With the cooperation of the world's largest retailers and
manufacturers, radio frequency identification technology--automatic
data capture technology that uses tiny tracking chips affixed to
products--aims to more effectively track the wants and needs of
consumers and revolutionize the means in which goods are tracked
and sold.
Gillette, Kraft, Coke, Wal-Mart and Proctor & Gamble are among
a consortium of companies that invested $20 million to form the
Auto-ID Center about six years ago to create this technology at
affordable prices to replace an established bar code system. Why?
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Inventory mistakes still remain that eventually lead
to spoilage and loss
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New insights into consumer preferences
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More control over pricing
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More focused in-store promotions
The key pieces to make this technology work are a radio transmitter
and receiver and a tag (the microchip with a tag). The chip is inert
until the energy from a radio transmitter from a reader hits it,
shooting the tag enough power to emit a 96-bit digital signature
or about triple the information that can be included on a bar code.
Also, the chip can be read through plastic, cardboard and wood and
embedded in some products too. Some readers can sense chips up to
30 feet away.
The advantages are obvious. No more lost shipments. Stores will
receive the right amount of items. Experts estimate a retailer the
size of Wal-Mart with $250 billion in annual sales could save as
much as $7.6 billion alone in labor costs if every pallet of stock
came a RFID tag.
Some retailers have experimented with this technology on a limited
basis in the U.S. Wal-Mart stores in the Dallas metro area are using
RFID tags on Hewlett-Packard, Johnson & Johnson and Proctor
& Gamble products. Michelin will start imbedding chips into
their tires to minimize costly recalls. Grocery store mega-chain
Albertson's has asked its top 100 suppliers to place RFID tags
on all boxes and pallets they ship by spring 2005.
A fascinating example of this technology on a much larger scale
is the Extra Future Store, a grocery store operated by European
retailer Metro in Rheinberg, Germany. Many products carried in the
store come with RFID tags that tell retailers how many items are
on the shelf. A 2-millimeter pad underneath the product sends an
automated message telling workers when the product leaves the shelf
so it can be restocked.
Such technology also allows retailers to reduce or raise prices
at a moment's notice with the ebb and flow of daily business,
a far cry from the days of weekly specials in grocery inserts stuffed
in newspapers.
At the Extra Future Store, carts come with identification card
readers. Once a shopper swipes the card through the reader mounted
on the handle, a console mounted to the cart is equipped to generate
a shopping list based on previous purchases and send signals to
display tags, kiosks and shelf.
Understandably, retailers are chomping at the bit to recover this
kind of precise marketing information that can track the movement
of merchandise and consumer preferences. However, some experts are
concerned such pervasive technology opens the door wide open into
everyday lives of people, lessening their privacy.
The problem isn't the ability of a business to track the sale
of its own goods. One privacy advocate argues the ability to monitor
RFID tags inexpensively outside businesses in customer's homes
is the real concern. As a result, some states have enacted laws
requiring retailers to label any products with the RFID tag. Some
are concerned high-tech burglars could use cheap RFID scanners to
"case" the homes of unsuspecting victims.
Wired
July 7, 2004
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