Implementing RFID is a Business Decision, Not a Technology Question

Obfuscate Me with Facts

According to Merriam-Webster's Dictionary, "obfuscate" means 1 a : darken, b : to make obscure, 2 : confuse.

And that is exactly what often happens in considering RFID.

You should, by now, be familiar with the benefits of RFID: non-contact, non-line-of-sight reading, read/write capability, etc.

The problem is that different RFID systems have different capabilities and costs.

Not all tags, for example, are read/write. Some tags are active, some are passive some are semi-passive. They don't all have the same data capacity or range. Similarly, the different operating frequencies don't offer the same range or data transfer rates. And not all frequencies are legal in all countries.

Nonetheless, we often find hopeful stories that conglomerate all the best features of every available system into an imaginary product that, in the words of Dr. David Allais, "does everything, costs nothing and fits on the head of a pin."  (At the time, Dr. Allais was referring to bar codes, but the analogy is perhaps even more appropriate for RFID.)

Many companies, nonetheless, are waiting for this mythical system to be made available. And a common perception is that it will be "some time early next year" -- whenever "next year" happens to be.

Waiting for this system to be announced is rather like waiting for Elvis to reappear.

Time to Step Back

It is time to stop focusing on both costs and benefits and start looking at solving business process problems.

When we evaluate RFID for a given application, we need to start with the basics.

• What data do we need to encode?
• Where will the data be read?
• Are there physical or environmental constraints where the data must be read?
• Must the object be moving when read? If so, how fast?
• What is the required read range?
• How often will the data need to be read?
• Do we need (want) to enable unattended operation?

So far, this list could be used to evaluate the applicability of almost any AIDC technology. Two-dimensional bar codes certainly offer expanded data capacity, fairly high reading speed and range and can be configured for unattended operation. So far, if the data is to be read only a few times and there are no significant environmental concerns, a bar code may be the more cost-effective solution.

In other words, we haven't necessarily built a case for RFID yet.

So let's look at some questions that might suggest RFID.

• Do we need (want) to write data back to the data carrier?
• Will the data carrier be embedded or otherwise not visible?
• Will the data carrier be subjected to surface contamination (e.g., paint, dirt)?
• Do we need to be able to read multiple data carriers at the same time?

If we answer yes to any of these questions, then we have established some rationale for using RFID.

Why?  Because only RFID can meet our requirements.

Price, Cost and ROI

While companies have to justify an acceptable ROI for the costs associated with implementing RFID, they often overlook the price of not implementing it.

Some considerations:

• Will profitability eventually decrease if the status quo is maintained?
• Will the company lose a potential competitive advantage?
• Will the company eventually lack sufficient accurate information about its processes or inventory to effectively manage its business?
• Will customers' perception of the company suffer?
• Will the company be able to catch up once competitors implement RFID?
• Will existing inefficiencies become unmanageable as the pace of business continues to increase?
• Not to be entirely negative, you also want to ask this question:
• Will RFID enhance your company's ability to serve its customers? Improved customer service and customer loyalty are sometimes difficult to quantify. Sometimes it is easier to look at the negative side to understand the value of customer service. In other words:
• What is the cost of losing a customer to a competitor that offers better service?

Certainly not all these questions apply to all companies. They're presented to stimulate your thinking about your own company and its competitive situation in the marketplace.

Notice, however, that the questions are not focused on the technology but rather on business processes, margins and competitive strength.

In the final analysis, it's not about the cost of the tags. It's about staying in -- and ahead of -- the game.