CISCO's technical man in Scotland, Richard Moir, is just back from the European Radio Frequency Identification Centre at Bracknell with some unsettling news.
One of the largest technology companies in the world has issued a first-time warning to corporate Scotland - failure to prepare now for the new era of radio frequency identification (RFID) business applications will lead to significant losses in productivity and profit.
Mr Moir points out that while wireless technology may be a recent phenomenon, in many parts of the world it is fast becoming standard in terms of usage.
RFID tags are tiny intelligent data storage microchips attached to an antenna that emit a unique serial number by radio over short distances. Key business applications range from electronically tagging sensitive documents such as stock certificates and manuscripts to tracking consumer items like supermarket shelved products, or even library books.
Mr Moir says firms need to think about putting in place operational improvements associated with RFID to drive forward business.
"Start thinking now about the impact of integrating RFID into business model, networks and technology infrastructures," he says. "Then, full advantage can be gained of substantial benefits the technology will undoubtedly bring as it matures."
Forrester Research predicts 42 billion RFID tags will be in use by the end of the decade, and analysts forecast a 40 per cent compound annual growth in usage in the commercial supply chain.
Mr Moir explains that RFID tags can each store some two kilobytes of data. "Business networks will, therefore, have to filter a tremendous amount of RFID information, both essential and non-essential. And if they are not prepared, systems will become overwhelmed.
"It requires a transition from today's networks to ones capable of handling this increased load, towards solutions that are scalable, resilient, manageable and secure."
However, a perceived downside is that some fear RFID threatens civil liberties as microchipped surveillance devices become cheaper. Experiments are under way to control access by persons to restricted areas in buildings, stores, airports and train stations.
Mr Moir elaborates: "Society should be careful that RFID is used to track products, not individuals. It would be highly emotive if chips were implanted in ID cards holding information about a person."
The European Union is developing hi-tech privacy guidelines for manufacturers, to ensure they develop privacy-compliant products, and to avoid individual tracking and anything that smacks of underhand surveillance tricks.
And on the bright side, Mr Moir says: "Just imagine never again misplacing your keys, losing track of that essential item, or running out of milk? This is the everyday reality already available.
"And if such a capability sounds attractive, on a personal level just consider the operational improvements that such RFID applications can achieve to drive a business."
The Cisco technical guru understands the argument that RFID may sound little more than an advanced barcode system, but adds: "It actually offers significant advantages over that more traditional data collection method.
"Principal among these is that an RFID tag can not only store a great deal more information, it can also be reprogrammed and re-used. So, multiple items can be scanned simultaneously and its memory programmed, with the option of permanently locking or even erasing it to protect privacy."
Mr Moir says that RFID applications are becoming common across a variety of sectors like pharmaceuticals, construction, healthcare, transportation and defence.
"And it's set to have a particularly profound effect in the retail, logistics and distribution sectors," he claims. Both supermarket giant Asda and now Tesco are implementing RFID applications.
In the retail environment, for example, RFID tags can be put into a paper label or even sewn into fabric. This means products are constantly tracked giving a real-time picture of stock levels both on shop floor and in the storeroom.
"It means that a tracking system can be linked to ordering systems of several distributors to allow store staff to make rapid decisions based on current inventory levels, to avoid selling out or stockpiling."
Major industry players like IBM, Procter & Gamble and Asda-owner Wal-Mart strongly support RFID.
"The momentum behind this wireless technology is clearly one of driving efficiency and cutting down on unnecessary costs and waste," notes Mr Moir. He adds it is those companies that take advantage of early opportunities to drive value with RFID that will be in a good position to influence the market and compete at the highest level.
"What's clear is that RFID is an inevitability and organisations failing to make the necessary transformation over the next few years may ultimately lose competitive advantage," he warns.
Mr Moir says industry leaders are increasingly looking to emerging networked technologies as a "strategic weapon" to deliver a competitive advantage.
He says: "Aggressive competition, increasing globalisation and consolidation, together with smarter and more demanding customers, tightening margins, and new business models are all helping to put pressures on retailers."
Mr Moir points to the networked supply chain that is vital to all businesses. Here, integrating back-office systems is essential and appropriate internet protocol technology is smoothing the way by providing a universal platform for data communications. By using RFID to ensure that when a product is purchased, a replacement is automatically launched into production, a business can achieve a greater efficiency and remain agile.
In terms of a firm's vital customer relationship management (CRM), according to Jupiter Research a massive 76 per cent of multi-channel retailers are still unable to track customers across those channels.
But by integrating CRM using RFID, this allows the retailer to use its website to influence in-store purchases. This is essential as the survey shows that online shoppers tend to be higher spenders than those who actually visit a store.
It's considered that RFID can increase the traffic of the average store's network by 500 per cent, along with having a significant productivity boost across sectors.
Mr Moir concludes by pointing out that by 2008 it's estimated that customers will be spending more than £2.1 billion annually on RFID. AMR Research believes that the RFID market could reach £8bn-£16bn two years later.
"From tag to application, RFID solutions will need to be powerful enough to support current and future applications."
His company is actively engaged in industry forums to develop best practices on RFID and ensure privacy of any personal information that may be associated with data collected via such technology.
Cisco is a member of EPC Global which has adopted privacy guidelines for its members to use. They include a provision requiring notice to the consumer of RFID use and giving a choice about removing a tag if need be.
Technology pandas to new hopes
THE adoption of radio frequency identification into business - together with numerous other commercial applications - is rapidly transforming the new wireless technology into a must-have across the sectors.
In fact, RFID is becoming quite ubiquitous. Every one of the 2.3 million tickets sold at next year's football World Cup will have a sensing chip embedded in them.
Even the 163 captive pandas in China are now chip monitored to ensure they don't stray off the beaten track.
At Bracknell, close to Heathrow Airport, a permanent, independent centre has been established to demonstrate the latest RFID technologies and applications.
Cisco, along with other hi-tech giants like Microsoft and Cable & Wireless, together with the DTI and Cranfield School of Management, is behind the centre. There, nestled in the heart of the Thames Valley hi-tech belt, technical explanations are given on how RFID is affecting our everyday world.
It includes the retail supply chain, cold chain distribution for temperature-sensitive goods, fixed-asset maintenance and transport logistics. Also, healthcare management of pharmaceutical and blood analysis, and asset and document tracking.
The RFID centre is particularly relevant to professionals, executives and management involved in the production, packaging, movement or sale of goods.
Involving discreet devices emitting radio signals that encode item, price and numerous other data, all-in-all RFID tags are being hailed as the successor to barcodes, manual inventory checks and anti-theft devices.