2006 to Be RFID's Inflection Point?

Companies will move beyond pilot phase as radio frequency identification becomes core element of businesses, Unisys predicts

Companies will move beyond pilot phase as radio frequency identification becomes core element of businesses, Unisys predicts

Atlanta  September 14, 2005  Radio frequency identification (RFID) technology will reach a significant turning point by the end of 2006, according to Unisys Global Visible Commerce experts. Companies will move beyond the pilot phase, implementing RFID infrastructures that will increasingly become a core element of their businesses in 2006.

"Skeptics of RFID, who see significant technical and regulatory challenges or no return on investment, are wrong," said Peter Regen, vice president for global visible commerce at Unisys. "The same was true with barcode technology 30 years ago  many in the retail and consumer products industry considered it to be costly, technically flawed and unnecessary. Today, barcodes are on 87 percent of the items in the supermarket, and the adoption rate of RFID across multiple industries is already faster. Many of the key building blocks are already in place, and market drivers across industries will fuel adoption."

According to Unisys, adoption within the aviation industry will more than double in 2006 due to a recent ruling that allows passive RFID to be used for goods carried on airplanes and aircraft parts. The international shipping and transportation industry will also make great strides by using lessons learned by the early adopters, including retail and consumer goods, automotive, healthcare and life sciences, and the military.

"RFID is a winning technology," said Dr. Donald Bowersox, a professor at Michigan State University. "It will eliminate uncertainty in the supply chain, reduce the need for inventory 'safety stocks' and enhance productivity. Clearly, we will experience significantly higher adoption rates as RFID applications enhance supply chain visibility."

RFID adoption made great strides in 2005, reaching significant milestones. Building blocks such as the completion of the Gen 2 passive RFID standard  which makes the use of one, secure tag around the world possible  will aid adoption across industries, according to Unisys.

"All of the companies I have spoken with that are involved in RFID are justifiably proud of their accomplishments, but there remains a great deal of work to be done," said John Fontanella, senior vice president of supply chain services with Aberdeen Group. "The Gen 2 standard has to receive worldwide endorsement, the price of tags has to drop and the installation of the technology needs to be greatly simplified. The good news is that we are progressing on the path of RFID adoption and there is no turning back."

Suppliers have been implementing RFID to meet the mandates established by major retailers since 2003. Unisys is predicting that in 2006 the outsourcing of support for RFID infrastructures will increase more than 400 percent, a direct result of companies beginning to treat these infrastructures as a core part of their business, which will be a testament to the technology's growing maturity.

"Cynics will be astounded by the technology's increased maturity," said Regen. "Major advances will also be made as organizations learn to manage the data generated through their RFID implementations and use it to increase efficiencies. Companies will save billions of dollars through these efficiencies in the coming years."

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.