RFID: Proceed with caution

The standards issue is inextricably linked to implementation costs; the more companies that adhere to standards, the greater the uptake of the technology, and the lower the equipment costs over time. But the lower equipment costs will also help drive uptake for smaller companies. "It's a chicken-and-egg situation. We won't get volume unless the prices drop. Everything we are doing is to drive down those costs and increase functionality," says Wal-Mart's Langford.

Integration not tag cost
The biggest costs are not the tags and readers but the back-end integration issues with existing applications according to e.centre's Osbourne. "People talk a lot about having to get the cost of the chips down, which is true. If it is going to be used on a can of beans you don't want to be paying 20 pence a tag. In the bigger picture it is the integration issues which are expensive," he says.

And when costing out an RFID project, it's important to remember that most companies have already invested heavily in barcode technology, so the RF implementation needs to be calculated in terms of a technology migration rather than a completely new project. "Barcode and RF both carry data so in that respect they are identical. What that means, of course, is that if you are going to persuade companies to move from them then you need an incremental benefit to make it worthwhile. That is a point that is missed in the hype. People look at the benefits as if you are starting from a blank sheet of paper and that is not the way to cost it out," says Osbourne.

Avoid slap and ship
Standards, costs and immature technology aside, RFID is not going away. Companies have to have an educated view on it, even if it's a negative one. The advice for suppliers from the likes of Tesco and Wal-Mart is to avoid a "slap and ship" approach that contains no overall strategy beyond attaching the chips and pushing the product out the door.

"Make sure you are lead by the changes you want to make and not the technology. Some manufacturers seem to be going down the route of slap and ship. If you start slapping and shipping you will get the technology a bad name in your organisation," says Tesco's Cobain.

Wal-Mart's Langford has a similar message for suppliers and other businesses. "Start engaging with RFID today; don't wait for the call. Work out your own roadmap and how it will fit with your business. Start helping the book to be written; don't just wait for it to be delivered."