Bar code labels are a great way to inexpensively identify and track inventory. But radio frequency identification (RFID) tags can carry much more data than a bar code and accept new information on the fly, which bar codes cannot. Some say RFID tags can make any object intelligent. Applications include self-checkout lanes at grocery and department stores, and smart inventory shelves that track stock levels as customers shop.

"This technology is the 'last mile' between the database and the item," says Richard J. Mahaney, VP of Products for Intermec, an RFID manufacturer. But for all of RFID's potential, there are two significant obstacles to its mass adoption.

Today, these tags are still too expensive to be used on every retail item in a store. Instead, they provide the best return-on-investment when used at the pallet level and higher, including maritime shipping containers, Mahaney says. They also make business sense when used for high-value parts, such as cars, electronic equipment, and hazardous materials.

Another challenge is the lack of standards. Since RFID tags communicate through radio frequencies, they require a dedicated slice of the spectrum. And that's different in every country, depending on what what's used by other radio tools like cell phones.

But the tide is changing. Intermec is pushing the creation of standards and frequency authorizations in each country, and that could place RFID on the verge of a breakthrough to swiftly replace bar codes.