<http://www.nytimes.com/2004/11/11/technology/circuits/11howw.html?8cir=&oref=login&pagewanted=print&position=> The New York Times November 11, 2004 HOW IT WORKS Keeping Better Track From Factory to Checkout By BARNABY J. FEDER IKE investing or hitting a baseball, using radio scanners to wirelessly identify consumer products is simple in concept but dauntingly complex in reality. The current form of the decades-old technology, now known as radio frequency identification, or RFID, has three building blocks: small tags built around microchips that carry a digital identification code; scanners, which are also known as readers; and networking hardware and software to link scanners to computer databases. The biggest challenge for retailers and their suppliers has been melding the building blocks into systems that are reliable without being cumbersome or unduly expensive. Unlike the RFID systems that automatically collect tolls from motorists or control access to buildings, those designed for commerce call for disposable, batteryless tags that are tiny and unobtrusive. And since the tags are meant to be slapped on every pallet or carton or even on every item, they must be cheap enough for businesses to buy them by the hundreds of millions. Perhaps most important, retailers need software capable of filtering out huge amounts of data while recognizing relevant information - when an item has unexpectedly disappeared from a shipment, for example. "It's been very hard to do an intelligent investigation into how you need to change the business because the technology is not good enough yet," said Simon Ellis, supply chain futurist for Unilever, the consumer products company. "It's costing over $1 a case, which is fine for a pilot test. But there is no technology to get labels onto our production-line products." The ultimate goal of an RFID system is to track individual products all the way from manufacture to sale. Under such a system, every item would have a tag embedded in its label or attached separately. The tag consists of a microchip and a flat ribbon of antenna; the microchip would contain a unique code identifying the manufacturer, type of product and individual serial number in a format approved by EPCglobal USA, a nonprofit group that has been developing retail RFID standards. As the item moved through the supply chain, scanners in doorways, on loading docks or at other handoff points would capture the movement. Radio waves from the scanners would be picked up by the tag's antenna, providing enough energy for the tag to broadcast its identity back to the scanner. Data would flow through the Internet or other networks to corporate computers, but if the tags had read-write capability, status updates on the item could be added to the tag itself as well. Once products reached the store, scanners in the stockroom could track how rapidly they are moved to shelves, and scanners on shelves could monitor when shoppers removed them. Finally a checkout scanner could ring up everything in a shopping cart as it was wheeled toward the door. Such technology could speed up checkouts and returns, but the bigger economic impact would be in keeping store shelves filled with the products consumers want. Right now, according to the Grocery Manufacturers Association, stores are missing products consumers want to buy about 8 percent of the time on average and up to 15 percent of the time when the product is being promoted. RFID tracking would also make a big dent in theft and counterfeiting, according to proponents of the technology. And, they say, the tags would be designed so that consumers could easily disable them after purchase. That will not mollify privacy advocates, who object to manufacturers and retailers building up electronic records of shoppers' buying habits, but it could calm fears that individuals or institutions outside the store could use the tags to spy on consumer behavior. So much for the vision. Today's tags are too expensive to put on every item (the cheapest cost about 20 cents each). An effort by Wal-Mart to force its suppliers to use RFID has focused on handling tagged cases, cartons and pallet loads of goods rather than individual items. "Even Wal-Mart is still discovering what this technology can and cannot do," said Omar Hijazi, an RFID specialist at the consulting firm A. T. Kearney. With standards not yet settled, few individual items being tagged and retailers not yet demanding RFID tags at more than a few test distribution centers, manufacturers have put off automating RFID tagging. Instead, most are resorting to "slap and ship" strategies in which tags are applied to items involved in tests just before they leave the warehouse. -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'