Posted on: Sunday, February 22, 2004

Wal-Mart moving to smart-scan chips

By Naomi Snyder
Nashville Tennessean

When Wal-Mart acts, the world of commerce listens. That's why the retailer turned a lot of heads last fall when it decided that its vendors should use a new technology called radio frequency identification.

Radio frequency identification tags, or RFID, expected to replace bar coding, are more expensive and contain more information despite being not much larger than a piece of dust. The industry hopes the tags will improve inventory control in the short term. In the long term, the tags could end up on every product we buy.

"By Wal-Mart saying we're going to do this in a year, they're forcing the industry to come to some standard that now becomes universal," said Paul Reed, owner of BRS, which sells bar coding equipment in Brentwood, Tenn.

Wal-Mart vendors are facing steep costs to comply with the industry giant's demands. Wal-Mart has said the top 100 vendors must comply by January 2005 and everyone else by the end of 2006.

Some privacy advocates fear the tags will lead to a Big Brother universe, where retailers, the government and even criminals clandestinely scan and retrieve information about everyone they see.

The technology seems simple. A nanochip, similar to a microchip, is embedded in tags or labels to identify individual products. Antennas using radio frequencies can scan those products, either in a hand-held device or inside a wall or gate.

Some day, customers may be able to walk through gates in grocery stores that automatically scan their shopping carts and deduct the charge from their credit cards.

For now, most of the uses are on a smaller scale.

Used-car sales company CarMax is using RFID to keep track of cars that may leave its lot. A company spokeswoman said the tags are taken off when someone buys a car, so the company doesn't keep tabs on customers when they leave. The tags are for inventory control and to deter theft.

FedEx Corp. uses the chips inside wristbands of many delivery truck drivers, so they can quickly unlock and lock the truck door without fiddling with keys. The company is testing wristbands that will start the truck's ignition automatically. RFID also is used at FedEx long-haul truck centers to keep track of which trucks are on the lot.

Some tags can be read from about 3 feet away. Other tags, equipped with batteries, can be read from as much as 30 feet away, Reed said. The benefits are apparent for warehousing and shipping.

"If you've got a tote going down a conveyor belt, it could read all that as it goes through a gateway," he said.

There is, however, doubt that the technology will be ready for widespread use by the time Wal-Mart wants it.

"The people I respect are saying it's impossible," Reed said. "They say 'Wal-Mart really is forcing standards in the industry. The reality is that's not going to happen.' "

Vendors are not the only ones grumbling.

"It's actually totally misleading to call this an improved bar code," said Katherine Albrecht, the founder and director of CASPIAN, or Consumers Against Supermarket Privacy Invasion and Numbering. "This is a plan to uniquely number every item on the face of the Earth."

Bar codes only identify what type of product, such as Coca-Cola cans, is being scanned. RFID tags will individually identify each product.

With RFID tags, it may be possible to scan people's homes and see what products they have inside, she said. And the government could use hidden scanners to track people.