RFID: The Next Generation (page 2)

-- Logistics Management, 5/1/2005

Page 2 of 3

One concern is that demand for RFID technologies is outpacing the rate of standards development. "Industry is eager to start implementing the technology, and while tremendous progress has been made, the standards development process takes time," Grasso says. "[We're] committed to doing it correctly the first time, rather than rushing the process."

Getting international consensus on a common standard has also proved to be a major obstacle to wider adoption, says Gene Alvarez, vice president of technology services for Meta Group, the Stamford, Conn.-based research firm. "While everyone would like a fully acceptable international standard for RFID tags, EPCglobal has to get certain countries on board before that can happen," he observes.

Some of the holdup can be attributed to China's reluctance to recognize EPCglobal's standards. "China must abide by the WTO's international trade regulations, but the WTO does not recognize EPCglobal as an international standards body," says Liard. "Instead, the WTO observes ISO standards, which means China may support the current ISO 18000-6 standard for item management rather than EPCglobal."

Given that Wal-Mart—one of the prime movers behind RFID adoption—imports some 70 percent of its merchandise from China, that possibility has disconcerted some of the retailer's customers and supply chain partners, Liard says. Should China take that step, the implications could be enormous. "Think about the sheer volume of goods that come to the U.S. from China for Wal-Mart alone," Alvarez says. "If China opts to use a non-EPCglobal standard, who wins?"

Another development that threatens to undermine the universal appeal of the Gen 2 standards is a legal tussle between Intermec and Symbol Technologies. In an exchange of suits, Intermec is contending that Symbol has infringed on some of its passive RFID patents, while Symbol asserts similar claims against Intermec regarding patents for its wireless technology.

That situation could impact RFID users because Gen 2 standards may be "royalty free," but they don't cover all of the technologies that typically are required in an RFID system. "EPCglobal announced ratification of the Gen 2 standard as a 'royalty free' deliverable, but this status was achieved by stripping out components where supplier Intermec claimed intellectual property rights," explains Chantal Polsonetti, a vice president with ARC Research in Dedham, Mass.

According to Polsonetti, Intermec has already "donated" five of its patents to the EPCglobal standardization process, including one that covers the tag-numbering scheme. But because the Gen 2 standards furnish only a base "platform" for RFID tags, a supplier would either have to add its own technology to that base—raising concerns that the changes could decrease interoperability—or risk patent infringement, she notes. Polsonetti advises logistics managers to protect themselves until the patent issue has been resolved by requiring RFID suppliers to indemnify them in all agreements.

Although logistics managers may be able to sidestep the issue through indemnification agreements with their suppliers, Steve Geary, partner with consultants Supply Chain Visions in Bellevue, Wash., worries that the battle over what's "royalty free" might cause shippers to hesitate about RFID deployment. "The public exchange of lawsuits casts a cloud over the adoption of the technology, and that doesn't help the users or the vendors," he says. time to get on board

Although there are still questions surrounding the Gen 2 standards, they offer logistics managers facing a Wal-Mart or Department of Defense RFID mandate some sense of security and a motive for moving on to the next stages of implementation. What shippers are likely to get is a sense of comfort in knowing that the technology will work, and that it's backed by an industry-recognized organization, hopefully on an international level. Continued...

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