By Samuel Greengard

April 1, 2004—One of the most challenging tasks in the business world is manufacturing millions of automobiles and getting them to market. With millions of parts, thousands of assembly processes and the intricate logistics of delivering custom orders to specific locations, it’s easy to understand why profit margins are so slim. Today, the pressure to cut costs and boost efficiencies is so critical that many automotive companies are looking to harness RFID technology to shift production and distribution into high gear.


During the past decade, automotive manufacturers have turned to sophisticated hardware and software to manage factories and supply chains. Behind the high-profile enterprise resource planning, supply chain and e-commerce systems, RFID has emerged as a powerful supporting player. Automakers are primarily using active, or battery-powered, RFID systems to automate and improve an array of manufacturing and supply-chain management activities (see An Active Role for RFID). The road ahead leads to greater efficiencies through the tracking of each individual part and to benefits for drivers through the use of RFID technology inside the car.

“Automotive companies are turning to RFID in a major way,” says Joseph Tobolski, an associate partner at Accenture Technology Labs in Chicago. “Although many companies are already using second- and third-generation RFID solutions, the technology and applications are becoming far more sophisticated and complex all the time.”

To be sure, the auto industry has raced ahead of other vertical industries in moving RFID out of the lab and onto the shop floor. Despite all the attention heaped upon Wal-Mart and the retailing industry, market research firm Allied Business Intelligence reports that the auto industry now represents 46 percent of the total RFID market, with carmakers prepared to plunk down $600 million more over the next several years. In fact, auto manufacturers spent 30 times more than the retail industry on RFID products in 2003.