Challenges associated with RFID tag

implementations in supply chains

Gaurav Kapoor
1
,
Wei Zhou
2,3
and
Selwyn Piramuthu
1,3
1
University of Florida, U.S.A.;
2
Information
Systems and Technologies ESCP Europe,
France;
3
RFID European Lab @ESCP Europe
Correspondence: Selwyn Piramuthu,
Information Systems and Operations
Management, University of Florida,
Gainesville, FL 32611-7169, U.S.A.
Tel: 1 (352) 392 8882;
E-mail: selwyn@ufl.edu
Received: 25 August 2009
Accepted: 6 October 2009
Abstract
Radio-Frequency Identification (RFID) tags are gaining widespread popularity
throughout the supply chain from raw material acquisition, manufacturing,
transportation, warehousing, retailing to the ultimate consumers. A majority of
extant literature in this area explore the beneficial aspects of RFID tags such as
their batch readability, resistance to harsh environmental conditions, informa-
tion storage and processing capability, among others. Given the recent
explosion of interest in RFID tag incorporation in supply chains, literature in the
area has not yet comprehensively identified nor addressed associated
challenges and impediments to successful implementations. We purport to
fill this gap and to raise awareness by identifying and discussing critical issues
such as ownership transfer, privacy/security, computing bottleneck, read error,
and cost-benefit issues such as opportunity cost, risk of obsolescence,
information sharing, and inter-operability standards.
European Journal of Information Systems (2009) 18, 526533.
doi:10.1057 ejis.2009.41; published online 10 November 2009
Keywords: RFID; item-level information; information revelation; information sharing
Introduction
RFID is a disruptive technology that is here to stay at least for the
immediate foreseeable future based on currently available technology for
relatively cheap and generally reliable tracking and tracing of items
throughout supply chains. Several Special Issues of journals including
IEEE Systems Journal (1(2) December 2007), IEEE Transactions on Automation
Science and Engineering (6(1) 2009), International Journal of Production
Economics (112(2) April 2008), Journal of Theoretical and Applied Electronic
Commerce Research (3(1) 2008), Production and Operations Management (16(5)
SeptemberOctober 2007), European Journal of Information Systems (2009)
have been dedicated to Radio-Frequency Identification (RFID)-related
issues. Moreover, the number of conferences and workshops that are
dedicated specifically to address various facets of RFID research has
exploded over the past few years, and these conferences and journal Special
Issues certainly attest to RFIDs relevance. Clearly, EJIS, as a prominent
journal in the forefront of cutting-edge Information Systems research, has
several publications (including Lee & Shim (2007), and the Special Issue
that is due to be published in 2009) that address RFID-related issues.
During the past few years, several leading retailers including Wal-Mart,
Metro Group, and Marks&Spencer have mandated the use of RFID tags for
tracking items primarily at the pallet level. Apparently, Wal-Mart claims to
be able to achieve $287 million benefit by fixing just 10% of the problems
associated with lost sales due to misplaced inventory (Nystedt, 2007).
Although not many RFID implementations have resulted in benefits that
European Journal of Information Systems (2009) 18, 526533
& 2009 Operational Research Society Ltd. All rights reserved 0960-085X/09
www.palgrave-journals.com/ejis/
are in that order of magnitude, it is worth noting that
given the steady decrease in their implementation cost,
the benefits they provide, and the need to maintain
competitive advantage, RFID tags are here to stay. The
number of RFID tags produced each year is a small
fraction compared to that of bar codes. For example, Das
& Harrop (2008) expect that 2.16 billion tags will be sold
in 2008 whereas about 510 trillion bar codes are printed
every year. However, it is generally agreed that in the
very near future RFID tags would supplant bar codes.
While RFID tags are certainly poised to supplant bar
codes (e.g., pallet tags in supply chains) in a good number
of supply chain applications, their capability and poten-
tial applicability spans an even wider range (e.g., sensor
tags) vis-a`-vis bar code applications.
RFID tags have been known to provide several benefits
for supply chain management including improved asset
management, improved inventory control, shrinkage
reduction, increased product availability and fulfillment
rates, reduction in labor cost, decreased operational time,
material handling efficiency, improved process through-
put, improved customer service including returns &
recall management as well as service and warranty
authorizations, increased in-transit visibility, confirming
regulatory compliance through chain-of-custody records,
and overall process improvement. Benefits that are
measured as short term or long term can be either
tangible or intangible. RFID implementations, like several
technological implementations, do also exhibit network
effects simply because their value is better realized when
several related entities provide and utilize the necessary
infrastructure. Their beneficial properties, therefore, are
only bound to improve over time as RFID tags gain
widespread use.
Although a majority of related literature consider the
beneficial aspects of RFID implementations in supply
chains, we are not aware of any that specifically considers
the deterrents in a supply chain management context
in-depth. Lee & Ozer (2007) observe that a large gap exists
between perception and reality of what is generally
assumed to be the benefits engendered by the incorpora-
tion of RFID tags in supply chains.
When one considers various research issues that have
been addressed related to RFID, including those with
a focus on supply chain management, a majority of them
either ignore or assume away the complexities that are
associated with RFID implementations. To our knowl-
edge, no existing published work attempts to flesh out
the details on the major challenges that one faces in
RFID implementations for supply chain management.
Our purpose, therefore, is to raise awareness by identify-
ing and comprehensively presenting several critical issues
that need to be considered and addressed before wide-
spread adoption of RFID becomes a reality. Given the
initial resistance to any new technology, of which RFID
is not immune, critically examining the risks, benefits,
and associated challenges sooner than later would
facilitate seamless introduction and use of RFID tags
in supply chains. To this end, and in line with the Editors
view (Paul, 2005, p. 208), we identify and discuss specific
issues related to ownership transfer, cost, privacy/security,
back-end systems, obsolescence, read error, economic
disincentives to share item-level information, and the
complex nature of evolving standards that address
various facets of RFID tag applications. The following
sections consider them one by one, and we conclude the
paper with a brief discussion.
Ownership transfer issues
In a traditional supply chain, ownership transfer occurs
through physical means where the seller no longer has
(physical) access to the sold item without the buyers
knowledge. However, when RFID tags are embedded
in the sold item, the previous owner can indefinitely
maintain (radio-frequency, RF) item-level access to the
sold item due to the characteristics of RFID tags to be read
and written through wireless means. While a previous
owner may not have physical access to the sold item, the
item can be tracked and traced through RF means and
this has the potential for security/privacy violations as
well as loss in competitive advantage. Security/privacy
violations occur when the item is tracked and traced
without knowledge of (and explicit or implicit permis-
sion from) the current owner. As RF communications
may occur without physical proximity, it is relatively easy
for the previous owner to surreptitiously verify the
location of the tagged object. Knowledge of the presence
of specific tagged items can be used to generate informa-
tion (e.g., inventory level) that directly affect competitive
advantage. Complete (i.e., both physical and RF) owner-
ship transfer is therefore critical when competitive
advantage, security/privacy issues, etc. are at stake.
Researchers have thus far attempted to address this
issue of complete ownership transfer in the presence of
RFID tags through cryptographic means. When complete
ownership transfer occurs, the previous owner should not
have any (including RF) access to the RFID tag without
permission from and knowledge of the new owner. After
extensively reviewing existing literature, Kapoor &
Piramuthu (2008) find that a majority of existing
cryptographic approaches are vulnerable to attacks by
adversaries, which may possibly include previous owners.
These adversaries, with appropriate and necessary re-
sources, are able to obtain usable information from
passively observing or even actively participating in the
conversation between an authentic tag and reader. This
information can then be used to track, trace, or even
impersonate the authentic reader or RFID tag. Such infor-
mation can also be used to generate Denial of Service
(DoS) attacks, with the ability to cause extensive disrup-
tions and loss in the system. Kapoor & Piramuthu (2008)
also observe that none of the existing cryptographic
approaches accomplish ownership transfer without
the presence of a trusted third party (TTP). Although it
is feasible to use a neutral third party such as a bank as
a TTP to facilitate ownership transfer, the process can get
Challenges associated with RFID tag implementations Gaurav Kapoor et al 527
European Journal of Information Systems
unwieldy due to the presence of different TTPs between
each buyerseller pair in a supply chain and coordinating
cryptographic secrets among these TTPs is not a trivial
task. Therefore, it is impractical to assume that TTPs
will be able to coordinate every transaction in a supply
chain.
Moreover, even if TTPs are assumed to be present at
every ownership transfer instance, the process is rather
difficult to accomplish simply because the TTPs need to
have some mechanism to share the tags updated secret
keys as and when ownership transfer occurs. Given the
huge volume of RFID tags, each with its own unique
instance-level information and the movement of the tags
in and out of the field of the reader over time, it is not
feasible to expect every TTP to have access to the next
TTP in the ownership transfer sequence. The TTPs cannot
communicate with one another unless there is some sort
of mechanism through which they can authenticate
themselves to one another.
As seen in Figure 1, the tag has to (wirelessly) comm-
unicate with current and previous owners as well as the
TTP to exchange secret key information. Such wireless
communication are vulnerable to attacks by adversaries
(represented by the shaded triangle in Figure 1). These
attacks have the potential to reveal the tags secret key
information. And, once the secret key information is
revealed, the adversary can track and trace the tag or even
impersonate tag to reader or reader to tag. Even if the
tags secret key information is not revealed, the tag
becomes vulnerable as soon as the adversary recognizes
some pattern (i.e., signature) that is specific to this tag
that can be used to track and trace. An active adversary
can modify communication between tag and reader to
cause DoS attacks, which result in permanent loss of
communication between tag and reader.
Without TTP, the scenario is even worse. No existing
ownership transfer protocol guarantees complete owner-
ship transfer (Kapoor & Piramuthu, 2008). Existing
ownership transfer protocols without a TTP accomplish
only ownership sharing, where every previous owner
continues to maintain RF access to the tags. This, clearly,
is not acceptable in a supply chain context unless com-
plete information visibility is agreed upon by every node
in the supply chain. Moreover, this is exacerbated even
further by the deleterious effects of authentication
protocol vulnerabilities that can be taken advantage of
by adversaries. Realistically, it is impossible to develop an
ownership transfer protocol without a TTP, as any key
update information that is broadcast through a wireless
medium between (previous and new) owners and RFID
tag can be read by anyone in the vicinity. With currently
available technology, the best that can be accomplished
in the absence of a TTP is ownership sharing whereby
the previous owners continue to maintain RF access to
the tag.
Given the absence of TTP in several prospective RFID
applications and the sheer difficulty of cryptographically
transferring ownership under these circumstances, it is
surprising that this aspect of RFID implementation has
received very little attention in related literature. The lack
of mention of this aspect is even more surprising given
the fact that ownership sharing is generally not what
one expects when ownership transfer takes place, as the
former could lead to privacy/security violations and can
deteriorate competitive advantage for the current owner.
Cost issues
As in bar code applications, the cost associated with RFID
applications in supply chains include the cost to obtain
and tag items, tag readers, as well as necessary back-end
systems to gather, maintain, and process the data
including changes to existing Enterprise Resource Plan-
ning (ERP) and other related systems. While it is relatively
straightforward to compare the unit cost of RFID tags and
bar codes and their respective readers, the rest of the cost
structure is not necessarily obvious. This could be due to
the rarity of RFID implementations in supply chains
(Murphy-Hoye et al., 2005). As more and more imple-
mentations become available, the experience gained from
these would provide the necessary information to gen-
erate informed estimates of costs and associated returns
on investment (ROI).
It is clear that RFID implementations are more
expensive than a comparable bar code implementation.
However, the benefits of RFID implementations through
reducing labor, out-of-stocks, shrinkage, etc. are expected
to far exceed costs (e.g., Das & Harrop, 2008). These
benefits may only be realized if the RFID implementa-
tions are fully utilized. That is, an upstream firm imple-
menting slap-and-slip to comply with mandates from
firms downstream in a supply chain may end up with just
the costs and none of the benefits unless it strategically
and tactically uses readily available information from
those RFID tags. For example, such a slap-and-slip
implementation just to comply with Wal-Marts mandate
is estimated at $500,000 for a top supplier (Maurno,
2005). Other deterrents to adoption include the perceived
lack of ROI and the fact that an ROI model for one firm
may not be directly transferable for another to leverage.
The problem is compounded when payback time is not
short, as is certainly the case with most typical RFID
investments.
Owner
1
Owner
2
Owner
3
Owner
n
T TP
1
TTP
2
TTP
3
TTP
n-1
Tag Tag
Ownership Transfer
Tag
RF
Wired
Figure 1 RFID tags progress through a supply chain.
Challenges associated with RFID tag implementations Gaurav Kapoor et al 528
European Journal of Information Systems
It should also be noted that, in an overwhelming
majority of published literature in this area, the cost of
bar codes is deflated to cover just the cost of printing
them. The reality is that unlike RFID tags, which can be
embedded in an item (e.g., inside the casing) bar codes
have to be printed on the outside of the item where it is
exposed to the elements. In addition to the difficulty of
reading bar codes in different environments (e.g., direct
sunlight), replacing a destroyed bar code can be expen-
sive since it includes the cost of identifying the item
while it is in process, printing a replacement bar code,
and returning the item to its place in the process flow.
As human input is necessary in several of these steps,
the likelihood of error increases, which can result in
immeasurable loss.
Therefore, a major impediment of RFID adoption is the
vagueness of its cost-benefit analysis, which includes
both unknown cost structure and unclear future payoff.
In general, the cost associated with RFID adoption usually
includes cost associated with infrastructure installment,
marginal cost on various tags and receivers, and oppor-
tunity cost. While the installment cost and marginal cost
are relatively easy to measure, the opportunity cost is
usually rather difficult to quantify.
Privacy/security issues
Privacy issues are major stumbling blocks to RFID
implementations. Consumer protection organizations
such as CASPIAN (www.nocards.org) are vehemently
against the spread of RFID tags in consumer applications,
as they are miniscule and can be covertly attached to any
object that can in turn be inconspicuously tracked and
traced without the knowledge of the objects owner.
Moreover, it does not take much effort to associate tags
with their owners demographic and other information to
violate their privacy and security. There are several
examples of firms tagging their items only to face extreme
opposition from customers (e.g., www.boycottbenetton.
com). The information trail left by RFID raises serious
privacy/security concerns.
There have been several attempts at alleviating secur-
ity/privacy concerns. For example, the Blocker Tag (Juels
et al., 2003) helps consumers manage their live RFID tags
in a privacy-protecting manner. When present and
activated, the Blocker Tag deters readers from obtaining
information on RFID tags in the vicinity. However, it also
prevents communication between authentic tags and
readers. Moskowitz et al. (2007) proposed the Clipped
Tag, which enhances consumer privacy by shortening
(clipping) the antenna in the RFID tag thereby reducing
its read range. Although the Clipped Tag works well, in
principle, if the tag is no longer needed, it fails when the
tag is expected to operate normally at a later point in
time. For example, the customer of an RFID-tagged item
may have clipped the tag, but later decides to return the
item to the store. The item is no longer visible to the store
as much as it used to be before clipping occurred and
the utility of RFID tag on this item drops precipitously
from the stores perspective. A customer may also want
the tag to be operational after the item is placed in a
refrigerator at home to keep track of its inventory, etc. but
not in transit between the store and home. Disabling tags
is clearly not universally appropriate. There is a need to
empower customers with some form of opt-in/opt-out
choice process without any debilitating effect on the
smooth operation of existing systems.
Researchers have also developed a large number of
security protocols that can be used for secure commu-
nication between tag and reader (e.g., Piramuthu, 2008).
However, this is a very active and evolving area and while
new protocols are being introduced with increasing
frequency, vulnerabilities present in extant protocols are
continually identified. Although researchers proposing
some of these security/privacy protocols go the extra mile
in proving that their protocols are extra secure (e.g., Juels
& Weis, 2005) only to be shot down soon thereafter
by someone who identifies a loophole in the security
proof (e.g., Gilbert et al., 2005). Clearly, a security/privacy
protocol remains secure only until someone identifies its
vulnerabilities.
Back-end system bottleneck
Existing systems that gather, maintain, and process bar
code information can, in principle, be used to gather,
maintain, and process information from RFID tags.
However, the process may not scale up smoothly, as
a majority of existing systems are known to be operating
at close to their full capacity and any additional load on
them may drastically slow down their operation even in
the best case scenario. In the worst case scenario, they
could completely shut down the system due to processing
overload. RFID tags are notorious for generating huge
amounts of data as compared to bar codes. For instance,
bar codes have class-level information and the frequency
of scanning bar codes is generally quite low. RFID tags, on
the other hand, embed in them item-level information in
greater detail and they are relatively more frequently
scanned in most applications. RFID tags, therefore,
generate more information per scan and they are scanned
more frequently. This leads to an exponential growth in
the volume of data.
RFID-tagged systems typically generate about 10100
times the volume of data generated in bar code systems.
In large retail and supply chain organizations, this trans-
lates to daily data generation in terms of terabytes. It is
estimated that when item-level tags are used, Wal-Mart is
expected to generate about 7terabytes of data every day.
The difference is significant even if polling frequencies of
RFID tags and bar codes are the same. Its worse when
RFID tags are more frequently scanned and when active
tags are used. Mobility, as happens in any supply chain,
oftentimes necessitates increased frequency in tag reads.
Data collected are of no use if not used properly.
Most data mining systems that are used to identify
patterns in bar code data are generally not scalable, and
they are not developed to process data at such huge
Challenges associated with RFID tag implementations Gaurav Kapoor et al 529
European Journal of Information Systems
volumes. The systems in place for handling bar code data
at present, therefore, need to be upgraded to handle the
additional data volumes when RFID tags are introduced.
Without appropriate use of data generated by RFID tags,
an RFID system could end up being an expensive bar code
system.
Computing resources such as memory, communication
bandwidth, and computer hardware are generally of
primary concern when an organization that adopts RFID
systems has limited budget to upgrade the supporting
back-end systems. However, oftentimes it is the compu-
tational time that hinders the applicability and expend-
ability of an RFID system when the need for data storage
and processing time increases exponentially.
Consider the simplistic scenario where the data are
stored at n different locations (location here refers to the
scenario of a server that may be located in a centralized
building or spread over different geographical regions),
adding one attribute with space requirement of a units
will result in na units of additional storage requirement.
If attributes are used in m hierarchical computing pro-
cesses, the required computing time is in the order of n
m
(Figure 2). Moreover, in addition to increased number of
attributes, introducing RFID tags in supply chains would
likely also result in more frequent polling of these tags.
These result in more attributes as well as instances
corresponding to each tag in the system. In a classical
database analysis context, in addition to additional
storage space requirement, this translates to an exponen-
tial increase in required processing power.
Figure 2 illustrates that without evolutionary computa-
tional breakthrough, such as quantum computing,
current computing technology is only able to increase
its computing power in a linear manner by stacking up
processing units. RFID data processing requirements, on
the contrary, demand exponentially increasing proces-
sing power with an increasing scale of information. The
computing bottleneck occurs when scale of information
and associated computing demand are large.
Risk of obsolescence
The technology associated with RFID-related security/
privacy protocols and industry standards have been evolv-
ing rapidly over the past decade. It is natural for potential
RFID adopters to consider the risk of obsolescence as well
as the uncertainties in future payoffs. On the other hand,
it is not uncommon for newly introduced applications
on existing RFID systems to generate unexpected benefits
to the organizations involved (Hendricks, 1992; Tellis &
Golder, 1996). Consequently for business practitioners
who are risk averse, it is difficult to make decisions when
the payoff for RFID projects is extremely unpredictable.
For example, the current system may be obsolete in a short
period of time or additional unexpected benefits may
result from unplanned new advances (e.g., in technology)
in the future.
While the problem with the risks associated with future
payoff is a common issue to any new technology
investment scenario, there are some unique character-
istics associated with RFID adoption. Firstly, an RFID
project usually requires continual investment over a
considerably long time span and failure could happen
at any time. Secondly, the uncertainty of future payoff
is very volatile compared to most other new technologies.
The causes of this large variance include (1) potential
obsolescence; (2) possible unplanned advances (in tech-
nology, among others); and (3) uncertain adoption com-
patibility from supply chain downstream and upstream.
Although the actual payoff may, also, be better than
the expectation value, the risk associated with RFID adop-
tion can, nevertheless, not be ignored. A Real Options
approach may be appropriate in this context, given
the risks associated with RFID investments (Figure 3).
RFID Data Processing
Time Requirements
Computing Power
Bottleneck
Figure 2 Comparison of the speed of growth of RFID data
processing requirement and (computing) processing power.
I
1,
Initial Investment
P
11
P
12
t
0
G
12
, Cease Investment
G
24
, Cease Investment
P
21
P
22
P
23
P
24
P
31
P
32
P
33
P
34
P
35
P
36
P
37
P
38
G
32
G
34
G
35
G
36
G
37
G
38
G
33
G
21
, 3rd Phase Investement
G
11
, 2nd Phase Investement
G
22
, Cease Investment
G
23
, 2nd Phase Investement
G
31
t
1
t
2
t
3
Figure 3 RFID investment decisions across time.
Challenges associated with RFID tag implementations Gaurav Kapoor et al 530
European Journal of Information Systems
Here, the implementer has the option to bail out or
proceed further with investments as situations dictate
over time.
Read error
A majority of the literature on RFID assume that once
RFID tags are affixed on items, they can be tracked and
traced without any problem. Although it is generally
assumed that data read from RFID tags are highly
accurate, variations in accuracy can and do occur due
to several reasons. Jeffery et al. (2006) claim that over 30%
of RFID tag reads are routinely dropped. Although the
extent of dropped reads varies across domains and are
context-specific, figures in the 6099% range are not
uncommon.
These read rate errors could occur due to several
reasons including the presence of RF-impenetrable (e.g.,
metallic) objects between tag and reader, inconsistencies
across different readers, chip and antenna defects, noise,
reader and/or tag collisions, among others. While some
of these can be prevented or their deleterious effects can
be alleviated, it is difficult to guarantee a 100% read rate
under any circumstance due to the dynamic nature of the
process of reading RFID tags as well as their ambient
conditions.
A tag read could result in several different scenarios true
positive, true negative, false positive, or false negative. True
positive (or, true negative) refers to the case where the
reader confirms the tag is present (or absent) when the tag
is actually present (or absent). False positive refers to the
case when the reader confirms that the tag is present when
indeed it is not. False negative refers to the case when the
reader confirms that the tag is absent when indeed it is
present. In a supply chain management context, false
positives and false negatives generate their own distinctive
dynamics. For example, too many false positive reads could
lead to stock-out situations resulting in related loss in
revenue and customer goodwill. Too many false negatives,
on the other hand, for example, could result in excessive
inventory holding cost and related loss due to spoilage,
obsolescence, etc.
Several researchers (e.g., Tu et al., 2009) have attempted
to address this issue with varying degrees of success.
Clearly, RFID tag read error cannot be completely
eliminated. However, to benefit from detailed item-level
information provided by RFID tags (e.g., Zhou, 2009), the
read rate error needs to be reduced to a minimum.
Economic disincentives to share item-level
information
Conflict of interests between sellers and buyers to share
RFID-generated information is another major impedi-
ment to RFID adoption in supply chain management.
For example, Wal-Mart requires its vendors to be
equipped with up-to-date RFID infrastructure according
to Wal-Marts compatibility standards. While Wal-Mart
will definitely benefit from shared information from up-
stream, vendors are reluctant to share such information,
which traditionally is kept as private, even without
considering the extra cost associated with the revelation
of such information.
As it is not uncommon for a supplier to supply items to
several buyers, sharing of RFID-generated information
(including, for example, inventory information) could
lead to serious deteriorations in competitive advantage.
Although the nodes upstream in a supply chain do
benefit from reduction in variance (bullwhip effect)
across the supply chain, the nodes further downstream
benefit the most. The irony is that the nodes further up
in the supply chain are the ones who incur a majority of
the costs associated with RFID tagging, etc. while they
generally benefit the least from such implementations.
Given this scenario, the nodes upstream have only
minimal incentives, if any, to share item-level informa-
tion with nodes downstream.
That is, only the categorical information is transferred
along with the sold item. The seller generally provides
only aggregate information on the sold items such as
minimum quality standard (MQS), whereas the buyer
bears the cost associated with obtaining the minimum
required sample and verifying that these MQS are met.
An advantage when RFID tags are embedded in these
items is that the specifications are transparent, and
therefore preclude the need for sampling. Economic
disincentives to share RFID information, nevertheless,
has become one of the major concerns for companies in
a supply chain to adopt RFID technology when the
benefits are perceived to be only marginal.
Evolving standards
As with any widely adopted technology, regulatory stan-
dards addressing various facets of RFID applications are
necessary to ensure minimum level of product character-
istics including quality, inter-operability, reliability, and
safety. While there are different standards and guideline
developers at the international (e.g., ISO), national (e.g.,
ANSI, BSI), pan-industry (e.g., EPCglobal, AIM Global), and
industry-group (e.g., AIAG, Air Transport Association)
levels, the effects of globalization necessitates that these
standards are compatible for RFID tag applications. Given
that there are several different types of RFID tags and
readers that operate across national boundaries and
applications, universal standards that address the entire
application spectrum are necessary to improve the inter-
operability of these standards. RFID standards generally
address issues related to tag and reader frequency, air
interface protocols, data structure, data content and format,
tag and reader types, tag and reader conformance, code
assignment, and data communications.
The Global RFID Interoperability Forum for Standards,
funded by the European Commission to improve colla-
boration and maximize global interoperability of RFID
standards, has identified more than 125 RFID standards.
However, there is a lack of consistency among these
(e.g., EPCglobal and AIM Global have their own emblems
for indicating that a particular product or its packaging
Challenges associated with RFID tag implementations Gaurav Kapoor et al 531
European Journal of Information Systems
contains an RFID tag). Supply chain participants and
standards developers need to be aware of the differences
and overlaps among existing standards and be able to
create new standards when necessary while ensuring that
these interoperate with existing standards.
For example, several ISO/IEC standards exist for RFID
applications including ISO/IEC 18000, ISO/IEC 15961-3,
ISO/IEC 17363-7, and ISO/IEC 18185. The ISO/IEC18000
series was developed to determine the use of the same
air interface protocols for RFID item management.
Specifically, ISO/IEC 18000-3 defines the air interface
at 13.56MHz to be used for a single read from a short
distance that is ideal for personal identification applica-
tions, the ISO/IEC 18000-6 is for batch-reading from
medium-range read distance that is ideal for high-speed
object identification in a general supply chain context.
The DASH7 Alliance supports broader use of ISO18000-7
standard to track a wide range of objects including
vehicles, shipping containers, pharmaceutical products,
hazardous materials, perishable goods, and manufactur-
ing and operational equipment so the tagged object can
move through the supply chain without any disruption.
The Health Industry Business Communications Council
recently approved a set of standards for RFID tags for
labeling and tracking medical products (ANSI/HIBC 4.0)
that include guidelines (e.g., the use of 13.56MHz high-
frequency coding) for tagging healthcare products to
prevent radio frequency interference with medical devices.
In addition to the technology standard, the regulatory
aspects differ among countries. These differences need to
be addressed for widespread RFID adoption in supply
chains and to alleviate related barriers to global trade.
Moreover, from a supply chain perspective, most stan-
dards address the container level or pallet level handing
of materials and there is a need for standards that address
tagging at the item level. This is an evolving process, and
new standards are continually being proposed, evaluated,
and approved. Nevertheless, the lack of and inconsisten-
cies among standards only slow down the rate of adop-
tion of RFID tags in general supply chain applications.
Conclusion
We considered, and hopefully raised awareness on,
several critical issues that can possibly hinder smooth
RFID implementations in supply chains. Research to
address these issues is sorely needed and raising aware-
ness is a necessary early step in this process. Although it is
generally believed that RFID tags will be incorporated
extensively in supply chains, it is only a matter of time
before this becomes a reality. However, to facilitate
smooth transition from bar code implementations to
RFID implementations, the issues that we considered
need to be addressed. While some of these can be
completely addressed or their deleterious effects can be
alleviated through appropriate means, others (e.g., own-
ership transfer without a TTP) are rather challenging to
accomplish with current technology.
We conclude by summarizing the many issues facing
the RFID industry into two main categories: the technical
issue and the economic issue. Although emerging
technologies have had continual impact and innovative
applications in RFID have been developed over the years,
we cannot avoid the fact that inherent technical con-
straints have hindered the development and adoption of
RFID devices in many industries. Among the technical
issues, we considered four of the most significant ones:
(1) ownership transfer issue; (2) privacy/security issue;
(3) computing bottleneck issue; and (4) read error issue.
So far, both academic and industry researchers in this
area have devoted a significant amount of their resources
to address some of these issues with promising results.
We anticipate a steady increase in technical advances as
the area gains more prominence in the very near future.
Economic issues also have enormous influence on RFID
adoption in supply chain management. Among them, we
considered four prominent issues including issues related
to (1) cost-benefit considerations; (2) opportunity cost
considerations and risk of obsolescence; (3) information
sharing among nodes in supply chains; and (4) the need
for standards that facilitate inter-operability and global
trade. Just as the Internet has changed the way people
live, the disruptive technology that is RFID will change
the way business operates in a revolutionary manner.
New business phenomenon, innovative economic strate-
gies, and improved business process controls that have
emerged over the past several years have been gaining
attention from both business sectors and academic litera-
ture alike. We believe that by addressing the economic
and technical challenges facing this industry, we will
be in a better position to help the industry better
understand this technology and its untapped potential
in supply chain applications.
Acknowledgements
The authors thank the anonymous reviewers, Associate
Editor, and Editor for their helpful suggestions.
About the authors
Gaurav Kapoor received his Ph.D. in Information
Systems from the University of Florida. His research
interests include RFID systems.
Wei Zhou received his Ph.D. in Information Systems
from the University of Florida. He is Assistant Professor of
Information Systems and Technologies and a member of
the RFID European Lab at ESCP Europe. His research
interests include RFID-enabled item-level information
visibility, Internet advertising, and knowledge-based
learning systems.
Challenges associated with RFID tag implementations Gaurav Kapoor et al 532
European Journal of Information Systems
Selwyn Piramuthu is Professor of Information Systems
at the University of Florida. He is a member of the RFID
European Lab at ESCP Europe. His research interests
include RFID systems, pattern recognition and its
application in supply chain management, computer-
aided manufacturing, and financial credit-risk analysis.
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