Short Assignment: Future
Forecast
by Anne Bauers for INLS
187
April 9, 2003
Inventory Tracking
for Consumer Goods
RFID Tags Today
The Future of RFID
Resources
Modern consumer goods inventory tracking dates back to 1972, when the first now-ubiquitous bar code was included on a pack of Wrigley's gum. Bar codes have been used since that time to help producers track and manage their inventory all along the supply chain. However, they have a major disadvantage: each individual bar code must be scanned. The scanning process demands a good deal of labor, and any inventory that is not scanned risks being misplaced, lost, or stolen. Producers and suppliers of consumer goods lose large sums of money each year to inventory that has been misplaced in their own warehouse, or that spoils before it can be shipped to store shelves. They would benefit from a tracking technology that could be scanned through an automatic process, and that could locate goods without the need for individual hand-scanning.
Radio Frequency Identification (RFID) tags may provide a solution to these inventory-tracking difficulties. RFID tags are tiny silicone chips (they range from the size of a dust mite to the size of a grain of sand) that can be implanted into all kinds of consumer goods, from razors to blue jeans. These tags communicate with small antennae that can be placed inconspicuously around stores, warehouses, and even shipping devices like trucks and railroad cars. The tags transmit signals to the antennae, essentially saying, "I'm still here." When the tags stop transmitting signals, suppliers know that the items have been removed.
RFID tags are a new implementation of a technology that has been around for quite awhile. The same technology makes highway tollpaying systems, such as Smart Tag, possible; it also enables some office employees to open doors with chip-equipped cards. Using the technology to track consumer goods could streamline supply chains by allowing manufacturers to update supplies in real time, resulting in the stocking of less inventory. They could help to prevent theft and misplacement of goods, saving suppliers money and bringing down items' overall cost for consumers.
However, RFID data could also be
linked with customer information that stores are already gathering using loyalty
cards and other methods. This data integration could result in stores being
able to track specific items customers purchase, both while customers are purchasing
items, and when they bring those items back to the store. (For example, Wal-Mart's
systems may be able to detect that you purchased the Levi's you're wearing from
another store.) CASPIAN,
a consumer advocacy group, envisions a time when stores track your consumption
behavior in your own home: "applications could include shopping carts that
automatically bill consumer's accounts (cards would no longer be needed to link
purchases to individuals), refrigerators that report their contents to the supermarket
for re-ordering, and interactive televisions that select commercials
based on the contents of a home's refrigerator." Perhaps even more frightening,
the same technology could be used to monitor patients' health behavior. Imagine
an RFID tag implanted on a prescription bottle; pharmacists could potentially
monitor your behavior to ensure you are taking your prescription properly.
RFID technology is not currently in widespread use, but several major corporate sponsers are striving to make this technology affordable and accessible. The Auto-ID Center is a partnership between 87 companies, MIT, University of Cambridge in the UK, and Australia's University of Adelaide that is working to develop RFID technology into a so-called "internet of things." Companies participanting include Proctor & Gamble, Gillette, Wal-Mart, CVS, Coca-Cola, Target, and many others. Auto-ID researchers are working to develop an infrastructure that can support widespread data collection and monitoring, including Electronic Product Code or EPC, specification for cheap tags and cheap agile readers, Object Naming Service or ONS, Product Mark-up Language or PML and Savant software technology.
Test implementations have already begun; several Wal-Mart stores (including Wal-Mart itself and Sam's Club) in Tulsa, Oklahoma are now distributing Gillette Mach-3 razors that include the embedded chips. Benetton stores are also considering testing the chips in some of their merchandise.
Privacy advocacy groups are concerned about these developments, which they see as leading to the erosion of consumer privacy. CASPIAN has responded by instituting a worldwide boycott on Benetton stores. Charlotte Observer reporter Leigh Dyer asked staff and customers in a Benetton store if they were aware of the boycott; none of them knew about it, but several said they would reconsider purchasing merchandise at the store if they knew the ID tags were in use.
RFID technology is not in widespread use today for two main reasons: no dominant standard exists for implementation, and the chips themselves are currently expensive (most analysts estimate that the chips must cost under a penny to enable their use in most products). The Auto-ID Center and other organizations are working to overcome these barriers and it's a safe bet that in the near future widespread implementation will be technologically feasible. The technology carries some substantial potential benefits for inventory management and tracking; I think RFID tag use for these purposes fulfills a legitimate business need.
However, using data gathered from RFID tags for consumer marketing purposes has grave potential to violate consumer privacy. I believe that efforts to prevent the development of RFID technology are futile, especially since it can be used to benefit consumers (streamlining the supply chain can bring down costs for end purchasers). Therefore, the question of how to address privacy concerns about RFID use is a legislative and policy question. Do stores and goods producers have the right to track information about goods they provide once you have purchased them? Unlike consumer loyalty cards, where customers agree to allow stores to gather data about them, RFID tags enable data gathering without customer consent. Do they have the right to link specific item purchase back to you without your consent? Some consumer advocacy groups have speculated that the technology may enable "customer-specific" promotions; people who buy diapers regularly may pay a lower price for them than people who only buy them once in awhile. Is such price variation fair or legitimate?
For the most part, discussions of RFID technology have so far been limited to the "technology" section of the popular press. However, the implications of RFID tag use place the issue as a consumer one, of interest to everyone who buys products at major retailers (which is essentially everyone in this country). This is an issue about which the public should be made aware, so that they, like the Charlotte Benetton shoppers, can make their own decisions about whether or not to support retailers using RFID technology. More importantly, policy guidelines, and preferably legislative penalties, are necessary to enforce good behavior and consumer privacy protection among retailers and manufacturers. I don't believe these corporations should be trusted to "self-regulate" their use of consumer data; regulation should be official and supported by stiff penalties. Such a structure would allow consumers to reap the benefits of better supply-chain management without having to sacrifice their privacy.
Albrecht, K. Auto-ID: Tracking everything, everywhere. CASPIAN, 1999-2003.
Deutsch, C. and Feder, B. A Radio Chip in Every Consumer Product. New York Times Online, 2/25/2003.
Dyer, L. Tracking Chip Eyes Goods - and One Day, You? Charlotte Observer Online, 4/3/2003.
Fulcher, J. RFID's Day is Coming. MSI, 1/2003.
Mayfield, K. Radio ID Tags: Beyond Bar Codes. Wired, 5/20/2002.
MIT's Auto-ID Center.
Schoenberger, C. The Internet of Things. Forbes.com, 3/18/2002.