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Logistically Speaking: Tower of babble

Feb. 2, 2006
At what point does radio frequency identification (RFID) stop being mere hype and start becoming an accepted means of improving inventory management?

At what point does radio frequency identification (RFID) stop being mere hype and start becoming an accepted means of improving inventory management? Ever since retail giant Wal-Mart Stores Inc. announced back in June 2003 that it expected all of its suppliers to eventually use RFID tags, there's been a nonstop deluge of press releases, analyst reports and lately, doomsday proclamations centered on this not-really-new data capture technology. Skeptics could easily be excused for questioning whether there was more money to be made by writing about the technology than by actually implementing it in a warehouse.

Our favorite activity here at Logistics Today is to hear from our readers, whether in person, on the phone or electronically. One reader, who quite frankly is sick and tired of hearing about RFID, wrote recently:
"In my opinion the media (especially print) tend to grab onto hot topics or catch words like RFID and run with it ad nauseum rather than focusing on topics and concepts that most logistics professionals actually use. We spend so much time babbling about the "what if" items of the future that we lose sight of the items that need to be addressed today. When more than 1/10th of 1% of the firms in this country start to use RFID in actual practice, then we can open it for discussion. Until that time, can we please talk about something else that has value today? Please."

I can certainly sympathize with his sense of being overwhelmed by RFID hype, but I think he's being distracted by the babble and missing the realworld usefulness of the technology. In fact, and somewhat ironically, the reader happens to be a logistics manager in the pharmaceutical/healthcare field, where RFID has already advanced well past the "what if" stage. While it is true that most drug makers haven't yet begun applying RFID tags themselves (leaving that task to healthcare distributors), last month pharmaceutical manufacturer Pfizer Inc. began shipping every package, case and pallet of Viagra with RFID tags. This use of RFID could well become (to slip into some 1990's slang) its "killer application."

Pfizer's primary goal in using the tags is to enhance patient safety, explains Tom McPhillips, vice president of the company's U.S. Trade Group. "We are creating additional barriers for criminals who might attempt to counterfeit our products," he says. Viagra was chosen for the RFID project because it has been a major target for counterfeiters. Pharmacists and wholesalers will use electronic scanners designed to communicate the code to a secure Pfizer website.

"We want pharmacists who fill prescriptions for Pfizer medicines, and patients who use those medicines, to have increased confidence that they are receiving authentic product and not a potentially dangerous fake," McPhillips states. "We are creating additional barriers for criminals who might attempt to counterfeit our products."

Maybe the most interesting announcement from Pfizer, though, was this statement: Its application of RFID tags does not allow for the collection of any patient information. In other words, anybody concerned that Pfizer will be able to identify exactly who is buying Viagra – and let's face it, that's not the type of product a consumer would generally like people to know they're buying – can rest easy. Reading between the lines, you get the sense Pfizer wants consumers to conclude: No spychips here.

There's a rapidly developing cottage industry dedicated to "exposing" the encroachment of RFID tags – aka spychips – into our daily lives. Some of the Orwellian nightmare scenarios these writers describe seem pretty loopy, but on the other hand, it's probably a good idea to ask exactly why retailers want to embed miniature spy cameras in their "smart shelves." Conspiracy theories are a dime a dozen these days, but nevertheless, there are some compelling arguments in favor of clamping down on just how much personal data we ought to allow the government and private companies access to.

So, again, it's easy to understand how a logistics professional could be overwhelmed by the amount of ink and bytes devoted to RFID. And we appreciate that some of our readers honestly have no interest in RFID. However, when we ran a QuickPoll survey on our website (see chart), nearly half the respondents gave a "thumbs up" to RFID, indicating they've already found it to be a useful supply chain technology. That's a pretty good percentage for a solution some aren't convinced is even ready for prime time yet.

As another reader wrote, "Those that are waiting to see what happens [with RFID] will be wondering what happened."

What's your opinion of RFID tags?

They're a good idea and will help improve inventory management ....46%
They're too expensive and so far don't work very well ....30% Our products will probably never be tagged so we have no opinion ....14% These "spychips" pose a serious threat to privacy and should be outlawed ....10%