RFID: Keepin' It Real

by CXOtoday Staff    Jul 06, 2006

As the euphoria about radio frequency identification (RFID) technology continues to subside, the market is beginning to adopt a more realistic approach towards the technology that was once touted to be the next best thing after the invention of wheels.

According to a new study by consulting firm Frost & Sullivan, industry participants are increasingly focusing on integrating RFID technology to work with existing business process and applications.

The study, World RFID in Retail and Supply Chain Applications - A Supplier Perspective, said that to yield true benefits, RFID would have to be better integrated in the supply chain.

According to Priyanka Gouthaman, Research Analyst, Frost & Sullivan, “The true benefits of RFID technology in the retail supply chain is likely to materialize only in the face of collaborative efforts by all the trading partners. Isolation of RFID projects along the retail value chain would result in information being owned separately by manufacturers, suppliers and retailers with little or no value proposition in sight.”

As suppliers’ gains are driven by accurate demand forecasts and capacity planning strategies, which in turn are dependant on information received from the retailer’s end, information gaps in the supply chain are uncalled for.

The technology presents immediately visible returns to retailers in terms of improved inventory management and demand planning that would result in higher turnover.

As the retail supply chain becomes global in nature, the technology is expected to be employed across global supply chains in the long term. Especially the APAC region, which is fast gaining prominence as the manufacturing hub, holds the most promise for mass adoption of the technology.

Having said this, RFID vendors still need to establish the potential benefits of the technology and the positive return on investment that appeal to the retail suppliers because the value proposition from RFID is still unclear among most suppliers preventing them from going for full-scale deployments.