Five years ago, Kevin Ashton, then an assistant brand manager at Procter & Gamble in London, set out to revolutionize the world's supply chains using a technology called Radio Frequency Identification, or RFID for short. Ashton was frustrated because his team had come up with a hot-selling shade of lipstick that would sell out in an hour, yet not be replaced for a week. When he discovered a smart credit card with a chip that could be read without being swiped through a machine, he hit on the idea of using the same kind of chip in P&G products, to speed corporate response time to the marketplace. Since then, Ashton has sought to make a lot of people believers in the vision he had that these chips, connected through a global network, could enable companies to respond to changes in supply and demand—as well to trouble in the pipeline—in real time. "This is bigger than the Internet," he says.

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At first, people at P&G thought Ashton was nuts. RFID tags—tiny radio-powered microchips that broadcast a unique serial number, like a talking bar code—cost several bucks apiece in those days, and the idea of putting one on every box of cereal and bar of soap was preposterous: Profit margins on such products were measured in cents. But Ashton managed to convince higher-ups at P&G that it was an idea worth exploring. He then got MIT and some of the world's biggest companies—including Wal-Mart Stores Inc., The Coca-Cola Co., Johnson & Johnson, PepsiCo Inc., The Home Depot Inc. and Unilever—to back his quixotic quest. And now, from an MIT laboratory in Cambridge, Mass., he's creating converts. Says Dick Cantwell, vice president of global business management for The Gillette Co., a backer of Ashton's RFID lab, called the Auto-ID Center: "We see RFID as the supply chain technology of the future. It's going to revolutionize the way we track goods from manufacturing to the consumer and even through recycling." Ashton puts it another way. "Creating a way for companies to use sensors to identify goods anywhere in the world is a very big deal," he says. "We are, in effect, creating an Internet of things."

Ashton essentially sees the world as two giant networks. First, there's the network of goods and services that make up the global supply chain. Second, there's the network of computers called the Internet. Ashton wants the machines that make up the world's supply chains to interact with the Net. "Our vision is a world where by moving atoms you can move bits, and by moving bits you can move atoms," Ashton says.