Unlocking the Power of RFID to Improve Productivity

Zebra Technologies offers tips for generating return on investment in radio frequency identification projects

Zebra Technologies offers tips for generating return on investment in radio frequency identification projects

Vernon Hills, IL — October 7, 2005 — Where's the ROI in RFID? According to Zebra Technologies, the best way to generate a return on investment in radio frequency identification (RFID) is to start with a packaging compliance pilot project, then to leverage your new-found knowledge to improve processes throughout your operation.

Zebra's senior manager of RFID systems, Matt Ream, recommends that companies identify common operating procedures in warehouses and distribution centers that can be improved by applying the automation and speed delivered by RFID technology; create realistic benchmarks for evaluating RFID's impact on operations and labor, productivity and supply chain efficiency; and use an RFID return on investment (ROI) calculator.

"RFID technologies are being looked at for a number of processes in manufacturing, including product identification, quality control, intelligent conveyor routing, date and production time verification, automatic guided vehicles and batch process recipe control," Ream explains.

Companies implementing systems to comply with retail and U.S. Department of Defense RFID labeling mandates can leverage RFID throughout their organizations, but they must first identify whether the benefits outweigh the cost to implement the technology.

For example, retailer Best Buy is betting that RFID will reduce labor required to handle and distribute products, provide higher accuracy of inventory data to improve forecasts and replenishment, and track location-specific sales within stores to correlate placement-to-purchase statistics, among other benefits.

To determine the bottom-line results that can be gained from an RFID implementation, Ream suggests the use of an ROI calculator. These calculators allow companies to enter information about profits, revenues and operating costs and then determine the payback of reducing shrinkage, product diversion, counterfeiting, tracking and tracing, etc. — all areas that RFID can potentially improve. Such tools can provide companies with an overview of one-time benefits vs. annually recurring benefits, plus they can extrapolate the effects on the bottom line over a period, such as five years.

RFID ROI calculators can be found on the Web sites of various organizations such as EPCglobal, which is leading the development of electronic product code standards for RFID, and GS1 UK, a U.K. business association that specializes in supply chain technology standards.

A pioneer in RFID printing/encoding technologies, Zebra has been researching and developing RFID products for nearly 10 years. It has staked a claim as the first company to produce an integrated, on-demand RFID printer/encoder more than five years ago.

Additional Articles of Interest

— RFID technology has the potential to change the way supply chains are managed, but in order to be effective businesses need to take a holistic look at the deployment. Read more in the SDCExec.com article "Time for RFID: Applying RFID in the Supply Chain."

— For a contrary view of the future of the RFID market, see the article "The O'RFID Factor: A 'No Spin' Look at Where Radio Frequency Identification Is Headed," in the October/November 2004 issue of Supply & Demand Chain Executive.

— For more information on trends relating to radio frequency identification (RFID), follow this link for an extensive listing of SDCExec.com articles, featuring the latest research findings on the RFID, including adoption, return on investment and barriers to implementation.