Are RFID Tags About to Take Hold?

On Monday November 15th, OATSystems, a Division of Checkpoint Systems Inc. of Waltham, Massachusetts announced its latest edition of RFID Asset Tracking Solution, which complies with the Air Transport Association’s (ATA) Spec 2000 Standard. (a comprehensive set of e-business specifications, products and services that are designed to overcome challenges that have plagued the airline industry’s industry's supply chain for decades.)

The new RFID solution generates a unique record for every part used to build an aircraft. The solution captures the part’s manufacturing details and ongoing maintenance history in an RFID tag with high capacity memory that will remain with the part throughout its useful life. The ATA Spec 2000 enables information exchange among every supplier involved in the manufacture, repair and operation of commercial and military aircraft. The information contained in the tag is readily available at any point in the part’s serviceable life.

The airline industry is the low-hanging fruit for RFID adoption. The information need is critical and cost of the sophisticated RFID tag is easily justified. This represents a significant growth opportunity for a technology that has been dominated by the access control and automobile immobilization market, which will manage a modest 6 percent growth through 2014 according to market research firm ABI Research. The firm predicts the industry to be worth $5.35B in 2010, 15 percent higher than last year. Driving this increase will applications such as the asset management solution from OATSystems and cargo tracking, two sectors expected to grow 19 percent year over year. Another application to see high growth through 2014 is real time location systems: baggage handling, animal ID, item level tagging of fashion apparel and retail.

The most visible proponent of RFID tags is retailing Wal-Mart, which will mandate item-level RFID tagging for four categories of clothing: men's jeans, T-shirts, socks, and underwear. Wal-Mart has already been tagging at the pallet level and case level for some time now. The 7-cent RFID tag have increased inventory accuracy and improved sales not only for Wal-Mart but also at other retailers like Bloomingdale's, J.C. Penney, and The Gap who have also been testing the tags’ effectiveness.

However, there is a dark side to RFID tags in the retail product area. The tags are not removed from the object before it leaves the stores. Thus, it’s possible that the tag can be read later by any scanner able to detect the signal. If you return to the store wearing the apparel you purchased there, the store knows you’ve returned, what you purchased and can market to you more effectively. RFID credit cards may soon allow you to make purchases simply by scanning the card in front of the reader or simply walking through a scanner when getting on public transit. You see where this is going: retailers and government agencies collecting information on an individual’s preferences as well as behavior.

As with most technologies, the initial reticence is quickly overcome by the convenience and efficiency the consumer experiences. The best example is the EZ Pass transponder on cars speeding through tollbooths, providing location information on the driver at each transaction. It’s not a matter of will RFIDs take hold it’s a matter of when. And all indications are that they’re catching on now.