Boosting Profits in a Sluggish Economy

And it's not just manufacturers. Hospitals and medical clinics have tons of mobile devices as well, and they often pay rental costs on equipment they don't need. Smart hospitals worldwide are adopting RFID to root out these inefficiencies. Bon Secours Richmond Health System, which runs five hospitals in the area of Richmond, Va., is employing RFID to track a wide variety of assets across its facilities. This has increased asset utilization and reduced rental costs, saving the company $2 million annually (see Bon Secours Richmond Finds RFID Saves $2 Million Annually).

Retailers can also improve margins by better managing inventory. The University of Arkansas' RFID Research Center has shown how the technology enables apparel retailers to take inventory more often, with little extra cost. The added visibility of frequent cycle counting increases inventory accuracy.

Although there have not been any studies to prove greater inventory accuracy boosts margins, RFID Journal's Fashion Retail ROI Calculator shows how selling just a few items at or near full price can quickly lead to a 4 percent boost in profits. I bet a detailed study would show RFID actually improves margins by more than that, because when stores are at their busiest, execution is at its worst. That is, when a store is filled with people, employees are focused on helping customers, not on replenishment. Items not sold during the rush are marked down later.

How much RFID can improve your company's profit margin depends on many factors—your industry, the size of your company, the number of mobile assets you use in your operations, and how efficient you are. Another big question is how rigorously you use the technology. Airbus, for instance, plans to use RFID wherever it can improve inefficiencies, so it will achieve more benefits than companies that simply deploy the technology to solve one or two problems.

What's more, when you utilize RFID as an extension of your IT system to manage your mobile assets, the benefits keep accruing. And as you track more mobile things, there is little extra expense beyond tag cost. When the economy picks up, this could enable businesses to grow revenue without significantly increasing costs, leading to even greater profits down the road.

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.