RFID: More projects moving to second phase
More RFID projects are moving to Phase II, and could be isolated from a company’s economic struggles.
By Staff -- Modern Materials Handling, 10/29/2008
More RFID projects are moving from pilot programs to “Phase II,” helped by contributions from academia and driven by consumer goods marketing, according to R.W. Baird’s October RFID Monthly.
There has been an emphasis in the Near Field Communication (NFC) markets to produce low cost and secure products, such as Kovio’s printed tag offering, which could have an impact on promotions and marketing programs in consumer products. Per-tag costs could be as low as one cent. “We consider marketing to be a long-term driver of RFID,” the report said.
Part of the accelerated transition to a second stage of development is due to contributions by the academic world. Labs are helping end users understand the capabilities and technology, and real world studies are assisting in ROI development. Another plus is that students who will be entering the workforce are being trained in RFID,. Despite these advances, the biggest hurdle to enhanced RFID implementation is scalability.
As for the economy’s impact on projects, companies said they do not expect much effect – not surprising due to their small size. But in the broader automatic identification and collection market, signs of softness are being seen. The report cited Baird’s quarterly survey of 80 to 100 resellers, which evaluates the ratio of positive to negative responses regarding overall business trends. In good times, a ratio of between 8:1 and 10:1 is seen; In September, the results were 1.5:1. And this caution came before the news of bank failures, forced mergers and government intervention.
“History and our survey suggest a weakening environment will lead to project delays in the RFID space,” the report said. But with most RFID projects not large enough to be worth meaningful savings, a good amount of pilot activity may continue.
RFID is gaining traction and seeing rollout activity in the apparel, financial services and healthcare industries. Bank of America, for instance, uses RFID for inventory optimization with large ticket items, such as servers. A physical count of server racks in one data center that previously took two-and-a-half hours using barcodes was completed in five seconds using RFID.
“Such productivity improvements are what CFOs may be seeking in a weak environment,” the report said.
In August the Produce Marketing Association, the Canadian Produce Marketing Association and the United Fresh Produce Marketing Association unveiled the Produce Traceability Initiative, which supports improved tracking through data standardization for six billion cases of produce shipped each year. The report expressed concern regarding the lack of requirement for a centralized data base and the need for increased automation.
“We believe to fully capture the benefits of standardized data … the industry will need to further develop data sharing models up and down the entire supply chain,” it read. “This can be done electronically, or through portable data bases in the form of 2D bar codes or RFID.”
“We expect these issues will likely not be addressed until a good portion of the bar code system is in place and until the produce industry believes RFID has sufficient read capability given that produce has very high water content.”
Baird is an employee-owned wealth management, capital markets, asset management and private equity firm.
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