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Supply Chain Executives See Value in RFID
Article courtesy of Frontline RFID
Sept. 22, 2005 -- A majority of U.S. supply chain executives consider radio frequency identification (RFID) and Electronic Product Code (EPC) technologies important to their companies' supply chain management operations, says a new industry survey from EPCglobal U.S. and Decision Analyst Inc. More than 85% of respondents said the technology was important to some degree.
Manufacturers were slightly more likely than retailers to recognize the importance of the technology, with 87% of manufacturers considering RFID/EPC "extremely,'" "very" or "somewhat important" compared to 80% of retailers
Decision Analyst surveyed more than 400 U.S. supply chain executives, most of which worked for companies with annual sales of more than $1 billion..
"Perceptions about the importance of EPC technology are very much driven by familiarity with the technology," said Mike Meranda, president of EPCglobal US. "The research shows us what we have known for some time: organizations across multiple industries that understand the technology can more clearly see its significance and potential benefit to their business."
Respondents indicated that global standards and royalty-free standards were key factors in their deployment schedules.
A report from IDC Co.'s Manufacturing Insights division stresses that manufacturers should focus on the business benefit of RFID, regardless of where the standards fall.
"The current RFID climate is overwrought with a sense of urgency (especially in the consumer goods and retail industry) to reap the potential supply chain benefits promised by RFID and comply with the plethora of aggressive mandate timelines. This has forced many manufacturers to implement immature technology in a narrow, compliance-focused scope," says the report, RFID Investment: Cost of Compliance or Strategic Business Benefit?
"Waiting for RFID to become 100 percent proven, understood and standardized may seem to be a safe decision on the surface, but it's a losing strategy," said Mike Witty, program director for demand management strategies, Manufacturing Insights. "In general, companies have focused too much on the cost of compliance and not enough on the business value of RFID. Organizations that develop a comprehensive RFID strategy extending beyond mandate compliance will be poised to gain a competitive advantage once the dust settles from the early pilot projects."
There are signs of the industry growth that vendors, customers and investors have been waiting for, as well. Impinj Inc., a fabless semiconductor company has entered volume production and will fulfill orders exceeding 50 million units for its Monza Generation 2 (Gen 2) EPC RFID tag chip in the second half of 2005. Avery Dennison RFID has started commercial production of its first high-volume EPC Gen 2 RFID tag, the AD-220.
Sirit Inc. also hit a milestone this year. The company has shipped 250,000 of its RFID readers from its IDentity and INfinity product lines. The company shipped 1,500 hand-held reader modules this year, including an order of 1,000 units for "a major OEM for a retail application."
At the same time, though, Sirit has embarked on a cost-cutting initiative, reducing staff and discretionary expenses. The company has reduced headcount 15%.
Alien Technology Corp., meanwhile, has reduced the cost of some of its products, offering EPC Class 1 RFID labels for 12.9 cents, a 44% decrease in 12 months. The new price, for the ALL-9338-02 fully converted tag, applies to order quantities of one million or more.
SmartCode Corp. announced that it received an order for 100 million EPC RFID tags from MSWAYCO in Korea. Under the terms of the agreement, SmartCode will supply MSWAYCO with EPC Class 1 and EPC Gen 2 tags to be used in the Korean market.
"Our aim is to be the Korean market leader in providing EPC RFID solutions." said Taehyun Jeon, RFID general manager, MSWAYCO "We have chosen SmartCode EPC RFID tags based on its performance and low cost structure. After field testing in our facilities, we have found SmartCode Corp. EPC RFID tags to best meet our needs to become the leading provider of EPC RFID solutions in Korea."