A lump of coal in the RFID stocking

ABI Research's analysts look at the coming year and predict what isn't going to happen, including explosive growth in the RFID market.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 12/11/2007

Think RFID is going to explode in the supply chain in 2008?

Think again, suggests Michael J. Liard, research director for RFID & contactless technologies at ABI Research.

“When I look at the way the RFID market is shaping up, what I see is the continuation of a lot of pilot activity,” says Liard. “Closed loop asset management applications have been growing and will continue to plod along. But when you talk about the kind of high volume applications in the retail supply chain that everyone has been waiting for, that isn’t going to happen in 2008.”

That is just one of the predictions in “What’s Not Going to Happen in 2008,” an annual report from ABI. Rather than predict what might happen next year, ABI’s analysts survey the market for over-hyped technologies to predict what isn’t going to happen in areas that include consumer electronics, digital media, Wi-Fi, mobile handsets, wireless networks including WiMAX, telematics and automotive safety.

For his part, Liard predicts that RFID won’t become a cure-all for inventory and supply chain problems.

“Doing your holiday shopping in that big consumer electronics retailer, you might be thinking that the whole behind-the-scenes operation is a paragon of efficiency because of RFID,” he contends. “But you’d probably be wrong.”

According to Liard, RFID continues to make steady headway into the supply chains in a number of verticals. But while a number of leading European retailers, including Metro and Marks & Spencer have made headway, too few companies have jumped on the bandwagon in the US.

What went wrong? Liard says there have been three barriers to adoption:

A lack of education: “People just don’t understand the technology, what it can do and what it costs,” says Liard. He adds that organizations like AIM Global are getting more aggressive about educating supply chain professionals.

A lack of mandates: “Customer compliance drives adoption,” says Liard. “But for every three steps forward Wal-Mart took, they took two steps backwards. They don’t even call it a mandate any longer.” 

A lack of ROI: Show me the money could be the mantra for RFID. While some experts have talked about privacy concerns impeding the deployment of RFID at the item-level, Liard says the reality is that as of yet, there’s no return on investment. “RFID isn’t getting very close to item-level tagging yet,” he says. He adds that while many are looking to California’s ePedigree requirements to drive the adoption of RFID in 2009, “I don’t see it happening. A lot of companies are going to meet those requirements with bar codes and 2D bar codes,” he says.