Radio frequency identification Item-level RFID — A Prosperous Market 2006-2016
According to a new study conducted by consulting and research firm IDTechEx, item-level radio frequency identification (RFID) tagging, the tagging of the smallest taggable unit of things, will rocket from $160 million in 2006 to $13 billion in 2016 for systems including tags.
In 2006, 200 million items will be RFID-tagged in the world. In 2016, 550 billion items may be RFID tagged. Those adopting item-level tagging today do so willingly and are prepared to pay for good performance as they enjoy rapid multiple paybacks.
Evolution of item-level RFID by tag price showing earliest date of mass adoption of leading application in each price band. Source: IDTechEx.
The biggest item-level potential involves uniquely coding very high volume products, totaling 5 to 10 trillion items a year. The U.S. Food and Drug Administration will make tagging of up to 20 billion prescription drugs a legal requirement in the United States; the TREAD Act will create a tire-tagging market in the U.S. market; and many new high-priced retail items will enjoy the excellent paybacks currently found with apparel in the United Kingdom, China and Japan. China will rapidly adopt item-level tagging.
Globally, healthcare supplies, tools and assets are being urgently fitted with RFID for safety, security and cost control, including theft reduction. Boeing and Airbus are progressing the tagging of aircraft parts and equipment. Over 10 million test samples for blood (Europe) and milk (New Zealand), drug research and other uses have been tagged, with the potential of billions yearly.
However, it is challenging to meet the most sophisticated requirements for item-level tagging and to evolve appropriate technical specifications and approval procedures for, say, mission critical aircraft parts. At the other extreme, it is tough to get down to the price that justifies tagging a can of soda in a supermarket or a letter. Item-level tagging has therefore started with the many lucrative intermediate requirements as shown below, and it is rapidly widening in scope.
The average price of just under one cent for an item-level tag in 2016 will cover a range from 0.1 cent primitive ink stripes and thin-film transistor circuits to $8 tags for aircraft parts to high specification and even more expensive military tags. Some tags for dangerous, expensive or mission critical items will have batteries and sensors in them and even act as real-time locating systems (RTLS) on assets in hospitals, museums, art galleries, etc., not just in supply chains.
— By Dr. Peter Harrop, chairman of IDTechEx, a consulting and research firm specializing in RFID smart labels, smart packaging and printed electronics.
Market focus Industrial Suppliers, Manufacturers Focusing on Revenue Growth, Quality
Organizations within the U.S. industrial sector are investing within their companies to support growth, with enterprises targeting headcount increases, expansion into new markets and rising spending on sales and marketing, according to a recent survey of industrial and manufacturing professionals conducted by GlobalSpec.
Thirty-eight percent of respondents in the survey indicated they will be adding headcount in 2006, while 35 percent are expanding sales into new markets and 28 percent are increasing sales and marketing spending. These results were offset by reductions in other areas, including spending and travel, and vendor consolidation, which increased by 8 percentage points in 2006 over 2005.
Other results indicated uncertainty over increased costs among companies within the industrial sector. Raw material costs were a concern for 47 percent of respondents, while 15 percent said it was the single biggest issue facing their company this year. Rising energy costs was cited by 40 percent of respondents as an area of increased focus, with 12 percent citing it as their greatest concern.
Overall, results of the survey imply optimism within the marketplace. More than 90 percent of survey respondents foresee their spending increasing or remaining the same in the second half of 2006, as compared to the first half of the year. Additionally, 71 percent of companies anticipate their 2006 revenue will be ahead of 2005.
Sales and operations planning Traditional S&OP Seen Failing to Improve Corporate Performance
Companies' sales and operations planning (S&OP) processes are failing to improve enterprise-wide performance, and few companies believe that their S&OP process is adequate, according to a new Aberdeen benchmark report of more than 140 companies. "Current S&OP processes are failing to deliver the financial results expected," said Nari Viswanathan, research director at Aberdeen and author of the report. "Our research shows that best-in-class companies are moving past traditional S&OP toward 'integrated business planning.' This is a technology-enabled process that supports profit optimization and includes all elements of demand, supply and financial analysis in relation to business goals and strategy."
According to the Aberdeen report, companies today have under-invested in supporting S&OP technology:
- More than 40 percent of respondents report they use spreadsheets for their S&OP processes;
- Only 16 percent of companies employ best-of-breed S&OP technology.
"One impact of poor technology is that three-quarters of companies say they don't have adequate executive-level reporting on the key performance indicators of their S&OP process," added Viswanathan.
Fortunately, Viswanathan said, companies with best-in-class order fill rates plan to spend more on S&OP technology than their peers (an average of $250,000), indicating that the best-in-class companies see S&OP technology as critical to improving on their already strong corporate performance.