RFID Gains Momentum

By Mark Roberti

While there haven't been any new mandates, it's clear that companies are accelerating RFID projects and, in some cases, committing to deploying RFID.

Last May, I wrote an opinion piece pointing out that no new RFID mandates had been issued in seven months, and that several vendors had pulled out of the radio frequency identification market. I questioned, as a result, whether the RFID movement was running out of steam (see Is RFID Losing Momentum?). In the end, I decided it wasn't, and that a lot of hard work was going on behind the scenes to understand how and where RFID could deliver benefits.

All evidence suggests RFID adoption is picking up. We're seeing a rise in visitors to our Web site, as well as subscriptions and registrations for RFID Journal LIVE! 2006, our 4th annual conference and exhibition (to be held May 1-3, Las Vegas). And conversations I've had in the past few months reveal not only that work is still ongoing, but also that end users are intensifying their efforts. In the past few weeks, two leading end users, Dick Cantwell of Gillette and Alan Estevez of the U.S. Department of Defense—both of whom will be sharing their insights and early lessons learned at RFID Journal LIVE! —told me about their commitment to roll out the technology.

The DOD recently put out a request for proposal to vendors who can supply interrogators for some 17 Defense Logistics Agency facilities. During my chat with Alan about this and other developments, he mentioned that word of the DOD's successful projects are spreading, and that folks in the different branches want to know what the other branches did, how they did it and what they can learn from the pilots. That's a very good sign, because it means projects are taking on their own momentum within the DOD.

Dick Cantwell was the head of Gillette's RFID efforts for several years. He served as the head of the Board of Governors for the Auto-ID Center, which developed the original concept for the Electronic Product Code. Gillette and Procter & Gamble founded the center, along with the Uniform Code Council (now GS1). Gillette has been among the most aggressive companies in exploring the benefits of EPC. I think it's fair to say that P&G was a bit more conservative over the past couple of years. (It didn't, for instance, place an order for 500 million tags, as Gillette did in 2003.)

When Procter & Gamble purchased Gillette, P&G could have used the massive integration of the two operations as an excuse to slow down its own RFID efforts and those of its new Gillette division. Instead, P&G elevated Cantwell from head of Gillette's RFID project to the head of RFID for all of P&G. What's more, it's stepping up its RFID implementation work under its EPC Advantaged Strategy (see P&G Adopts EPC Advantaged Strategy).

Wal-Mart is still playing a major roll in encouraging adoption of the technology, but mandates alone are no longer the sole driver. I recently interviewed Robert Kashmer, vice president of information technology at drug wholesaler H. D. Smith. The company is tagging bottles of Class ll narcotics at its distribution center in Springfield, Ill., and he said it plans to start tagging bottles at a DC in Florida. It's also expanding the number of pharmacies to which it ships tagged bottles. Why? In part, to meet pedigree regulations introduced in Florida and California, but also because the company wants to protect the public health and improve internal efficiencies.

I hear similar stories almost daily now. In distribution centers, manufacturing facilities and retail stores from Topeka to Tokyo and from Madrid to Melbourne, companies are stepping up their investigations of RFID's benefits. Companies are committing to much larger pilots, in some cases tracking individual items. In others, they are tracking ocean containers or aircraft engines. These companies are not driven by the need to please a customer, but by the goal of understanding the potential benefits.

End users tell me they are impressed that RFID vendors have been dramatically improving their products and developing solutions for real business problems. They're encouraged by the reduction in tag prices, which makes RFID look increasingly attractive, and they expect to see interrogator prices start to fall, as well. And while it might be several years before you can track an individual box of breakfast cereal with RFID, companies now feel that for many applications, the ROI is in sight.

There's still a great deal of work to be done before RFID really takes off. Most companies are just figuring out where the benefits are, what data they can collect and how they can use it to change processes and cut costs. The EPCglobal standards for sharing data over the EPCglobal Network will be critical, because many of the benefits come when supply chain partners collaborate. EPCglobal is expanding the number of its Business Action Groups and subgroups working to create the standards that will turn RFID data into actionable information. Many companies across the retail/consumer packaged goods, health care/life sciences, aerospace/defense and transportation/logistics sectors are contributing to the creation of standards for sharing data.

I'm not sure if we are completely out of what Gartner calls the "trough of disillusionment," but clearly some companies are climbing Gartner's "slope of enlightenment." It might take several more years to reach the "plateau of productivity," but the conversations I've been having over the past few months have been very encouraging. As H. D. Smith's Kashmer said to me: "It's all good. It's all good."

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