Running the Numbers: April/May 2007

The latest facts, figures and benchmarking data in Business Intelligence, Manufacturing, Radio Frequency Identification, and the Express and Parcels Industry


Six of the 10 factors measured by the quarterly survey were higher than the previous report, foreshadowing a likely improvement in the industrial sector and providing a measure of optimism in the midst of mixed economic indicators for this sector. There were decreases in three indexes, and one remained flat. Importantly, however, the index measures the direction of change rather than the absolute strength of activity in manufacturing.

The March 2007 outlook marks a healthy turnaround from the December 2006 report in which seven of the 10 indexes were lower than the September 2006 survey.

"The survey results of this quarter are evidence of latent strength in most manufacturing industries and are a harbinger of renewed vigor in the latter half of the year," said Donald A. Norman, Ph.D., Manufacturers Alliance/MAPI economist and survey coordinator. "Most industries, with the exception of those businesses closely linked to the housing sector, should expand this year, although the rate of expansion is likely to be less than in recent years."

Radio Frequency Identification
Passive RFID Smart Label Markets Seen Rewarding Patience

Despite continued doubts about whether passive radio frequency identification (RFID) will have a payoff for the retail supply chain, ultimately these technologies will reward patient companies willing to make the necessary investments, and some sectors already are reaping benefits from rollouts, according to a new report from ABI Research.

Some media commentators have begun talking down the market for passive RFID tags within the retail supply chain. They cite slower-than-predicted progress by the two mighty drivers of RFID adoption, the Wal-Mart and U.S. Department of Defense mandates, and they suggest that major vendors — Motorola and Intermec — may be reordering their priorities away from the compliance mandate-based commodity tag market.

These and other passive UHF Gen 2 tag players have adjusted their near-term strategies to focus more on "specialty" tag form factors and non-retail supply chain compliance applications. But ABI Research, while acknowledging that passive label markets have grown more slowly than hoped, has reiterated that they will ultimately reward those who have patience.

Why has the development of this retail supply chain market been slower than expected? "End-to-end deployments based on passive UHF RFID tags do involve technological and physical challenges," said Michael Liard, the firm's research director for RFID says. "Price, too, has always been an issue despite significant reductions in recent years. Shipment volumes are rising: eventually they will trigger further price drops, although at the moment many vendors are running on slim margins."

ABI believes that to reach volumes in the billions, further label cost reductions must be achieved, particularly for low-cost retail item tagging, where tag price points remain too high for many products to justify the cost of RFID.

Outside the retail consumer packaged goods (CPG) market, however, end-users are finding strong value positions for high-volume passive UHF item-level tagging at current price points. This includes item-level pilots and limited deployments within pharmaceuticals, fashion apparel, consumer electronics and asset pooling/management markets. The tagged objects in these application scenarios are often high-risk, high-value items that provide a strong ROI at present price points.

How is cost being driven out of commodity-like passive labels? "In both the passive HF and UHF label markets, we see innovation in terms of IC (integrated circuit) size reduction, new antenna materials and designs, and manufacturing processes," Liard said. "But we do not expect migration to some of the newer materials and methods in the immediate future."

Express and Parcels Industry
Express, Parcels Industry Set to Undergo Drastic Transition

The European express and parcels industry is set to undergo drastic transition as several factors work to transform the industry, according to a report published by independent market analyst Datamonitor.

The firm reports that the industry in nine European Union countries will grow at a compound annual growth rate of 4.1 percent to $55.1 billion by 2010.

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