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Survey reveals RFID benefits beyond supply chain

By George Reynolds , 19-Jul-2007

More companies are realising that radio frequency identification (RFID) can be used to streamline operations beyond supply chain management, according to a new survey by ABI research.

According to Michael Liard, director of ABI, the value of integrating the tracking and tracing technology into operations is being realized across many industries. The results of ABI's annual RFID survey indicate that the technology's use is not limited to open-loop supply chain management, Liard stated in a release of the results. "Other application areas include asset management, security access control, and inventory management in closed-loop environments," he said. The survey of 175 organizations that either have implemented RFID or have considered it also identifies key markets trends, system requirements, expenditures, and more, according to ABI. While the survey found that an increasing number of companies said that they were using, evaluating, or piloting the technology to support a wide number of applications, the main driver behind its uptake is downward pressure from retailers. In the US, Wal-Mart has set mandates requiring its suppliers to invest in the technology or risk losing shelf space in stores. Metro supermarket chain has led the way similarly in Europe. Outside of supply chain management of pallet, case, and item level tracking, US food and drink manufacturers are looking at asset management applications such as reusable pallets, tray, roll cage, and container tracking and visibility as well as optimization and utilization, according to Laird. The survey found that some respondents evaluated RFID, but decided not to deploy the technology. The reasons non-users gave for not deploying or evaluating the technology included limited application relevance, the success of existing automatic identification solutions already, concerns about ROI, and a lack of clarity regarding RFID's potential benefits.


Laird said that the issue is having the right infrastructure in factories to support RFID. The difficulties remain in justifying the first step in terms of return on investment. "For US food and drink manufacturers, many continue to struggle with trying to make a business case for investing RFID. Justification for the high costs involved is not an easy task," he said. Manufacturers are also looking at the total cost of ownership (TCO), because of the larger cost of deployment, but manufacturers that have already travelled down have experienced benefits, he said. "For example, accuracy of orders can improve, labor cost savings can arise, event-driven processes can be further enabled with RFID data, and more. RFID can have a very significant impact on the bottom line," he said. The results of this end-user research reinforce ABI Research's position that the opportunity for RFID is not limited to supply chain management or industrial environments. "These survey results mirror the patterns and pace of adoption that we have previously forecast," said Liard. "They provide solid validation for our assessment of the direction of the RFID market," he said. ABI Research offers assistance to assist manufacturers of wireless semiconductor components in understanding and entering new markets. In the past decade the company has expanded its analytical coverage to a broader base of manufacturers and service companies operating with in the technology market. A recent IDTechEx study estimated the RFID use in the food supply chain have a global value of $5.8bn (€4.3bn) in 2017.


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