Improved Inventory Management Tops List of RFID Benefits, Poll Finds

Reduced tampering and theft, improved collaborative planning also cited in CompTIA survey; technology "over-hyped," says one-fifth of respondents

Reduced tampering and theft, improved collaborative planning also cited in CompTIA survey; technology "over-hyped," says one-fifth of respondents

Oakbrook Terrace, IL  September 3, 2004  Expectations are that radio frequency identification (RFID) technology will deliver its most significant benefit through improved inventory management in the supply chain, according to results of a new Web poll released today by the Computing Technology Industry Association (CompTIA).

Better inventory management was cited as the key benefit of RFID by 29.2 percent of the nearly 500 respondents to the poll. Other benefits cited include reduced product tampering, theft and counterfeiting, as well as improved collaborative planning with supply chain partners.

RFID is a wireless data collection technology that uses electronic tags for storing data. Like bar codes, RFID tags are used to identify items. A key advantage of RFID is the non-contact, non-line-of-sight aspect of the technology. While bar codes must be brought close to the scanner for reading, RFID tags are read when they are within the proximity of a transmitted radio signal. RFID tags can be read without line-of-sight scanning or physical contact. RFID is expected to help organizations track things they would otherwise have difficulty tracking, and to track them more accurately.

"Successful companies have recognized the importance of better inventory management," said David Sommer, vice president for electronic commerce at CompTIA. "It is a major source of competitive advantage for a company to know what it has in inventory and where."

In addition to the 29.2 percent of CompTIA survey respondents citing better inventory management as a benefit of RFID, other benefits cited included:

  • Reduced product tampering, theft and counterfeiting  cited by 12.3 percent of the respondents

  • Improved collaborative planning with supply chain partners  11.9 percent

  • Easier product tracking and recalls  9.0 percent

  • Automatic replenishment of parts and products  7.2 percent

  • Reduced invoice reconciliation and labor costs on the receiving dock  4.5 percent
Fewer than one-fifth of respondents (19.5 percent) said RFID will have little or no impact and that the promised benefits of the technology are being over-hyped.

While there are obstacles to overcome before the full benefits of RFID are realized, Sommer cautioned that failure to recognize how RFID will impact business operations could negatively impact a company's ability to compete. "If your customers are mandating RFID usage, you had better be ready to meet their requirements or risk losing them as a customer," he said.

CompTIA, through its Electronics Industry Data Exchange (EIDX) Leadership Group, is engaged in several RFID initiatives for the computer, electronics and information technology (IT) industries. One of these initiatives involves a working group charged with developing supply chain business process models that incorporate RFID and identify potential return on investment at points along the supply chain.

For more information on trends relating to RFID, see the following articles:

For more information on the use of RFID solutions in the supply chain, see "Needle in a Supply Chain Haystack," the Net Best Thing column in the January 2002 issue of iSource Business (now Supply & Demand Chain Executive) magazine.