While product recalls on the scale of the Bridgestone incident are rare, they can be a disaster if not properly managed, Ginsburg said. Upper management at Johnson & Johnson needed only be reminded of the costly Tylenol aspirin recall in the 1980s to authorize a study of RFID/EPC technology, said Pat Rizzotto, vice president of global consumer initiatives at Johnson & Johnson.
RFID/EPC technology can also help reduce product theft and counterfeiting, Ginsburg said. Retailers of high-end apparel and pharmaceuticals are two industries where item-level tracking is expected to provide immediate benefits, he said.
About 2 percent to 7 percent of pharmaceuticals are counterfeit, and the problem is worse in emerging markets, said Jamie Hintlian, a partner for health and life sciences with Accenture. Pharmaceutical companies want safe and secure supply chains, and RFID technology can help assure that by authenticating products at every step of the supply chain from product development to the doctor's office, he said.
RFID/EPC technology concerns some privacy advocates who feel the chips will allow retailers to track products once they leave warehouses and stores and head to homes and businesses. A group called Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) has launched a campaign that seeks to limit the use of RFID tags to pharmaceuticals and pallet tracking. The group, backed by the American Civil Liberties Union, the Electronic Frontier Foundation and the Electronic Privacy Information Center, wants to prohibit item-level tracking of consumer goods.
"Used improperly, RFID has the potential to jeopardize consumer privacy, reduce or eliminate purchasing anonymity and threaten civil liberties," the group said in a position paper available on its Web site at www.spychips.org.
RFID backers aren't as worried about the privacy implications of the technology as groups like CASPIAN. For one thing, an RFID tag reader has a maximum range of around 20 feet (6 meters), and even then only if the tag is very powerful. An active tag, or a tag equipped with a battery, can be read at a longer distance, but the battery would add so much cost to an RFID tag as to dissuade anyone from implementing it today, Boone said.
Any company thinking about deploying RFID for item-level tracking should consider informing the customer right on the store shelf that the product they are about to purchase contains an RFID tag, Boone said. "What vendors should not do with RFID is as important as what they should do," he said.
As with most new technologies, RFID/EPC growth requires a common set of standards to really take off, said Bernie Hogan, senior vice president and chief technology officer for EPCglobal Inc., one of the groups involved in the RFID/EPC standards-setting process. The goal is to create a "royalty-free" standard based on the collaborations of industry companies, he said.
The second generation of the wireless standards for RFID/EPC technology will be decided later this year, Boone said.