Data AvalancheData Avalanche

Glover Ferguson, a chief scientist at Accenture, says the consulting firm is working with a railroad company that has outfitted its railcars with RFID chips, global-positioning-system devices, and other sensors. The railroad analyzes the collected data to determine if railcars stand idle for a long time, an indication that they're being used for storage. The railroad now collects storage fees from customers based on that data.

United Parcel Service Inc. is among the newcomers to RFID trying to anticipate uses for the technology. UPS has several pilot projects under way to track vehicles and equipment. When the technology matures and individual packages can be tagged, UPS will consider adding collected RFID data to its data-warehouse system that's used to study information about problematic shipments, says John Nallin, an IT VP who oversees the shipping company's global networks.

There are those who believe a simple answer exists to preventing data overload: the delete key-or at least a policy for deleting unnecessary data or not collecting excess data. Wal-Mart CIO Linda Dillman said last year that the retailer expects to derive value from RFID's greater efficiency in collecting the same kind of data it does now, rather than collecting more information.

Retail Forward, a retail-strategy research and consulting firm, determined in an often-cited report last year that if Wal-Mart put RFID tags on every item in every one of its stores, then collected every signal emitted by those chips, the recorded data would total 7.7 million terabytes a day. What company, skeptics ask, would even come close to wanting all that data? "I don't think there are going to be all these massive databases out there with RFID data," says Joseph Tobolski, director of Accenture's silent commerce center, which provides RFID consulting services. "There's a lot of difference between what's generated and what you keep."

Just what and how often data is collected and passed on to operational systems will depend on the specific application. Medical-supplies distributor Owens & Minor Inc. tracks 20,000 orders per day at 32 order-status points in its distribution channels, using bar-code systems and other technology, says Paul Higday, VP of E-commerce. With RFID, Owens & Minor might double the number of those status-point checks, helping the company spot bottlenecks in its distribution systems. While the company's transactional database is already a half-terabyte in size, Higday believes the system can handle the additional data that an RFID network would generate. "It's definitely not beyond the state of today's technology," he says.

Video-game maker Electronic Arts Inc. has a pilot project to track pallet-level shipments of its products to Wal-Mart and other retailers and distributors. RFID will yield just 10% to 15% more supply-chain-transaction data than the EDI technology the company uses today, CIO Marc West predicts. The pallet tagging will help him get a clearer picture of logistics issues, West says. He has no plans to use RFID to tag individual products.

Even if companies aren't planning to tag individual items, RFID systems will increase the need for data-synchronization and transformation tools as more data is exchanged between trading partners, says Brian Higgins, global RFID solutions director at IT-services company BearingPoint. And data-quality-management software also will become more crucial. "RFID just moves dirty data more quickly," he says.

RFID also might create new issues related to data access. Data may have to be segmented based on who needs to see it, such as a shipper who has to view shipping schedules but shouldn't have access to data about a shipment's contents, says Jon Chorley, senior development director of Oracle's inventory and warehouse-management applications.

Businesses may be focused on this year's RFID pilot project, but if they're not thinking about what those systems may look like two, three, or even five years out, they may be missing an opportunity. Too many companies, GM's Scott says, are making the mistake of viewing RFID as if it were only the next generation of bar coding. "They're still thinking in the old model," he says. It's time to think about new models.

— with Tony Kontzer

Illustration by Campbell Laird

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