RFID Technology Has Come A Long Way

RFID technology is no longer the new kid on the block.

With the technological landscape constantly changing, it seems like everyday there’s some new gadget that promises cost savings and a higher level of efficiency. With appropriate skepticism, manufacturers are asking themselves “Is it worth it?”

The answer is YES… RFID technology has come a long way since its introduction into the identification market place so many years ago. Over 10 years after Wal-Mart mandated RFID tagging for its suppliers, development teams have been working on the problems that have hindered RFID adoption in the past. Manufacturer concerns such as reliability, profitability, and stable international standards have been addressed and made adoption much more financially feasible and desirable.

The benefits of RFID implementation are no longer disputed, in one of many studies that compares manufacturing companies with and without RFID, it was concluded that “RFID technology offers significant benefits for firms through improved inventory ratios and sales efficiency, which translates into higher profit for the firms”*. These higher profits stem from a combination of lower days-in-inventory and lower per-employee costs which can both be achieved by RFID implementation.  We have moved from asking “does it work?” which is no longer in question, to looking at the specific business problem and asking “does it make financial sense for my business?”.  If you are in manufacturing or warehousing and trying to improve efficiency, enhance traceability compliance at a lower cost, cut shipping fines, and reduce stock outs, the answer is usually not only yes, but yes with a payback period of less than a year!

Enhancements in reliability and efficiency have had a direct effect on demand. According to Enu Waktola at SMARTRAC, with an estimated 3-4 Billion RFID-tagged items in 2013 (UHF only), and a 35%-40% YoY growth, it is easy to see the level of market penetration that RFID technology has achieved**. As a result of an increase in demand and decreasing tag and equipment prices, RFID system integration is now offered by more market players than ever.

*Chang Does RFID improve firms’ financial performance?)

**(SMARTRAC Internet of Things Offers Huge RFID Growth)