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Immense interest has been generated around radio frequency identification (RFID) technology over the last several years. Though the technology has been in existence for decades, its early applications were limited. But thanks to newfound and revolutionary applications such as supply chain management and asset tracking, it is currently one of the most promising " and problematic " technologies available today to business and industry.
The hype surrounding RFID began in earnest about five years ago. In that time, numerous surveys, studies and reports suggested that massive adoption of RFID solutions was on the horizon. In fact, RFID remains a niche technology whose broader deployment has been stymied by the usual suspects: high equipment costs, low return-on-investment and a workforce skills shortage.
Despite these challenges, the trend arrow for RFID usage is pointing upward. While growth is not occurring at the rates many have predicted, it's is growing at a modest, steady pace.
Several factors are altering the RFID market in a positive way.
These changes include the adoption of technology standards; consolidation among product vendors and solution providers; greater availability of collaborative solutions and "off-the-shelf" commercial RFID packages; and improvement in RFID planning and implementation skills. Each of these factors should be welcomed by current and prospective users of RFID.
RFID standards have come together around the second-generation Electronic Product Code (EPC Gen 2). This has allowed product manufacturers to develop hardware that is more interoperable, making it easier for users to mix-and-match equipment.
Figure 1. RFID application is being added to many production lines. Source: Omron.
Most manufacturers of RFID tags and equipment are capable of meeting customer demands that would accompany 20-percent annual growth. Prices of RFID tags are coming down, though not as fast as some industry observers anticipated " or hoped. Generic RFID tags cost between eight and ten cents each today. That's less than half the price of five years ago, but nowhere near the one- to five-cent per tag level that many say is necessary for RFID deployment on a broad scale.
Finally, companies today have more experience with RFID deployments, which leads to better planning, less waste and lower total cost of implementation. In 2006, a large number of organizations engaged in pilot tests of RFID, typically deploying the technology in a specific location with a limited number of products. These pilot tests have allowed organizations to get a better understanding of how the technology works; the factors that can affect its performance; and to identify sources of return on their investment.
Manufacturing and supply chain applications are at the forefront of current RFID adoption, driven in large part by mandates from customers. Some estimates suggest as many as 100,000 U.S. companies are under some form of RFID-adoption mandate.
Companies may not be deploying RFID throughout their supply chain, where a high level of cooperation among partners is required for success. But the number of RFID pilot programs, tests and "closed-loop" deployments designed to address specific business problems continues to grow.
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