On the list of over-hyped technologies for the supply chain, radio frequency identification (RFID) must rank near the top. For years, shippers have been told that RFID will have a massive impact on operational efficiency. On the retail side, RFID tags are supposed to revolutionize the buying experience (for better or worse, depending on which side of the sales counter you stand). But doubts and qualifications keep popping up. Despite a concerted push by Wal-Mart Stores, the U.S. Department of Defense and other big entities, RFID has yet to yield its promised savings. Some consumer goods suppliers wonder whether it ever will. What's more, government regulators are beginning to question the technology's implications for individual privacy. So what's the realistic outlook for RFID? According to telecommunications attorney Ronald E. Quirk Jr., a member of Venable LLP's Communications Group, it's still positive. "While RFID deployment in the U.S. has not quite lived up to initial expectations," he says in a recent paper, "the trend is toward much stronger growth over the next several years." A series of recent developments has addressed some of the initial problems that slowed deployment of the technology. They include the adoption of EPCglobal Inc.'s Gen 2 specification as the industry standard for RFID systems operating on UHF frequencies. Until recently, Quirk says, there was no harmonized standard for RFID. Gen 2 allows for the storage of large amounts of information on a tag, along with the sharing of a basic software infrastructure among supply chain partners.

RFID technology has itself matured. Last year saw the introduction of near-field UHF technology, allowing for the deployment of RFID at all points along a supply chain, including item level tagging, Quirk says. Finally, recent government actions are expected to "increase the momentum for widespread RFID implementation." Proceedings launched last year by the Food & Drug Administration and U.S. State Department will likely lead to government mandated use of RFID for the medical equipment and international travel industries. "In 2007," says Quirk, "many of the causes that hindered RFID implementation are being resolved, and new mandates are in the offing. Accordingly, it is expected that RFID will experience robust growth in the future." But keep an eye on the privacy issue, he says - several states are still trying to ban or limit the use of active RFID tags in retail environments.

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