It’s security vs. the supply chain - Who will win?

Wednesday, September 1, 2004

The theme has resonated loud and clear over the past couple of years: The advancing and inevitable digitization of all security technologies has put the industry on a collision course with IT departments within corporations and the government. The availability of off-the-shelf networking technology and existing network infrastructures in the enterprise have made integration easier, the security network more pervasive and is now delivering greater economies for the end user. Security directors and integrators alike now consider the IT department and the network a boundary they have to deal with - to either cross or ignore.

Just as the industry accepted the notion of dealing with another department, another shock is about to hit - supply chain.

The announcement by Wal-Mart that its suppliers will be required to place RFID tags on all items has set off the first 21st- century technology gold rush. Wal-Mart, which has set the first of next year as the deadline, appears to benefit most through the reduction of go-to-market costs.

The announcements surrounding RFID development are based upon the work of the MIT Auto-ID Center, now Auto-ID Labs. Auto-ID Labs focused its efforts to analyze and propose standards for RFID technology and how the technology helps deliver supply chain efficiencies through the automatic identification of goods moving from manufacturer to distribution center to store to consumer. Since then, that charter of innovation has shifted to a group named EPC Global.

Claims about the size of the opportunity have not been reserved. Yet, more than one article professes a new RFID-centric world, where everything is tagged and tracked wirelessly in some form or fashion. And, they say it will be bigger than the Internet.

RFID industry analysts estimate that by 2008, 30 billion RFID tags will be on everything from toothpaste to cosmetics and all will communicate to provide their source, manufacturing date, destination and so on. Venture Development Corp., for example, found that by 2007, the supply chain and transportation market for RFID would be in the area of $700 billion, dwarfing security access control at $500 billion.

The interesting part of this development is that the supply chain (also known as ERP) specialists are not schooled in security solutions. And, the security industry put RFID tagging on the map 40 years ago with electronic article surveillance. Not to mention the industry’s growing success with RFID access control.

So far, an over-weighted reliance on passive RFID tagging technology shows a lack of understanding of the security issues. Does anybody really believe a knowledgeable thief won’t figure out that a passive (e.g. proximity) tag on a pallet of narcotics can be easily removed or compromised? Hold on to your pharmaceuticals!

In fairness, the EPC Global group and industry representatives have identified some security issues in this Holy Grail approach of ridding industry of waste. For example, they identified the need for security in the supply chain by beginning to specify active or battery-embedded RFID tags for trucks and their access control. What better way to summarize that we have either a challenge or opportunity here?

People and groups within this industry have already identified security issues in the supply chain as their opportunity. Thus, we have another and perhaps more significant boundary for security directors and security system integrators to address. How do you deal with this RFID technology wave du jour? Do you exert your expertise, thereby raising your profile in the organization? Or, do you quietly stand aside and hope it blows over? It all boils down to boundaries.

An analogy to this occurred when telecommunications was de-regulated. The then lowly telecom manager rose to prominence as chief telecommunications officer. Is the path of security manager or director one that leads to chief security officer? The early signs are that it does. The question is, is it a challenge or opportunity?

Allan Griebenow is president and chief executive officer of Axcess Inc. He can be reached at