RFID technology lowering labor costs by 54 percent

July 23, 2004

The U.S. Department of Defense and Wal-Mart have been accused of force-feeding radio frequency identification (RFID) technology to the world, proclaiming that they will do business only with RFID-enabled suppliers, with specific deadline dates.

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But a new survey indicates that there are other factors influencing RFID adoption, including strategic ones. Among the reasons companies give for implementing RFID technologies are lowering labor costs (54 per cent) and making their business processes more efficient (43 per cent).

According to a survey of 351 IT managers, staff and consultants (nearly 70 percent from U.S.-based companies) conducted by BearingPoint Inc., CIO Research and the Software & Information Industry Association, RFID deployments will ramp up steadily over the next two years, with CIOs playing a critical role in these investment decisions.

Nicholas Evans, global lead for emerging technology at BearingPoint, says most companies are nowhere near actually buying or implementing RFID, but they are heavily researching how to best deploy and use the technology.

Best practices:

1. Don't reinvent the wheel. Although RFID presents unique challenges, companies will be able to rely on experience with previous emerging technology rollouts as a guide. Recognize that RFID will follow the same evolution as other emerging technologies. Barriers to adoption (standards, security and privacy concerns, infrastructure costs and business model issues) will lift over time, so don't be overly concerned with them.

2. Look beyond compliance and basic supply chain applications and identify a portfolio of strategic areas for the technology. Determine application areas within your organization where RFID has a solid business case and prioritize them. It is likely that there will be several areas besides compliance where companies will be able to utilize RFID. For example, think of areas such as asset tracking, safety, security and operational efficiency.

3. Don't just focus on the hardware — the tags and readers. Be sure to consider all the technology layers needed from an integration and data management standpoint in your evaluation of RFID. The key to optimizing RFID investments is to take a holistic approach, incorporate other enabling technologies such as Web services and service-oriented architectures, and ensure RFID is a key part of your IT strategies and architecture.

Source: IT World Canada

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