New Wireless Technology Will Help Companies Track Individual Products

(Chicago) - Will there ever be RFID tags on individual products? Six out of 10 end users surveyed in a study released at an executive conference here this week say that radio frequency identification or RFID - a technology that uses microchips and radio waves to automatically identify items - "item-level" tracking offers the most benefit to their company.

The survey, released at RFID Journal Live!, was fielded by the conference's co-producer, RFID Journal, and conference research partner, Allied Business Intelligence (ABI), a New York-based research firm.

While 60 percent of RFID end users surveyed said they are interested in item-level tracking, a little more than half said that they planned to deploy RFID for tracking assets within their organization, and almost as many say they'll use RFID to track work-in-process.

"The primary motive for the technology lies in efficiency gains and cost reductions driven by the superior visibility RFID offers an enterprise's supply chain," explains Edward Rerisi, director of research at ABI.

"Though security concerns have captured much of the RFID spotlight recently, many companies view the enhanced security RFID provides as an ancillary benefit to productivity gains."

But obstacles remain to RFID adoption. When asked what prevents their organization from more aggressively adopting RFID, nearly three in 10 end-users said that the cost of tags - which today average 50 cents or higher - is the primary hindrance. Nearly an equal number of respondents indicated that the next most significant barrier includes end-users' uncertainty regarding standards and the costs of integrating the technology into existing systems.

Back-end integration was cited by 22 percent of respondents as deterrence to fast RFID adoption. "Confusion over standards remains a barrier to adoption," says Mark Roberti, editor of RFID Journal. "If you total up the percentages of those who cited standards as the first, second or third biggest obstacle to adoption, a lack of standards actually ranks higher than any other issue, including tag costs."

The survey also reveals that the end-user community is gradually becoming more informed about the technology.

"We've seen increasing focus away from tag cost and more towards standards and integration," continues Rerisi of ABI. "Many suppliers are poised to offer significantly cheaper tags when orders are placed in the tens and hundreds of millions.”

ABI believes that the industry continues to work towards addressing the latter two barriers above, which are key steps to the technology's eventual, inevitable ubiquity. The survey is based on 249 responses primarily from end-users with more than $100 million in revenue, and was fielded in April and May, 2003.

The study also asked RFID vendors about the services they provide. Back-end integration was offered by only 42 percent of vendors surveyed. More vendors, on the other hand, offer consulting, software and installation products and services.

"It shows there aren't enough companies fully addressing the technical and financial challenges of back-end integration - a key piece of the puzzle for RFID's largest potential customer-base: the retailers," concludes Roberti of RFID Journal. Still, some 13 percent of respondents said they would consume more than 500 million tags annually when an RFID system is fully deployed in their organization.

RFID Journal Live!, (www.rfidjournallive.com), held June 11-13, 2003, at the Hyatt Regency McCormick Place in Chicago, attracted more than 350 executives from the retail, manufacturing, logistics, and transportation industries. The event was co-located with the Retail Systems®2003/VICS Collaborative Commerce trade show and conference and included a pre-conference Executive Seminar sponsored by Accenture (NYSE: ACN). Jointly produced by RFID Journal (www.rfidjournal.com) and Phocas Partners (www.phocaspartners.com), the conference demonstrated how RFID saves money and increases revenue for many businesses.

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