'RFID carries unconditional guarantee of success' - Study

07 Feb '09

17 min read

Not all expectations were fulfilled:
Besides all the positive experiences, though, practice shows that the use of RFID does not necessarily boost efficiency. The decision makers in a company should therefore familiarize themselves in advance with the expected costs and incomes associated with an RFID project and perform a feasibility study. Furthermore, the targets should be reviewed critically at regular intervals. To give an example, RFID has in practice largely fulfilled expectations as to reducing production downtimes and improving quality control. By contrast, though, the expectations as to the reduction of the need for adjustments after deliveries and a decrease in material waste have often been disappointed

RFID carries no unconditional guarantee of success:
Public debate places particularly heavy emphasis on the significance of falling chip prices for the spread of RFID systems. This argumentation is easy to follow, but it does not entirely do justice to the complexity of the RFID issue. For besides the price of RFID tags there are numerous no less important factors from the three areas entrepreneurial environment, technology and politics shaping the cost-income ratio of an RFID system. Experience shows that there are three preconditions from the entrepreneurial environment that are crucial for project success:

— Degree of RFID use along the value chain: The more the technology is integrated into the value chain, the higher the returns that can be generated on investment projects.
— Fit of the software: There is no cheap standard solution that fits all RFID projects. Producers, traders and transport service providers have to coordinate their infrastructure with one another. The important thing is that the new technology is efficiently integrated into existing processes and the existing IT infrastructure.
— Allocation of costs: Costs/income linked with RFID deployments are usually incurred/generated by different participants along the value chain. To allow investment in the first place there has to be an extensive cost-benefit analysis. This calculation should help ensure that producers, traders and transport service providers appropriately distribute the costs incurred.

While in the entrepreneurial environment the aspect of cost allocation is a general precondition for investment, the two aspects of fit of the software and RFID diffusion along the value chain have a particular bearing on the feasibility of the RFID project.

Tough nuts to be cracked in technology and politics:
Besides the challenges from the entrepreneurial environment there are also still challenges from the areas of technology and politics which directly impact the market success of RFID.

The four technology issues are as follows:
— Energy consumption (the focus here is on conserving energy, so called power management) and obtaining operating energyfrom the system environment (so-called energy harvesting),

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