by Paul Wengert
Radio-frequency Identification (RFID) is a continually evolving technology for tracking and monitoring inventories. While it will be some time, years probably, before RFID is a widespread method for tracking surplus industrial assets, it is presently being used in certain commercial applications.
RFID is defined as an automatic identification method relying on storing and remotely refreshing data using RFID tags and transponders. These “tags” can be attached to products, passports, people, rail cars, etc. The most established usage that we are familiar with today may be in the toll tracking of cars and trucks and product inventory tracking as the shipments move through distribution systems.

To have a better knowledge of RFIDs one must understand that there are two basic types of RFID tags, passive and active. Passive tags are used in inventory, animal, library, prisoner and passport tracking (US and UK passports are being issued with passive RFID data including passport photos). Active tags are useful in monitoring the performance and the conditions of functioning equipment such as motor operating characteristics, generator performance, pump flows, tank car temperatures and volume.

Software companies such as Oracle and SAP are beginning to develop RFID functionalities in their programs. It is thought that, as the cost of the tags and the associated software and hardware decrease, RFID may replace bar codes. However, there are many issues that must be resolved regarding their use before RFID tagging becomes a common and practical reality. Among the issues confronting this emerging technology are security of information and the regulation / standardization of frequencies.

Security is a serious concern because, without expensive encryption coding, the information contained on the tags can be read by anyone possessing a reader that is within transmitting range. Data on readily readable tags poses personal, corporate and military privacy and security issues. For example, the ability to read RFID tags makes it possible to track people, tell others about individual buying habits and movements, convey proprietary corporate operating efficiency and process information and reveal the disposition of military assets.

There are also great concerns regarding protection from hackers. It has already been proven that viruses can infect RFID tags and databases. This vulnerability can permit unauthorized access to information as well as shut down databases or provide access to confidential information. Regulatory and standardization factors are also an issue that must be resolved. The frequencies that can be used for RFIDs are governed in the United States by the FCC, but other countries set their own rules for frequency licensing.

The cost of tags continues to come down (passive tags cost as little as five cents each and active tags as much as $200 each). However, the costs of the integrating software and implementation of an RFID tagging process for existing, installed equipment are unclear. With the uncertainty of regulatory and security issues, it will be some time, in my opinion, before RFIDs become a commonplace tool in our industry, particularly in sensitive applications.
Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 2, 2007

© The Investment Recovery Association