Sometimes it seems we have a love-hate relationship with technology, and that's certainly the case with RFID.  On one hand, the tags are just high-tech barcodes attached to items that can improve supply chain efficiency, and make life easier at supermarket checkouts.  On the other, people are concerned that their privacy could be invaded by the ability to link otherwise meaningless data about a product with their personal details.  With talk about RFID tags being used to identify individuals, as well as the goods they buy, there is growing concern about the incursions into an individual's privacy, and even their security.

But are these concerns justified?  And can the technology be enhanced or applied in a way that defuses the issue?

With supermarket giant Wal-Mart insisting that its top 300 suppliers use RFID to automate and streamline its supply chain, the technology has received a significant boost in the retail sector. But demand from retailers feeds back into manufacturing supply chains as well, and RFID systems can increasingly be found throughout factories and fabrication plants.

Feeding back into manufacturing supply chains

Even firms that supply the business sector, or distribute parts to their fellow manufacturers, and do not have a direct relationship with retail outlets, have a lot to gain from RFID.  The tags can provide a more detailed view of work in progress (WIP), helping to track components as they make their way along assembly lines and onward into the supply chain. This improved visibility reduces the chance that items will be out of stock when orders arrive, potentially increasing sales by two per cent, and at the same time reducing the amount of stock in store by between 10 and 30 per cent. Improved tracking could also help reduce shrinkage by 10 per cent.

Further opportunities for improved visibility arise after sale. RFID can help establish why goods have been returned, for example, providing valuable input to the repair process and another source of data about product quality that can be fed back into design and manufacturing. Weaknesses can then be eliminated, reducing warranty costs.

Helping with compliance

And as manufacturers operate in an environment of tighter regulation, RFID systems can also help with compliance. RFID can help prove that the EU's directives on waste management and disposal are being met, and can help food manufacturers demonstrate their conformance with environmental health standards by tracking the provenance of ingredients on their journey through the supply chain. There are also safety considerations that can be addressed by RFID: ensuring that no hazardous or flammable materials are unwittingly stored where they shouldn't be, and that the correct parts are used at each stage of assembly.

And society as a whole could benefit. The ability to access data relating to RFID tags through the product life-cycle could arguably preserve resources by identifying components, such as precious metals, for re-use or plastics for fuel, rather than wasting materials by dumping them in landfill sites.

But it's when manufacturers have interaction with the general public, that the issue of privacy is raised.  Perhaps the clearest example is that in the pharmaceutical sector, which has a lot to gain from using RFID.

First of all an electronic tagging system can help track the movement and veracity of expensive drugs, and provide a valuable weapon in the pharmaceutical companies'  ongoing battle against counterfeit medicines.

The grey market in pharmaceuticals is particularly insidious: not only does it affect profit margins and significantly reduce the return on the millions of dollars spent on the research and development, but its also a major safety risk for patients.  Drugs that have not been rigorously tested and medicines whose chemical compounds have not been licensed can be potentially fatal.  An RFID system can prove that the correct drugs are being shipped all the way from the manufacturer to the pharmacy that dispenses them.

Benefiting the public

But that's just one application. Others have big benefits to offer to the public. Take the way that drugs are dispensed, for example. Every year, hundreds of people die in hospitals around the world as a result of being given the wrong drugs. It's easy to see how mix ups can occur - for example, if there are two John Smiths on the same hospital ward - but that's an issue RFID tags can help address. By tagging patients, medical staff and drugs, it's possible to keep an audit trail of who gave what when to whom and to check that the right John Smith is given the right medication.

The benefits also extend to the home.  RFID tags on bottles of pills could alert a 'smart shelf' in a kitchen or bathroom cabinet to tell people when to take their daily dose or ask their doctor for a repeat prescription, with obvious advantages for patients on time sensitive and complex drug regimens.

But there are obvious privacy issues here, and experience in the retail sector has shown that this can stop a deployment of RFID in its tracks.

Marks & Spencer, which is currently the biggest user of RFID in Europe, and Wal-Mart have both successfully used RFID and shown that there is little risk to customer privacy. But elsewhere the results have been different - most notably in an attempt to prevent minor, but persistent, theft of razor blades from supermarkets.

Being small and easy to hide, razor blades are a prime target for shoplifters.  As a result, Gillette worked with Wal-Mart in the US and Tesco in the UK to use RFID to activate a camera that photographed people as soon as they took a pack of blades off the shelf. The aim was to deter thieves, but innocent customers were also caught in the net. There was an outcry about 'covert surveillance' and the schemes were dropped.

Balancing interests

This highlights the need to balance the interests of the organisation and the public when introducing any innovation that could intrude on privacy.  In particular, it is important to be open about how it is being implemented and how any data gathered will be used and protected.  Arguably, the use of RFID to deter theft of razor blades didn't represent much of an infringement - after all, it only photographed people in a very limited area of the store - but it was deemed unacceptable.

In the short term, solutions like that recommended by international standards group EPCGlobal may have to be adopted. Working on the basis that the supply chain ends when an item is sold to a consumer, the group suggests that customers be allowed to ask the retailer to send a 'kill password' instruction to a tag as it passes through the checkout.  The question for manufacturers is to identify at what point in their supply chain this instruction should be given.  As we have seen with pharmaceuticals, it is not necessarily a straightforward issue, with many of the benefits being negated if tags were routinely destroyed at the point of sale.

So what's the answer? Certainly, the technology itself has a role to play. If tags are to hold more than simple identification data, features may need to be added to allow access to such data to be controlled and the privacy of successive owners of a product to be protected.

The option to combine 'indestructible' data that identifies the type and manufacture of an item with secured re-writable storage that can hold data of use to the current owner is among those being explored by researchers.

Acceptance and regulation

But public acceptance and both industry and government regulation will also be critical to the future use of RFID technology. What's needed, therefore, is an informed debate about the opportunities and threats that results in a clear understanding of what is, and what is not, acceptable.

Only then will it be possible for RFID to deliver its full promise. In the meantime, however, applications that restrict the technology within supply chains and other closed user groups will continue to deliver significant benefit.