RFID and the Future of Asset Protection

Feb 1, 2004 12:00 PM, By Jacqueline Emigh

Wal-Mart and the U.S. Department of Defense (DoD) may not have much in common, but asset protection is one mutual interest. Both organizations recently announced that they will require their suppliers to start using radio frequency identification (RFID) tags by 2005.

The security industry is bound to be impacted by this emerging wireless technology sooner or later. However, beyond RFID lies a number of other asset protection technologies already available to help combat theft and other losses.

One Wal-Mart supplier, a major consumer goods manufacturer, is now suffering overall “shrinkage” (loss) of almost 30 percent in its disposable razors, says an executive at Sun Microsystems, a major partner in Wal-Mart's new RFID initiative. “A lot of disposable razors must be falling off a lot of trucks,” says Vijay Sarathy, Sun's product line manager for RFID, who has noticed some of the missing merchandise up for sale on Internet auction sites.

Sun and other large information technology (IT) providers are starting to take RFID extremely seriously. In January, Sun announced an RFID center in Houston that will comply with both the Wal-Mart and DoD mandates. Business software giant SAP unveiled a new RFID product targeted at makers of consumer goods the same month.

RFID tags use built-in microchips to store product, location and even temperature information. They can also transmit data wirelessly over special kinds of radio waves.

RFID technology falls under the security category of asset protection. By and large, “asset protection” is used interchangeably with “asset management,” however, the focus of the technology for this article is tracking and managing fixed assets, such as buildings and vehicles; product inventory; and consumable assets, such as printer paper and cafeteria food.

Customers use these asset protection systems for many purposes: giving evidence of theft or robbery to police and insurance firms; locating lost property; tallying assets for financial statements; and keeping tabs on equipment maintenance needs, for example.

Steven Rubarts, manager at Dallas-based asset protection specialist MindStream, remembers the day when several 18-inch computer monitors were stolen from one of the company's customers.

“At first, the security people weren't sure exactly how many screens were taken, or from where. By checking things out in our system, though, security was promptly able to give a detailed report to police. Further investigation found that some members of the cleaning crew had made a few too many trips to the room where the monitors were stored,” Rubarts says.

MindStream doesn't see the need for RFID input yet, according to Rubarts. MindStream's hardware systems come with a mandatory database from Hardcat. MindStream also resells Hardcat's optional software packages for barcoding, stock control, purchasing, maintenance and other functions. MindStream customers range from Shell Oil to the Dallas Police Department.

“I've seen people use barcoding with our product for keeping track of notebook PCs. People have to check the notebook out when they take it home, and check the PC back in when they return it,” Rubarts says.

Yet other small specialists in asset protection, such as HighJump Software, are already accepting both RFID and barcode input. HighJump's RFID solutions are available for transportation, warehouse and yard management, for instance.

Advantages of RFID

RFID carries big advantages for dealing with loss and theft, experts say. “Unlike barcodes, RFID tags can be read through boxes and other enclosures,” notes Chris Heim, HighJump's chief executive officer.

HighJump will soon start working with a luxury hotel to place RFID tags on TV sets with flat screen monitors, according to Heim. “If someone tries to walk out with the TV in a suitcase, the RFID system will be able to see right through it.”

Pepsi, another HighJump customer, is using the system together with barcodes to track and manage Tropicana orange juice. Also in contrast to barcodes, RFID tags don't require manual scanning. “People who are doing the scanning can get tired or lazy, and they can make mistakes,” Sarathy says. “Another difference is that RFID systems can read multiple tags at the same time. So RFID can actually be less expensive and more efficient.”

On the Other Hand

Most agree that RFID offers future potential for cost effectiveness. However, RFID is really much pricier than bar code scanning at this point.

“Bar codes cost only a few pennies each. RFID tags range from about 40 cents to $1 apiece,” Heim says.

Also, large RFID implementations can take a long time. Right now, for example, Wal-Mart is still using Sun's RFID Center to test the accuracy and interoperability of various vendors' tags.

“After that, Wal-Mart will want to integrate its RFID system with those of its product suppliers,” Sarathy says. Wal-Mart won't “go live” with RFID for product distribution until 2005, and even then, RFID will be limited to only three of Wal-Mart's distribution centers, all located in Texas.

Retail Environments

RFID tags will take longer to replace barcodes in retail stores, according to Sarathy. First, vendors need to deal with privacy concerns by overcoming public misconceptions about how RFID information will be used, Sarathy says.

Some people, for example, are mistakenly convinced that RFID tags can be read from long distances away — a scenario that might allow a manufacturer to tell that “the product is in your pocket” or to allow a thief to check out the furniture in your house from many miles away. Actually, Sarathy says, RFID radio waves can only be detected across the length of a room, for instance.

“Over time, though, people will become comfortable with RFID, just as they have with many other technologies, including ATM machines. This will happen as people start to realize that the benefits of RFID outweigh the privacy issues,” Sarathy notes. Long lines at the checkout counter will turn into just a distant memory, he predicts.

Meanwhile, the RFID industry is working on initiatives to help speed acceptance. One of these is an optional “kill” feature, which will let shoppers turn off RFID tags once they've purchased the tagged products.

The other initiative — conducted by an industry group called EPC Global — is an RFID branding program. Privacy policies will be spelled out for products emblazoned with the RFID brand.

ASP Services

At the low end of the cost spectrum, other asset protection alternatives are also emerging. Some companies, known as ASPs (application service providers), now sell asset protection as an Internet-based service, rather than a product.

Instead of installing asset protection products, users of CornerPost's TotalTrac service can access the software from any PC, using just a Web browser. Geared to town governments and school systems as well as private companies, TotalTrac combines tracking of fixed and consumable assets with work order management, according to Ryan Elswick, CornerPost's chief operating officer.

TotalTrac accepts barcode data, but not RFID. “For many of our customers, RFID would probably be cost prohibitive,” Elswick admits.

CornerPost is now building an add-on to TotalTrac, known as FiberTrac, for tracking installations of fiber optic cable throughout southwestern West Virginia. “This is mostly for the technicians to use, just to tell where they've put the cable. But if some cable got stolen, they'd also be able to see exactly what was missing,” he says.

Fairly soon, asset protection systems will be up and running all the way from the West Virginia hills to Wal-Mart distribution centers in Texas — and even into the far-flung reaches of the Pentagon. Security specialists can probably make good use of some of these systems to help deal with theft and other sorts of loss. It's very important, however, to recognize the differences in pricing and features among technology offerings in this category — from RFID products at the high-end to Web-based services at the more affordable end of the scale.

FOR THE RECORD

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CornerPost	33
HighJump	34
MindStream	35
Sun Microsystems	36

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