Reliability is another potential obstacle. In the past, some RFID readers haven’t been able to interpret all of the tags on a pallet of goods. In fact, a 2004 New York Times article said that Wal-Mart estimated the reading rate of all tags on merchandise received in its stores was only about 60 percent. That’s a concern because it means that some RFID systems will not be able to detect whether a box has been stolen from the middle of a pallet, defeating one of the primary purposes of an RFID network — to keep track of products so closely that theft becomes almost impossible. Mark Roberti, editor of RFID Journal, argues that being able to read at least one tag on a pallet tells the system that the items have arrived and that in itself is valuable. Nonetheless, to improve product tracking, companies like Mojix Inc. are designing position-based systems that indicate, through external tag positioning, whether products from a shrink-wrapped pallet have been pilfered. With this approach, if the shrink-wrap on the outside of a pallet has shifted because of a missing item within, the reader would detect the tag’s change in position and alert warehouse personnel that someone may have tampered with the contents.
Still believing that the technology has a future in large network application, Wal-Mart and the Pentagon have recently restated their support for RFID. In January, Wal-Mart reportedly sent letters to certain large suppliers warning that the retailer would soon institute fines of $2 to $3 per pallet for failing to place RFID tags on shipments to its Sam’s Club distribution center in Texas. In February, the Department of Defense said that its full rollout of RFID would be completed by 2015.
Between now and then, however, RFID will be far from ubiquitous. But for companies that hope to tackle specific operational problems in relatively closed or manageable environments, like a factory or a small logistics network, the returns from this technology could easily make moot any disappointment that RFID hasn’t yet become what people predicted it would be a decade ago.
Jeffrey Rothfeder is a senior editor at strategy+business and a former editor at Bloomberg News, Business Week, and Time Inc. His latest book is McIlhenny’s Gold: How a Louisiana Family Built the Tabasco Empire (Collins, 2007).
Also contributing to this article was Gwen Moran.
