RFID in the supply chain

october 2008 | vol. 51 | no. 10 | communications of the acm 127 Preliminary results suggest that WalMart is benefiting from its RFID initiatives and many retailers around the world have begun RFID trials. If RFID investments are to payoff through better supply chain management, firms will have to modify many of their processes to take advantage of the real-time individual item information that will be available. It is through these RFID-enabled process innovations that firms can gain competitive advantages. Consequently, supply chain processes and data can be among the most confidential information for firms. To date, supply chain process innovations have been protected from competitors by U.S. laws. However, with RFID deployment, current laws may no longer offer protection. Corporate intelligence (legal information-gathering about competitors) and espionage are common across all sizes of firms. 8 Until now, gathering intelligence about a competitor’s supply chain has been limited by both cost and legal constraints. The time, effort and visual or physical actions necessary to gather useful information about a competitor’s supply chain make it costly. In addition, it can also be illegal, because current laws against burglary, theft of trade secrets, copyright infringement and unfair competition limit corporate intelligence. However, because RFID data is passed wirelessly between the tag and the tag reader, and because tag data may be created by many different firms in a supply chain, RFID deployment will make it easier for competitors to gather intelligence at a low cost. Striking a balance between supporting innovation and facilitating competition is at the heart of capitalism as well as the production and use of knowledge. On one hand, scientific and technological innovations expand the frontiers of knowledge and contribute to the technological progress that affects how people live and work. On the other, competition in the marketplace enhances economic welfare; it is through competition that some of the benefits of innovation are passed on to consumers. Estimates suggest that apRfiD in the supply chain: Panacea or Pandora’s Box?