Although RFID technology has been utilized for years, many still are having a tough time of it. Despite widespread promise, many technical issues remain unsolved. Now comes word that Gen 2 tags are ready, which begs the question: Why go through the trouble of implementing Gen 1?

Radio Frequency Identification (RFID) is one of those “love it or hate it” kind of technologies. Companies with a lot of resources certainly have no problem using the it — in fact, the airline, healthcare and automotive industries have been utilizing RFID technology for years. But the poor schlubs being forced to ship RFID tagged goods to Wal-Mart, based on the mega-retailer’s own mandates, are having a tough time of it. From their perspective, RFID is costly and unreliable, even though they understand the benefits the technology will ultimately yield. Now comes word that Gen 2 tags are ready, which begs the question: Why go through the trouble of implementing Gen 1?

I have talked to many VP- and C-level executives in charge of implementing RFID infrastructures. They all agree that RFID will become a force to be reckoned with, believing that it will one day replace the common barcode. The key phrase here is one day. There are myriad technical snafus to work out. From proper placement of RFID tags and readers to dealing with interference and inaccurate read rates, there remains a lot of RFID work to be done.

The real problem is that manufacturers are using RFID for much more than simple tracking and tracing…there are tons of data these guys want to use, trapped inside the Electronic Product Code (EPC) of each and every RFID tag. Manufacturers hope one day to be able to make sense of EPC data, by using middleware applications, to help reduce out-of-stocks at the store level and boost accuracy of shipments to their retail partners. Organizations such as EPCGlobal are trying to create a set of standards so that manufacturers won’t have to tag goods in multiple formats. Speaking of standards…

RFID Journal reports that Wal-Mart has now set a sunset date of June 30, after which it will no longer accept the use of Gen 1 tags on the cases and pallets it receives from its suppliers. So all of the blood, sweat, tears and money spent on Gen 1 tags are now those of the past. Here’s how Wal-Mart spins it:

“Toward the end of last year, we polled our suppliers, to get an idea of when they thought they could switch to Gen 2 tags,” says Simon Langford, Wal-Mart’s manager of RFID strategies. Most of them indicated that by the second quarter of 2006, they would have enough Gen 2 tags and the infrastructure and middleware upgrades needed to support Gen 2 tagging, he explains.”

So what does “most” mean? Fifty (50) percent? Seventy-five (75) percent? Wouldn’t 100 percent make the most sense? What happens when Gen 3 comes out? These types of questions are commonly asked by manufacturers, though rarely do they get a clear answer. You see, not only is Wal-Mart driving all of this RFID stuff, the company also makes up to 30 percent of many manufacturers’ revenue. Catch my drift? For now, manufacturers are forced to do this RFID thing, which will show little or no return on their investment. Just the cost of doing business with Wal-mart.

My guess is that the folks perceived to be RFID laggards will benefit the most. By the time they are up and running with their own RFID strategy, most of the technology’s growing pains will have been resolved.