The industry buzz says that RFID is the next great ship sailing to the promised land of automation - in this case, supply chain automation. Last year's ratification of EPCglobal's Generation 2 standard (for multi-vendor interoperability between chips and readers) joins the ongoing mandates from Wal-Mart, the Department of Defense and the FDA. With Cisco's announcement earlier this month of its new RFID add-on board , the technology appears to be on course for mass adoption.

Despite technological progress, serious issues remain, including an almost prohibitive cost (at least for many of the most promising applications), system design unknowns and concerns over reliability and security. Developers are optimistic about RFID's future but remain cautious about its current capabilities.

"If you look at RFID's history, you'll see tremendous amounts of promise and little achievement of those promises ... the technology is still immature," says Daniel Engels, director of research for the Massachusetts Institute of Technology's Auto-ID Laboratory. "We are still very much in the overhyped phase. As I talk to people implementing, they are disillusioned with the reality of this technology and that has in many ways slowed the adoption and enthusiasm."

Expensive option

By now most network executives have heard enough of the RFID buzz to understand its ultimate promise. To recap: With RFID, objects are equipped with tiny radio frequency tags that constantly broadcast their identity and whereabouts to strategically stationed readers. With EPCglobal's Electronic Product Code standard , every tag is a unique identifier. As an object passes one reader after another - or even if it stays in one location - it broadcasts its identity and location. This lets a company eliminate manual processes, including scanning bar codes and tracking shipments with paper documents. When RFID is adopted throughout the supply chain, a slew of new material management practices will be born. Lost shipments hiding out in the wrong part of the warehouse? A thing of the past. Keeping an extra 10% of raw materials on hand to cover those lost shipments? Unnecessary. Manual inventory verification? Gone. Real-time stock reordering? Absolutely.