain, then its suppliers will face an additional burden of having to manage separate inventories—one tagged, and one not. Suppliers resist because this adds to their cost, and they can't attain much benefit from RFID since they can't change their own internal processes for just one, or even two, retailers.

If the industry moves more or less together, however—realistically, all companies will never be able to move fully in lockstep, since each has its own unique funding and deployment issues and strategies—then suppliers can invest in the technology and begin to change business processes. Moreover, if VILRI's members agree on how to implement the standards—that is, if they reach a consensus as to where tags should be placed, which data formats to use, and which information will be shared securely between a retailer and its suppliers—then deployment becomes easier for everyone involved. Collaboration speeds up adoption, the industry reaches critical mass faster, and everyone benefits from the technology sooner.

Other industries have collaborated on RFID standards. The Auto Industry Action Group has developed a standard for item-level tracking. The financial services industry has embraced one standard for tracking IT assets. And the consumer packaged goods industry worked with Walmart and Target, through GS1, to come up with standards for tracking pallets and cases in the supply chain.

Is this anti-competitive? Not at all. It's akin to sports teams agreeing on the rules before playing the game. The United States Golf Association, for instance, regularly evaluates new golf ball and club technologies, and sets rules regarding whether they can be used—and, if so, any limitations that should be placed on them. Once that is done, golfers can compete on a level playing field.

The retailers involved with the VICS Item-Level RFID Initiative all hope to improve inventory management and replenishment using radio frequency identification. But they are going to compete fiercely for market share based on the styles of items they sell, as well as their advertising, price, brand loyalty and other factors. So collaborating can move the entire industry forward, and reduce the time it takes to build the critical mass that Moore says it needed before mass adoption can occur. That's good for business—and for consumers.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.