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RFID: the Right Frequency for Government

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RFID: the Right Frequency for Government O ctober 2 0 0 5 RFID: The Right Frequency for Government David C. Wyld Maurin Professor of Management, and Director, Strategic e-Commerce/e-Government Initiative Southeastern Louisiana University E–Government Series E–GOVerNMENT SerIES RFID: The Right Frequency for Government David C. Wyld Maurin Professor of Management and, Director, Strategic e-Commerce/e-Government Initiative Southeastern Louisiana University October 2005 T A B L E O F C ON TE N T S Foreword .............................................................................................4 Executive Summary .............................................................................5 Introduction ........................................................................................7 Introduction: The Next Big Thing? .................................................7 Information ...................................................................................7 The Power of Identification ...........................................................8 The Big Picture: Automatic Identification and RFID ......................9 A Brief History of RFID .................................................................9 RFID and Bar Codes ...................................................................11 Report Overview ........................................................................14 RFID 101: The Basics of the Technology ...........................................16 Introduction ...............................................................................16 What’s in a Tag? ..........................................................................16 What Does an RFID Reader Do? ...............................................20 ‘What’s the Frequency, Kenneth?’ ...............................................20 Making It Automatic—Read Rates ..............................................21 Conclusion .................................................................................23 RFID and the ‘Informationalized’ Supply Chain ...............................24 Introduction: The Fifth Element ...................................................24 The Quest for the ‘Perfect’ Supply Chain ....................................25 RFID and Supply Chain Management ........................................27 Implementing RFID in the Supply Chain ....................................28 Managing—and Using—an ‘Avalanche of Data’ .........................29 A Tool, Not a ‘Magic Bullet’ .......................................................31 Conclusion: An RFID Future for Supply Chain Management? .....32 The Federal Government and RFID in Supply Chain Management ...34 Introduction ................................................................................34 Department of Defense Case Study Overview ............................34 The Food and Drug Administration and the Pharmaceutical Supply Chain Case Study Overview .....................................34 The Department of Agriculture and Animal Identification Case Study Overview ...........................................................35 From Susquehanna to Baghdad: RFID and the Visible Defense Supply Chain ...................................................................................36 Introduction: The ‘Tipping Point’ .................................................36 A Briefing on the U.S. Military’s RFID Strategy ...........................36 ‘Where’s the Bullets? Where’s the Burgers?’ ................................39 The Defense Driver ....................................................................42 The Future? .................................................................................42 The Right Prescription: RFID and the Pharmaceutical Supply Chain .....................................................................................44 Introduction: Defining ‘Mission Critical’ .....................................44 The Big Business of Healthcare in the United States ...................44 The ‘Drug Pushers’ .....................................................................46 The Right Prescription ................................................................48 Summary: The RFID Rx ...............................................................49 2 How Now Brown Cow?: The National Animal Identification System ........................................................................51 Introduction: ‘Mad Cow’ ............................................................51 The Need for Animal Identification .............................................51 The National Animal Identification System (NAIS) ......................52 Key Issues Involved with the National Animal Identification System ............................................................55 Conclusion .................................................................................57 An RFID Agenda for Government .....................................................58 Introduction: Nearing Take-Off ...................................................58 RFID Best Practices ....................................................................58 Standards for RFID Technology ....................................................65 Research on RFID Technology .....................................................67 Education on RFID Technology ....................................................68 Privacy-Related RFID Issues .........................................................69 Conclusion: ‘Uncle Sam’s Guiding Hand’ ..................................73 Conclusion: ‘You Say You Want a Revolution...’ ................................74 Appendices .......................................................................................77 Appendix I: Glossary of RFID Terminology .................................77 Appendix II: Recommended Further Readings on RFID Technology ..................................................................81 Bibliography ......................................................................................84 About the Author ............................................................................101 Key Contact Information ................................................................102 3 RFID: THE RIGHT FREQUENCY FOR GOVERNMENT FO rew O rd October 2005 On behalf of the IBM Center for The Business of Government, we are pleased to present this report, “RFID: The Right Frequency for Government,” by David C. Wyld. The evolution and application of new technologies have been at the forefront of allowing the United States and other countries to improve the quality of life and increase standards of living. Radio frequency identifi- cation (RFID) is another such application—an enabling technology that, we believe, will have a substantial impact over the next two decades. Professor Wyld’s report, his fourth for the IBM Center for The Business of Government, provides an impor- tant contribution to the literature around RFID by chronicling its history and setting out the opportunities that it provides, especially for the public sector. The bar code, a previous identification technology advance, has had a significant impact during the past 30 years. Now, with the emergence of RFID technology, new opportunities will arise and its impact will continue to grow as new applications are realized. In addition, we expect the time to reach significant impact will be half of what it was for bar-code technology. The integration of RFID technology with other information technology makes a paradigm shift now possible. RFID technology can track patient safety by error-proofing processes for medication, as well as providing global visibility of worldwide shipments, which will improve the flow of commerce and the security of nations. The future role of RFID will dramatically increase its impact over that of its predecessors. The potential of RFID is indeed great. The supply chain management industry refers to the “three V’s of RFID”: visibility, velocity, and value. RFID promises to increase visibility to make earlier and better decisions and actions possible. Second, RFID will enable the flow of goods and information to be accelerated, with a higher certainty of information for decision making. Finally, RFID will enable important enhancement of value, often in new ways. As described by Professor Wyld, RFID offers the potential to provide increased safety for patients, faster movement of automobiles from manufacturer to dealer, and greater national security. We trust that Professor Wyld’s report will make a valuable contribution to the understanding of the potential of RFID and how it might be applied in the public, private, and nonprofit sectors. Albert Morales Robert E. Luby, Jr. Managing Partner Vice President, Supply Chain Management Practice IBM Center for The Business of Government IBM Business Consulting Services [email protected] [email protected] 4 IBM Center for The Business of Government RFID: THE RIGHT FREQUENCY FOR GOVERNMENT EX ecut IV E Su MM ar Y We are in the midst of what may become one of Leading organizations, such as the U.S. Department the true technological transformations of our time. of Defense, and retailers like Wal-Mart and Target, RFID—radio frequency identification—is by no have set stretch goals for their suppliers to begin means a new technology. In fact, it dates back to using RFID on shipments to their organizations. the techniques developed to differentiate “friendly” In the next section of the report, we appraise the aircraft from enemy warplanes in World War
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