Can RFID Deliver a Competitive Advantage?

Prada viewed RFID as a way to enhance the customer experience by offering high-fashion clothing in a sophisticated atmosphere. The technology was used to dazzle customers—when a patron put a tagged item on a hanger in a dressing room, the tag was read and information popped up on the screen. Sure, the customer could browse other expensive items, such as accessories with the product they were trying on. But the main point was not to cross-sell, but rather to impress. (Prada never pursued RFID in a big way, and it's not clear why. Some say the touch screen interface was not intuitive enough for customers, but it's possible the company was just ahead of its time.)

If you're a retailer, you can compete on price, style, product selection and other factors. If no one wants to buy what you sell, it's pretty obvious RFID won't help you. But what RFID can do is ensure that you execute better in the supply chain, and in stores. That means that when you offer the proper item at the right price, it's available in the store and in the correct place, so that when customers come to buy that item, they can easily find it.

Similarly, if you manufacture mobile phones but no one wants to buy them, RFID won't help you. But if your phones are popular, RFID could help you meet demand, and it could improve your profit margin if you use the technology to lower costs.

Some people we invite to speak at our events decline because they see RFID as a competitive edge, and they don't want their competitors to know how they're using the technology to improve business processes. I think developing a new product, such as an iPhone or a drug that can cure a disease, is a corporate secret that must be protected. But if you're using RFID to enhance your existing competitive edge—whether you're a low-cost or a high-end retailer, for instance—it's probably not going to make a difference if your competitor knows what you are doing. Airbus won't sell more planes, for instance, if it deploys an RFID solution a year or two ahead of Boeing.

What's more, there are advantages to sharing information about what you are doing. If other companies adopt RFID, it would lower the cost of the technology, increase innovation, expand the products available and so on. Airbus has been open about the ways in which it uses RFID to reduce costs, and it has encouraged its suppliers—many of which are Boeing suppliers as well—to employ the technology. If Boeing expands its use of RFID, then suppliers will also utilize it, and the entire industry will be more efficient. And the two companies will still compete with regard to whose planes are more efficient, offer a lower cost of ownership and so on.

Ultimately, companies should deploy RFID tactically to reduce costs or solve specific business problems, such as losing containers, but they should also look at the technology strategically. They should use it in ways that can increase their current competitive advantage to provide the lowest costs, the best service or whatever. And they should focus more on how to utilize the technology to their advantage, and less on what others know about what they do.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, RFID Connect or the Editor's Note archive.