News: ROI for RFID Remains Elusive

June 1, 2005
Where's the ROI? That's the question on everyone's mind when it comes to the implementation of radio frequency identification (RFID) technology.

It's one of the questions the Warehouse Education and Research Council posed to its members in a special research project that it conducted last fall.

According to a recent report of the survey results, more than half (56 percent) of the 211 responding companies do not expect any cost savings from their RFID initiatives. Manufacturers are the least optimistic about their opportunity for a positive return, suggesting that the potential for positive ROI has not made it back into the supply chain. Wholesalers/ distributors and 3PL warehouse/logistics service providers are slightly more optimistic, and retailers are the most optimistic.

Of the RFID solutions likely to be implemented over the next several years, respondents reported that they are most likely to apply the technology to palletand case-level tracking. Work-in-process, container and item-level tracking are much lower priorities. Of the possible areas-where warehouse/distribution centers can apply the technology, shipping and receiving are the most popular, followed by loading, put-away and picking.

Of the companies that do anticipate cost benefits, savings are expected to come mostly from minimizing out-of-stocks, reduced inventory losses, and reduced labor costs from less material handling.

Companies surveyed that are not implementing RFID cite the lack of foreseeable benefit and cost, followed by a lack of funding, the lack of standards, the lack of integration and a lack of understanding. On a scale of one to five, none of the responding companies reported being "very satisfied" with their RFID implementations.