The state of RFID today

RFID Journal's fifth annual conference and exhibition detailed where RFID technology stands in the supply chain.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 5/4/2007

Nearly four years after Wal-Mart announced its push into RFID for distribution, where exactly does the technology stand? Well, that all depends upon who you listened to at this week’s RFID Journal Live event.

Referring to articles that Wal-Mart has backed off from its RFID mandate, the retailer’s CIO Rollin Ford told attendees that “nothing could be further from the truth. RFID is in 1,000 Wal-Mart locations across the country, and we are adding 400 more this year.”

Ford then laid out the case for the technology in a presentation that was long on Wal-Mart’s vision for RFID, but short on what’s happening today.

“Imagine a world where you have peace of mind that when you pick up a prescription, it’s not only the right drug but the right dose,” Ford said. “Imagine a world where the food you purchase is the freshest it can be. Imagine a world where you always get the best price because of the efficiency of the supply chain. Imagine a world ….” You get the idea.

In many respects that summed up where the technology is today, especially in the supply chain.

What the experts were saying
The imaginations of executives across enterprises, and industries, are tickled by the vision of real-time visibility from RFID. But adoption continues to be slower than anticipated because the cost of the infrastructure, implementation and operation limits widespread use, especially in the supply chain.

“You’re hearing that RFID is fizzling,” acknowledged Mark Roberti, the founder and editor of RFID Journal, in his opening remarks. “But you’re also going to hear from companies that are successfully using the technology.”

According to Reik Read, an analyst from R.W. Baird and one of a panel of analysts who spoke to investors, total sales of Gen II tags and readers was somewhere between $15 and $25 million in 2006. That’s a maximum of $25 million being divvied up by companies as large as Motorola, Intermec, Zebra Technologies and Tyco along with dozens of smaller players. While Read expects those numbers to double in 2007, he says most of that growth will come from non-supply chain activities.

The problem, says Mike Liard, an analyst from ABI Research who also spoke to investors, is that we’re hearing from too few end users. “Too often, we’re hearing the same stories about the same early adopters, like Kimberly Clark, over and over,” Liard said

The point was driven home on another panel when OAT Systems and True Demand, two of RFID’s bright lights, both cited Kimberly Clark as one of their key clients.

Still, as Roberti said in his opening presentation, companies are successfully using RFID and gaining value, especially when it comes to tracking assets in the yard and the manufacturing plant, and gaining visibility into the inventory in retail store rooms and the location of promotional displays on the retail floor.

What the future holds
The key to those successful applications may be the key to RFID adoption in the future. Those are companies that were intrigued by solutions, rather than technology.

“As a company, we moved away from selling RFID technology and concentrated on our customers’ problems,” said Paul Cataldo, vice president of marketing for OATSystems. “They want to solve a business problem, and like the namesake of the conference, we were able to put RFID to work to do that.”