True cost of radio frequency Tags.

• Author: Roemerman, Steven D.
• Position: LETTERS - Letter to the Editor

In reference to your May 2005 story, "Electronic Tags," several points seem worthy of mention. The value of radio-frequency ID cards to our soldiers, sailors and Marines is important. Operations are hampered by not having the right things at the right and right time. Traditionally, the approach has been to vastly over-order at several places along the supply chain, which creates a glut of "just in case" shipments that choke supply lines. Meanwhile, critical repair parts, medical supplies and other items are lost in the flood. For this reason, the Pentagon has been a leader in developing RFID use. Wal-Mart is interested in the same problem. Failure to have the right items when you come to a store costs retailers billions of dollars.

However, the May 2005 story perpetuates several myths about RFID. The first is that "most RFID data is worthless." Some of the data collected at an interrogation point is not useful to the organization that collected it, but someone else in the supply chain has a need or potential need. The cost of RFID interrogation and data storage are about the same regardless of the number of data fields used. And the ratio of useful data is determined by the ability of an organization to use it.

Perhaps the most serious problem with the story was the discussion of implementation costs. These costs vary widely. In fairness, this is a confusing topic, with "experts" claiming that the costs can vary anywhere from a few thousand dollars to several million. The story stresses the lowest cost end of the spectrum and in doing so sets dangerous expectations.

We conducted extensive research in the costs vendors invested during the first wave of Wal-Mart RFID implementations. The average cost was well over $100,000. Some systems...