Another issue is the price. Right now, the notion of a 30- or 40-cent tag on a bottle is still something hard to imagine because
that adds quite a bit of cost to the product. If you think about millions of bottles, if not tens of millions of bottles of
product a year, just the tag cost alone is adding $100 or $200 million in terms of your manufacturing operations. And that's
just the tag—companies will also need readers, scanners, and some of the application software to integrate their manufacturing
and order-management systems. But I think Moore's law [the idea that data density doubles every 18 months] applies here, as
it has in a technology environment. And that's starting to translate into the cost coming down a little bit while we are seeing
a simultaneous increase in the performance and reliability of the technology.
How is the environment surrounding the adoption of these technologies changing?
As we speak, EPCglobal is working through all of the standards that need to be established in the form of user requirements
to make sure that we don't end up with a Betamax and VHS environment.
Then there are the issues of privacy. As real or perceived as they are, they're there. And we need to start thinking about
the notion of more broadly educating the healthcare community, patients, and consumers about the reality and the myths of
tagged items. They need to know whether or not drive-by scanning (the ability to read RFID tags from afar) is really something
they need to worry about in their neighborhoods, or if there are other privacy concerns related to knowing at that level of
detail what drugs people are taking home with them. In time, that can probably be addressed with more education and appreciation
for what the technology can and cannot enable.
Another huge issue is the pedigree requirements emerging at the state levels, and figuring out to what extent that will actually
push back to the manufacturers. California, for example, is now one of the only states that stipulates that pedigree must
originate from the manufacturer. Most of the other states would suggest that pedigree only applies to those who are actually
selling and distributing product, not necessarily the manufacturer who made it. And there are things going on now where the
states are involved with industry participants to try to establish some sense of what we would call "minimum construction
standards" around pedigree processes, and data formats or data requirements.
How disruptive are RFID and EPCs ?
It's tough to accurately predict how disruptive it will be. After all, there are different dimensions of what a future environment
may involve in relation to how things are done today. But if you think about the shop floor itself, and what it takes to actually
tag and commission and launch a product with the tag on it at that point—well, I'm not going to say it's easy. The fact is,
it is a label-like type of process. So companies must figure out a way to apply it, and then read that tag, and then associate
that tag or that EPC with the information that they care to associate with it.
So there are process changes, there are some technology changes, and some modest infrastructure changes inside the four walls.
But nothing so dramatic that requires people to rip out finishing lines to put in new ones to accommodate this type of environment.
What's more, solution providers are looking to provide migration paths for the industry. So moving from an existing warehouse-management
solution environment that accommodates traditional bar codes to one that can accommodate EPCs and RFID is something that will
be more evolutionary than revolutionary.
What new pathways will RFID create?
It opens up a lot of new opportunities for different kinds of trading relationships. The kind of data that's now created,
how that's exchanged, and the value that data has to manufacturers is something that will likely create new kinds of relationships
with their trading partners.