The worldwide introduction of trials in Radio Frequency
Identification heralds the arrival of a new weapon in
the fight to streamline inventory management and improve
market control by allowing for the more efficient tracking
of products. This in turn has the potential to bring
down costs for producers, manufacturers and distributors
and has the potential to bring down prices at the sales
For the uninitiated, an RFID system works on the
same principles as a scanner/bar code system, but offers
much more scope. The RFID chip needs no power (the power
is in the reader) yet can be scanned through packaging,
hence a pallet load of goods can be scanned without
unloading to check each individual items' bar code.
Goods trains and semi-trailers can pass through scanners
en-route providing shippers with up to the minute information
on the location of their goods.
These savings can be substantial. When Wal-Mart (the
US supermarket chain) proposed the introduction of RFID
technology in June 2003 it was estimated that its savings
could amount to as much as US $1.3 billion to US $1.5
billion based on a six to seven per cent reduction in
supply chain costs. However, these savings are based
solely on cost-cutting in the distribution area. While
the current focus of RFID technologies is in the tracking
of cartons and pallets, the technology is not expected
to truly take off until the price of tags drops to the
point where their versatility allows them to be used
in stores to more accurately monitor sales and stocking
issues. As production increases, it is expected that
the tag price will drop from approximately US 0.50c
- $1.00 down to a few cents.
It is here, however, that business should pause to
consider an increased recognition for consumer rights.
Consumers are no longer content to accept what is offered.
The Internet has not only been responsible for informing,
it has also misinformed, allowing conspiracy theorists
to have a field day. But when there is some basis to
their theories the misinformation spreads much more
easily and is much more believable. The introduction
of RFID overseas has been a lesson in how not to introduce
such technology. Ignorance of consumer issues has seen
some companies face the consumer backlash.
Gillette introduced a trial project using RFID tags
on their Mach 3 razor blades in conjunction with UK
grocery giant, Tesco. However, protesters began gathering
outside the stores when it was found that the supermarket
was automatically taking photos of customers picking
up the blades. Despite claims by Gillette that they
were only using the chips to improve their supply network,
the result has been a worldwide call to boycott Gillette
by the US-based group "Consumers Against Supermarket
Privacy Invasion and Numbering" (CASPIAN).
The group's director Katherine Albright is quoted as
saying, "Consumers will not tolerate being spied
on through the products they buy". A proposed similar
trial by Gillette in Wal-Mart stores in the US was subsequently
cancelled in July.
Privacy activists have the real concern that the
uncontrolled use of these tags will allow shops to gather
large amounts of data about customer/store activities
and link this to their customer information databases.
There is also the possibility that this monitoring will
continue after the goods have left the shop. Any reader
can scan tags and it is proposed to put these readers
in shop doorways. This may help stamp out theft as well
as improving stock monitoring and continuing to allow
these tags to be read after they have been legally purchased
may increase the retailers knowledge base, however this
would be seen by most as an unacceptable intrusion into
the shoppers personal space. Of further concern is that
the data gathered could be stored overseas to remove
it from Australian consumer protection and privacy laws.
As one witness to RFID hearings in a Californian Senate
hearing said, "How would you like it if, for instance,
one day you realised your underwear was reporting on
With such emotive aspects surrounding this issue
it deserves more than the offhanded one liners we have
come to expect from the Government's Information Technology
Minister. Senator Alston's approach to the rapid build-up
of broadband usage in Korea was "they like pornography"
and his advice for handling the Spam deluge was "just
don't open it". Senator Alston's sole response
to the problems surrounding the introduction of RFID
is that it is a matter for the Privacy Commissioner.
Ignoring the fact that the PC is under-resourced for
current activities, the prospect of a long investigation
over several countries to follow the data path would
stretch the Commissioners resources to the extent that
all other mandated work would suffer.
The only solution is a legislative framework which
respects the right of business to work as cheaply and
effectively as possible while at the same time respecting
the privacy concerns of the consumer. At the very least,
this means mandating that all goods carrying such tags
be identified as such, that these tags be switched off
at the point of sale unless the consumer gives informed
consent to the contrary and that no personally identifying
information is connected with the data gathered by the
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