Electronic tagging using RFID - radio frequency identification - will create a sea-change in the way items are tracked as they move both within a single business and across a supply chain.
The latest Technology, Media and Telecommunications report from business consultants Deloitte Touche Tohmatsu predicts that this is the year RFID will take off, providing businesses with a complete insight into where items are located at any time of the day or night. This, says the report, will cut fraud, reduce errors and help improve all manner of business operations.
Although supermarkets such as Tesco are already using RFID on pallets, the ability to trace individual items through the supply chain will inevitably lead to greater efficiency where it matters - the customer-facing operations. A store manager will be able to identify why products in stock are not on shelves and take action to remedy the situation.
Worryingly, much of the pilot work that has been undertaken has largely been secretive, as early adopters of RFID attempt to gain a competitive advantage.
But with a billion tags expected to be in circulation in 2005, many more businesses will be required to gain an understanding of the technology. How will RFID affect the business, what are the opportunities and where are the pitfalls are questions few businesses can afford to ignore.
Scant details have emerged into the public arena from Wal-Mart's RFID pilot scheme, even though it is arguably the most important RFID trial in existence as its strategy is to mandate its use across the group's supply chain.
What has emerged is that RFID is more than just a way to gain supply chain visibility. It can act as a radioactive isotope does in medical diagnoses to monitor a business process.
Even though Wal-Mart's trials are running in only a few stores, monitoring the location of tagged items has allowed stores to identify bottlenecks in the replenishment process that can be corrected in others stores not participating in the trials. Likewise, Royal Mail is planning to use RFID to measure flows and process failures in the mail stream.
These and other businesses will develop increasingly innovative uses for RFID. It will benefit everyone if they are forthcoming in publishing the findings of their trials.
Today's relatively closed approach to RFID will handicap the development of open standards and cheaper hardware, software and services. The maximum benefits of this revolutionary technology will be realised only through greater understanding in the business community as the result of collaboration and sharing of RFID information.
This was first published in February 2005