I Spy

By Stuart Finlayson

Are RFID tags a step towards Orwell's literary totalitarian society-as portrayed in '1984'-being realised; the most important technological advancement of the 21st century thus far, a bit of both, or something in between. Stuart Finlayson finds out.

RFID tags are not a new phenomenon, far from it. Indeed, rumour has it that similar technology was used as long ago as World War II, albeit in a less sophisticated form. What is relatively new, however, is their application in industry, particularly in the supply chain.

Sun Microsystems' CEO, Scott McNealy sees RFID tags as "one of the keys connecting everything with a digital, electrical or biological heartbeat, even inert objects-and conceivably every object on the planet-to the network."

Now it's hardly surprising that when the head of a multi-national technology company starts making such bold predictions, that alarm bells start to ring for civil libertarians and technophobes alike.

And not entirely without good reason too. Even though the widespread adoption of RFID technology in industry is still in its infancy, there have already been a number of situations where a company has been forced to withdraw its plans to use RFID for certain purposes for fear of a consumer backlash.

Take Benetton for instance. The Italian clothing company is no stranger to controversy (remember the United Colours of Benetton series of ads some years back depicting a variety of shocking images, ranging from a person dying of AIDS to human remains) and it was reacquainted with it once again when consumer groups threatened to impose a boycott on the company's products after it emerged that Benetton planned to use RFID tags to track the wearers of its clothing.

Similarly, designer fashion house Prada reportedly removed RFID tags from its couture items when customers raised objections to the notion that the company would possess recorded information such as what dress size they wore upon purchase of such items."These tags are capable of gathering information on a person without their knowledge or prior consent," argues David Bernie, Vice President of the New South Wales Council for Civil Liberties. "People do not have the opportunity to opt out of divulging such personal information. Neither do they have any control over the use or distribution of that information."

All fair and just points, but to use such examples of corporate misjudgement or fears of divulging a little more of ourselves and our habits than we may otherwise wish as a means to decry the technology and reject its use outright would be folly in the extreme, without taking into consideration the wondrous potential for technological advancement, some of which we are already getting a glimpse of, with much more to come in the next few years.

The reality is that far and away the majority of RFID applications will be used in a similar fashion to the bar codes we have on our baked beans and cans of fizzy drink today, rather than devices that will be able to pinpoint Joe Public's every step.

"The majority of the 'Big Brother' scenarios are pure fiction. They ignore the reality of the situation in the local context," says Max Judd, Wireless Practice Leader at IBM's Business Consulting Services. "In Australia, most RFID pilots are focused on the supply chain, particularly on the tracking and management of large, expensive assets like containers and pallets in a highly controlled environment. The fundamental physics of how tags and readers operate would render the implementation of these 'Big Brother' scenarios unworkable."

Judd maintains that the widespread introduction of RFID technology does not alter the fact that citizens are still entitled to their privacy, and that the laws governing this will not suddenly disappear, which means that developers will have to abide by them or face the consequences.

"It is the role of government to legislate and enforce the protection of privacy for its citizens both locally, and as required under any international agreements. Vendors must work within the appropriate legislative guidelines. Both have an obligation to move away from the hype and focus on the facts."

Scott Dawes, Director, Manufacturing, Retail and Distribution, Oracle Australia, agrees that the issues of personal privacy around RFID have been greatly over hyped, arguing that the cost of implementing such a "big brother" network of surveillance technology renders the possibility of such a system being introduced as very distant indeed.

"The investment to develop a network of this size is estimated to be in the trillions of dollars, (source - The ROI of Privacy, AIMGlobal, January 2004), so quite simply it is very unlikely to ever be deployed. The government will need to develop policies and laws to ensure that citizen's privacy rights are protected as this technology evolves. Vendors will need to work within these policies."

Angus McDonald, Chief Technology Officer, Sun Microsystems Australia and New Zealand, is less dismissive of the "hype" surrounding RFID, acknowledging that its use in certain applications-such as implants under the skin replacing cards for identification or banking purposes -is a very emotive issue.

"I think it's unlikely that skin implants will be acceptable to society for perhaps a generation or two. The initial step is to perhaps use smartcards with RFID incorporated to give people the ability to carry identity when they wish, but allow them to leave it behind if they wish anonymity. Once this sort of approach has enabled a degree of comfort to be reached with the honesty/trustworthiness and efficacy of the technology and its propagators, I think a generational change to a new generation that perhaps says "why do I have to lug it around" may enable skin implants. Allaying the current fears needs to be done jointly by government and vendors. It is a matter of proving to the community that the benefits outweigh the perceived downside, and that the readers and users of the technology are trustworthy."

Neither is talk of RFID skin implants merely confined to the pages of science fiction novels. A U.S.-based company by the name of Applied Digital Solutions (ADS) is gambling on convincing the American public of the merits of implanting RFID chips under their skin instead of having to carry around bank or credit cards.

Such a proposal throws up a number of security concerns. Most notably, what if a thief figures out how to intercept the signal from your tag and then uses it to clean out your account? Or worse, a determined thief may decide to slice you open to steal your tag-altogether more unpleasant and messy than someone pinching your wallet, not to mention potentially life threatening if they hit an artery.

You also have the issue whereby if the security of your tag does become compromised, rather than simply having to telephone the bank when your card goes missing, you face a trip to the surgeon instead. Not surprisingly, not many citizens have shown an interest, a fact which has resulted in ADS' share price plummeting from a high of $12 in 2000, to just 40 cents. The company has recently introduced a promotion where the first 100,000 people to get chipped will receive a $50 discount!

The dash for cash

Such outlandish applications are real headline fodder and are great fun to examine, but they should not disguise the fact that the overwhelming majority of RFID projects concern altogether more mundane functions such as inventory control.

Never slow to miss a trick when a potential multi-billion market opportunity arises, the bulk of the major IT vendors are tripping over themselves to bring RFID technology to market.

And yes, Microsoft does want a piece of this pie too. Bjarne Schoen, Worldwide Director of Supply Chain Strategy and Planning, Microsoft Business Solutions, outlines what the Redmond-based software giant is doing in this emerging field.

"Our plan is to have an RFID solution available for our Axapta ERP solution in 2005. Our focus is to identify the key areas of functionality to enable mid-market customers to generate the most benefit from using RFID.

"In addition, Microsoft is developing a platform that among other things will provide RFID filtering to prevent duplicated tag reads. For example, in a warehouse there may be a number of readers present all picking up reads from the same tag. To ensure that the same product is not read twice, three or four times over, this middleware will filter out duplicates automatically. It will also recognise when a new reader comes into range and automate other RFID processes, effectively making it a plug and play system. This functionality will be essential in providing efficiency and ease of use for customers."Microsoft's great adversary IBM is also taking an active interest in developing RFID systems, according to Judd.

"IBM is currently working with local organisations to assess the impact and benefit potential of deploying RFID - in short, examining the business case fundamentals to assess whether projects are deployable, benefits achievable, and cost/risks contained. Additionally, examinations of local technologies that comply with Australian communication standards, as some overseas solutions cannot be deployed in here, are also in train, leveraging our involvement in the key industry bodies associated with RFID."

Meanwhile, Sun has been an early sponsor as well as a vision and technology leader of the now disbanded Auto-ID Center, and now works with EPCglobal (which carried on the Auto-ID Center's work of developing industry-driven standards for the Electronic Product Code (EPC) Network to support the use of RFID).

McDonald discusses the architecture that Sun has defined for EPC Networks and how it will assist enterprises as they look to explore the possibilities of RFID technology."This architecture is intended to allow large enterprises to join the EPC Network in a safe, scalable and reliable way. Self-healing of the system is also an important facet due to the reliance that will be placed on the systems.

"Partnering and standards are the keys to our approach. Working on pilots with organisations like Gillette and Dai Nippon has given Sun an understanding of the intricacies of the technology, and our own internal pilots in manufacturing have give us sound knowledge of the benefits to be gained, and obstacles to be overcome. We have recently set up a Wal-Mart compliance lab to be used by Wal-Mart for their suppliers to validate their use of RFID. Other similar centres are being established.

"In Australia, a number of retailers are either in discussion or pilots with us. It is worth noting that whilst there is a perception that RFID is largely about retail and supply chain, there are an equal number of uses outside that arena. Tracking valuable documents and tracking equipment usage are just two examples."

Meanwhile, Oracle has also been keeping a keen eye on the situation at Wal-Mart, as well as the U.S. Department of Defense, in the development of its RFID technology.The company's new Warehouse Management software will include new RFID and EPC (Electronic Product Code) capabilities, which will help suppliers comply with recent mandates from Wal-Mart and the Department of Defense, and enable companies to reduce warehouse and distribution costs through improved inventory control and extended supply chain visibility.

It will enable pallet and case level tagging for automatic processing of inbound and outbound shipments, allowing companies to easily identify, track and manage pallets and cases as they move through the supply chain.

Wal-Mart-leading the RFID charge

It would be remiss to examine the subject of RFID at length without discussing Wal-Mart, as the US-based retail giant is playing a major role in driving the adoption of RFID technology after it issued a directive to its top 100 merchandise suppliers to implement RFID technology.

Wal-Mart is itself committed to spending up to US$3 billion (AUD$3.9 billion) over the next few years on RFID technology, with its suppliers facing a bill of millions to meet the company's new standards or face up to the prospect of being frozen out.

This spells good news for RFID developers, who have not been slow to capitalise on the compliance rush. Many of the major technology companies have also seized upon the opportunity to meet the needs not only of Wal-Mart and its army of suppliers, but of the many other large and small enterprises interested in deploying this technology.

It is not hard to see why Wal-Mart is pressing forward with this, as analysts estimate that the retailer could achieve savings of around US$8.4 billion annually once this project has been completed, largely thanks to reduced costs of inventory processing and fewer logistical errors and stock over-ordering.

Home and away

RFID technology has already been used in a huge variety of projects, both here in Australia and overseas, with much more innovation to come.

Organisers of the next soccer World Cup-to be held in Germany in 2006-are planning to issue match tickets complete with RFID tags in order to accelerate the process of ticketing and to combat fraud. FIFA (Federation Internationale de Football Association) officials are also exploring the possibility of including personal information of the ticket holder on the tag in order to prevent the buyer from selling the ticket on for a large profit, and also to help prevent hooliganism. The RFID-embedded tickets will not, however, allow FIFA to track the movements of ticket holders, with the range of the signal set at around 10 centimetres.

In Australia, the Hunter Holden dealership announced plans to tag every vehicle it sells. Then, when the vehicle owner takes their vehicle in to be serviced at one of the Holden dealerships, mechanics will be able to access the vehicle's full service and ownership history on a handheld PDA.

Still in the automobile business, UK insurance company Norwich Union has piloted a program called "pay as you drive," which bases premiums on when and where a customer drives their vehicle. This has proved popular among customers, many of whom have said that their premiums now more accurately reflect their driving habits as well as the likelihood of them having to make a claim.

Finally, The Northern Herd Development Co-operative (NHD), which provides dairy herd improvement services, such as milk testing and artificial insemination, used RFID technology to make it easier for farmers to monitor their herds' productivity and take swift action should a problem exist. It did so through the use of RFID tags inserted into the cows' ears, read with handheld scanners. They were able to identify each individual cow with the tags, and its level of milk production, information which was then updated on a main database.

What lies ahead?

"RFID tags have great potential. They can help companies greatly improve the way they manage the supply of their products and so save consumers a lot of money. But they also have equal potential to invade personal privacy if deployed wrongly," said the Australian Privacy Commissioner, Malcolm Crompton at a recent conference attended by the world's data protection and privacy commissioners.

So it is clear then that privacy issues must be afforded the same consideration as business and profitability issues when taking this technology forward.

What is also clear is that the potential of RFID is as boundless as the human imagination."RFID will fundamentally impact enterprise data strategies and new application development," predicts Oracle's Scott Dawes. "It will streamline access and consistency of data inside the four walls of the business. Knowing how far a product has progressed through the manufacturing cycle, then being able to locate that product downstream on a store shelf, translates into product visibility-the ability to tie a product to its physical location and know when it was manufactured, whether it was received and where it is located."

"There will be many benefits in years ahead, and the problem with this technology is that the imagination is really the only limit on its use," believes Sun's Angus McDonald. "Its initial benefits will be directly around efficiencies and cost savings. The early adopters have already seen reduced "stock shrinkage"-an interesting name for theft, better stock tracking, ability to reduce inventory and generally better stock control."The pharmaceutical industry is a prime candidate to label drugs. This will give good stock control, help in managing drug expiry dates and gain some control over drug counterfeiting. Imagine the hospital that uses tags on medicines and also on patients - the drugs trolley of the future could tell the nurse if they pick up the wrong drug for this patient."

As the technology progresses, and the capability exists to add more intelligence to the tags, McDonald says we may see a tag able to tell you the maximum temperature it has reached, which could deliver benefits to the control of foods or any product whose quality is affected by temperature.

"There will be many innovations along these lines, perhaps even the ability to monitor heart-beat, or blood pressure. Who knows?

"These sorts of benefits are the ones that will see societal acceptance of the technology grow and the distrust of the privacy issues diminish. Ultimately skin implants may be able to carry your medical history amongst other things - the imagination is the limit."

Related Article:

Coles tries to steal RFID march