For Small to Midsize Container Companies, RFID Makes Sense

ROI Analysis
An average payback period for RFID implementation within a small to midsize company is between 12 and 24 month. As discussed, the cost for implementing a pilot project would be $14,869. Considering all of the gains, such as the above-illustrated lower amount of labor for track and trace, data accuracy and visibility, as well as benefits to customers due to process innovation, it would be interesting to run a complete analysis of the total actual costs of investing in RFID for the Belgian office.



Table 3: Total Implementation Costs for a Permanent RFID Deployment
(To view a larger version of the table, click here.)

The above calculation determines that $172,200 would be Company X's total estimated investment for introducing RFID at its Belgian office. Taking into account the total cost of deploying the technology at the firm, the payback time can thus be calculated:



Table 4: Return on Investment
(To view a larger version of the table, click here.)

This would result in a payback period of approximately 24 months, offering the company the certainty of having a short-term ROI. Thus, investing in RFID technology would be a wise decision for Company X.

Conclusion and Recommendations
Businesses that gain a better understanding of RFID, and how the technology can improve their supply chain operations, will be more prepared and willing to work effectively with clients and other potential adopters in order to achieve their goals. The compiled research and results provide information to help explain, predict and account for factors that impede or facilitate the diffusion of RFID. As no integrated track-and-trace, seal or sensor system will be the single solution for every type of cargo, a modular technology approach should be implemented throughout the supply chain as the best long-term system approach.

Having examined the existing technologies employed that permit the location of a container during its shipment, and having discussed the benefits of a pilot project and the ROI that Company X would achieve in the short term, the recommendation would be for the firm to invest in RFID first at its Belgian office, and thereafter in other worldwide locations.

As such, it would seem feasible for other small to midsize container companies to invest in RFID technology. The results would be an immediate improvement with locating and managing a pool of containers, savings in the shipment organization and follow-up, enhanced customer service and a short-term ROI.

Melanie Hippler is the former general manager at Intermodal Tank Transport Europe, located in Brussels, Belgium. She undertook the postgraduate program in logistics management at the University College Group-T in Leuven, where she researched the impact of deploying RFID technology in small to medium size European container companies.