Looking at RFID? Companies are ready to exploit the technology despite privacy concerns.

When retail giant Wal-Mart issued a mandate in 2003 that required its vendors to use radio frequency identification tags, the announcement gave an enormous boost to an emerging technology that was already gaining momentum. As of January 2005, Wal-Mart's top suppliers have been rolling out RFID-enabled cases and pallets, which allow the wireless technology to transmit product serial numbers and inventory data from tags to a reader, without human intervention.

Can RFID technology help your business? Anyone thinking about implementing RFID would do well to look at it from a broader perspective, keeping in mind issues dealing with costs, standards, and privacy. Many manufacturers, distributors, and retailers are under pressure to improve efficiency, and they see RFID technology as worth the investment. The Yankee Group, a Boston-based communications, networking research, and consulting firm, projects that, during the next three years, businesses will spend $1 billion to $3 billion on the infrastructure needed to allocate and integrate RFID.

Now that high-profile retail RFID projects are already underway, businesses and vendors in other sectors are starting to look at ways they can exploit the technology. For instance, trade show producers are placing RFID tags in name badges and smart cards that carry bits of information. Readers are set up at trade show entrances and in exhibit booths to track attendee movement across the trade show floor and gather leads for exhibitors.

RFID technology has tremendous potential to improve the way product data is collected and analyzed. Experts speaking on the enhanced technology are quick to point out the difference between RFID and bar codes. "With no line-of-sight requirements, automatic data capture, and read/write capability, RFID technology offers numerous advantages over bar-coding," says Adam Zawel, an analyst for the Yankee Group. "RFID has the potential to improve supply chain management by reducing manual operations associated with data collection, providing real-time supply chain visibility, and enabling real-time changes in the field." Zawel and other technology industry experts contend that bar code scanners will eventually give way to RFID readers.

However, some consumer advocates argue that the technology is too invasive and infringes on privacy rights when it's used to track individuals. For example, the Spring Independent School District in Spring, Texas, recently initiated a pilot program where it equipped about 28,000 students with ID badges containing RFID chips that are read when students get on and off school buses. The information is transmitted to the police and various school administrators. The notion behind the concept is to monitor the movement of students and prevent abductions and school absenteeism.

Toby Rush, president of Rush Tracking Systems in Kansas City, Kansas, believes privacy groups are blowing the matter out of proportion. "Sure it's a concern," says Rush, whose consulting services firm specializes in RFID technology. "But offering consumers and businesses certain options addresses and eliminates the privacy issue." To allay worries about whether RFID tags will violate privacy rights, Rush recommends that consumers be given these choices: the right to know whether a product contains an RFID tag; the right to have the tags deactivated without cost; and the right to have personal identity information kept separate from product identity information.