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RFID: Befuddled by FUD

But experts predict a breakout in 2-3 years, led by retail

By Bob Violino, Network World
December 10, 2012 07:00 AM ET

Network World - Radio-frequency identification (RFID) technology has shown promise as a way to monitor the movement and even the condition of all sorts of objects.

The advantage of using of radio-frequency electromagnetic fields to transfer data is that, unlike barcode systems, where the tag must be within the line of sight of a reader, RFID tags can be embedded with a tracked object. This can give organizations more flexibility in how they track and identify inventory.

The potential benefits of RFID technology include increased supply chain visibility, improved inventory management, better prevention against product loss and theft and improved food and drug safety.

RFID 'starter kit' is low-cost entry to asset management

But RFID has not taken off as people once thought it would. For many prospective RFID users, there has been hesitation due to fear of the unknown.

Risky business

"All technology deployments involve risks, and new technologies involve even more risks — risks that the project might fail, the technology might not work, the vendor might not survive, etc.," says Mark Roberti, founder and editor of RFID Journal.

"The biggest reason more companies are not using RFID is simply because they perceive it as risky. Companies naturally wait for a technology to mature and be proven to deliver value by others," he says.

But that's not the only thing holding up RFID deployments. Roberti points out that RFID is fairly complex to deploy. "Each facility is different and radio waves might behave differently in each facility," he says. "Few companies sell integrated solutions, meaning a company might need to buy tags from one company, readers from another and software from a third company. Moreover, you might need to write a custom interface to your existing back-end software, or even customize that software to handle serial numbers."

John Devlin, a practice director at ABI Research in London who covers RFID, smart cards, security and other technology areas, agrees that the lack of vendors that sell complete solutions has had an impact on adoption of the technology, and while the RFID market has been growing in the U.S., a boom hasn't happened in part because of the fragmented market.

"There are not two or three solutions that can serve every [customer need], so you've got a lot of small vendors and systems integrators with specialty knowledge," Devlin says. "I think that in a way it provides a natural barrier to rapid uptake" of the technology.

RFID has succeeded in industries such as retail, Devlin says, because the technology has proven itself in meeting specific business cases for retailers, such as tagging some of the more expensive goods in stores to avoid theft, keeping tabs on inventories and even managing distribution networks. Retailers can see fully commercial systems and the returns that early adopters are achieving, he says.

Some retailers, such as companies that sell apparel, footwear and jewelry, "have been tagging for two or three years and we're seeing volumes [of tags] increasing now," Devlin says. "It seems to have proven the return on investment." He points out, however, that even in the retail industry RFID adoption has not grown at the rate people were expecting.

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