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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

Page 2 of 4

Integration headaches

Many companies that have considered implementing RFID, including retailers, did not realize how much integration work was needed or how long the integration would take, Devlin says. "Within a large chains of stores you are not going to have the same IT infrastructure" among all the stores, he says. "And if you're going to put RFID in place it has to be uniform across" all the stores.

One reason why expectations have been high for the technology is that some RFID product companies have attracted venture capital groups of investors, who have talked up the market, Devlin says. "It's maybe partly out of hope, partly out of expectation or maybe some hype," he says.

But as many companies and industries continue to go through a learning process with RFID there will be more clarity in terms of how the systems work and how much they cost, and a better understanding of the business cases and expectations of what RFID systems can deliver, Devlin says.

Roberti thinks what needs to happen — from a technology, cost and standards standpoint — in order for RFID to gain some significant traction in the U.S. depends on which sector you are talking about.

Healthcare, for instance, needs to determine a standard for real-time location systems, which use tags and readers to determine the specific location of an object or person within a particular facility such as a hospital.

"Other industries, such as apparel retail, have essentially agreed that EPC Gen 2 [EPCglobal UHF Class 1 Generation 2] is the technology to use," Roberti says. EPC Gen 2 is an international standard being developed by EPCGlobal — an organization created to achieve worldwide adoption and standardization of Electronic Product Code (EPC) technology.

"In general, I would say that software solutions need to mature to the point where they solve specific business problems or deliver clear improvements," Roberti says. "Then, early adopters must prove the solutions deliver business value."

RFID "needs to continue to evolve in terms of performance and prices," and end-users need to be educated about the technology, Devlin says. He predicts a coming "boom" in the use of RFID in retail that will have a positive impact on use of the technology in other industries such as transportation and logistics, healthcare, pharmaceuticals, aerospace and oil and gas utilities.

But it is apparel merchandizing that seems like the best fit for RFID today. "Retail apparel has a major problem no other technology can solve economically — namely inventory inaccuracy," Roberti says. "Studies show inventory accuracy is about 65%. That leads to lost sales because the store thinks it has an item on the shelf when it isn't there."

RFID can cost-effectively get inventory accuracy up to 98% or 99%, Roberti says. In addition, "there is agreement on the type of RFID to use, UHF Gen 2," he says. "And the ROI is pretty clear. Sales go up when you have 99% inventory accuracy."

Aerospace is another sector with challenges that RFID can solve. "Every part on a plane has to have a unique [identity] and must be tracked throughout its history," Roberti says. "Some parts need to be removed from planes for regular maintenance and everything that happens to the part must be recorded."

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