Tracking chemicals through the manufacturing and distribution process is a critical requirement for Dow Chemical, to ensure safety and operational efficiency.

In 2004, identification technologies such as RFID tags had gained significant buzz due to initiatives by the US Defense Department and Wal-Mart to mandate their use in supply chain and inventory management applications. So CIO Dave Kepler periodically asked his IT staff whether Dow could take advantage of these technologies. The repeated answer: RFID was not mature enough.

But Kepler wasn't sure the scepticism was warranted. So in late 2005, he asked his staff to think about RFID differently. His request: Define the problems first, then see which technologies might be useful to address them - viewing RFID technology as a possible tactic in the larger product tracking strategy. "He didn't want technology for technology's sake, but he did want tight alignment to the corporate strategy," recalls Dave Asiala, a shared services IT director at Dow, who served as a member of the strategy development committee and assumed leadership of the implementation efforts.

Today, Dow has several pilot projects in place to test RFID and other location-oriented technologies such as GPS, two-way radios and traditional bar codes. Early projects have shown that sometimes – such as when it's paired with a sensor log to transmit environmental readings during shipments – the use of RFID makes sense. But at other times bar codes still prove cheaper and easier.

Dow's not alone: Despite years of discussion and "here's what you could do" stories from vendors, RFID remains in the pilot stage at many firms, especially outside the established retail warehouse and distribution use on pallets and shipping containers. Both the RFID technology and marketplace are fragmented and slow-moving, analysts say, and costs remain high. A recent Computing Technology Industry Association (CompTIA) study showed that while 84% of providers expect to offer RFID technology in the next three years, 66% say their customers have yet to implement RFID. That doesn't mean you should ignore RFID.

Dow's "keep your eyes open" approach is the right one, says Colin Masson, a research director at AMR Research. By itself, he says, RFID is still not a strategic technology that CIOs should have high on their agendas. But it can be useful in service of those strategies.

Making your case

Testing the business case for an RFID project is the first consideration for a CIO. Sometimes, RFID is the wrong solution. For example, Dow uses bar codes and handheld readers to track the large metal containers used to transport chemicals. RFID tags cost more, so Dow would want to reuse them to minimise the overall price. But it's hard to find RFID tags that can survive the sandblast cleaning the containers go through as their chemical contents are replaced, Asiala notes, so applying a bar code is simpler and cheaper.

In other cases, using RFID does make sense for Dow. The company is testing active tags placed over the fastener that holds each shipping container closed; the tags connect to an internal sensor and clock. The combination lets Dow track environmental conditions such as temperature or moisture, so a log is stored on the tag - essentially, a shipment e-pedigree. That log can be checked as the container passes through various points on its journey, giving early alerts to possible problems, Asiala says.

RFID gurus

Because RFID is a tactical, enabling technology, CIOs will likely find it as part of a larger project or technology proposal. That means that RFID vendors are typically subcontractors to another company such as 3M, NCR, Oracle or SAP, or to a systems consultant such as Accenture, BearingPoint, Capgemini, Computer Sciences, IBM, Infosys Technologies, SAIC, Siemens Energy & Automation, Tata or Unisys. RFID-specific consultancies include AccuCode, Advanced Solutions for Tomorrow, Avaana, Panatrack, RafCore Systems, RFID Global Solution and Savi Technology.

Often, vendors and consultants focus on specific industries. For example, Systech focuses on the pharmaceutical industry, Xterprise on retail and supply chain uses, ADT and Axcess on building security, Aleis International on livestock tracking, Kestrel Wireless on rights management for retail (such as unlocking DVDs once they are bought), Ciber and FileTrail on legal case management, Apriso and Escort Memory Systems on manufacturing plants, Assa Abloy on the hospitality industry, and Zonar Systems on transportation.

In some cases, tag makers such as Alien Technology, Avante International Technology, NXP Semiconductors, RCD Technology, RSI ID Technologies, SecureRF and Texas Instruments act as the lead vendor. Similarly, so do reader makers such as ACC Systems, FEIG Electronics, LXE, Motorola, SecuriCode and Socket Mobile.

In a few cases, networking vendors such as AeroScout, Blue Vector Systems, Cisco Systems, Ekahau, Reva Systems and WhereNet provide RFID technology as part of a larger location-oriented network deployment.

The same tag is also used in a more traditional inventory management application: to locate and redirect a container in transit, for instance, when a customer cancels an order but a different customer wants the materials. When the container enters a port, the shipping firms can find the affected container and move it to a new ship destined for the new customer, rather than ship it back to its origin first, as had been standard practice, Asiala says.

Most experimentation today in using RFID beyond inventory management is happening in the medical industry, notes Michael Liard, a research director at ABI Research. Like Dow's Kepler, hospital CIOs have discovered that RFID can sometimes be a useful tactical weapon to support a larger strategic need.

Reducing medication errors is a common goal at hospitals. That's why the Friedrich Schiller University Hospital in Jena, Germany, is testing the use of RFID tags on patients' ID bracelets, nurses' ID badges, and drugs and drug containers. Before a nurse administers a drug, she scans herself, the patient and the drug. A software system checks the patient and drug IDs against the pharmacy instructions to make sure there are no medication errors. The drug type and amount, as well as the time of delivery and the ID of the nurse who administered it, are all logged, so the hospital can quickly analyse medication history in case of a problem, says vice CIO Martin Specht.

While the hospital could use bar codes to accomplish the same goal, it decided to test an RFID-based system from SAP and Intel because Specht envisions using a similar approach to track blood products - where RFID-sensor combinations could also monitor temperature to ensure blood does not get spoiled before use. It made sense to start with an RFID infrastructure given the likely future uses, he says.

Rich Schaeffer, vice president and CIO of St. Clair Hospital in Pittsburgh, started with a bar code - based system for tracking and validating medication dispensing. But nurses were convinced the scanning of their ID, patient bracelet and drug package container slowed them down, even though Schaeffer's studies showed otherwise. So he added RFID tags to patient bracelets and nurses' IDs (at the cost of about $1 each) so nurses could scan faster with their handheld readers. But he kept bar codes on the medications, mainly to save costs - "it's too costly given the number of tags we'd need," he says - and because the robotic drug dispensary system supports only bar codes. To support both bar codes and RFID tags, he uses a dual-technology reader from Socket Mobile.

At the University of Ghent Hospital in Ghent, Belgium, CIO Bart Sijnave has decided to keep his bar code-based system for drug dispensation tracking. "It's a cheap solution that works," he says.

But Sijnave is testing other RFID uses where the productivity benefit seems to outweigh the costs. To reduce emergency response time in the intensive care unit, the hospital has installed a dense wireless LAN to connect various monitors so they can transmit readings to the patients' electronic medical records and to nurses' monitoring stations. It uses the same Cisco wireless LAN and location software from AeroScout to detect where these often portable monitors are on the floor (by seeking a signal from the RFID tag), and highlights the location to the nurses if a monitor's alarm goes off. "The nurses can now act more quickly," Sijnave says.

Extending RFID's reach

RFID's initial applications have centred around inventory management, such as tracking shipping containers across the supply chain, and now many enterprises are exploring how to get additional benefit from those investments. Wholesale drug company H.D. Smith has used RFID on pallets for several years, plus individual RFID tags on narcotics bottles, "increasing the security of each product along the supply chain," says Rob Kashmer Jr., the company's vice president of IT. The firm expects state governments to soon require the individual tags on drug bottles for safety purposes. Kashmer's team aims to have a leg up when those RFID compliance requirements go into effect.

Denver law firm Kamlet Shepherd & Reichert is using RFID tags in a traditional inventory management approach, tracking movement of case files within the law office, and expects to expand the business benefits over time, says Technology Director Adam Yantorni. By adapting the firm's FileTrial software to cover other materials, such as furniture and computer equipment, Yantorni plans to build a general-purpose automated inventory management plan. The firm will also grab opportunities to integrate its RFID database with its document management software, to improve workflow.

Another established use of RFID is for security applications, such as door locks that read RFID-enabled badges, notes Rebecca Wettemann, a vice president at Nucleus Research. But oil giant BP is testing a new twist on that approach at its refineries and oil and gas platforms. BP personnel wear RFID-equipped security badges that broadcast their whereabouts each second to a tracking application, so safety managers can see where everyone is. The system also helps analyse fast-moving loads and alerts drivers if they are on a collision course, says Curt Smith, BP's application director.

RFID cost and deployment barriers are falling, notes Wettemann. "A few years ago the CIOs' questions were all about tag technology and costs. Now it's all about how do we evaluate the technology for specific uses," she says. Even if RFID doesn't turn out to be the right tactic approach for a current business need, it may be the right tactic down the line, she says.