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Cost Control Is Now Key

With sales slowing, CEOs worldwide are focused on reducing costs across their operations. That's bound to make them more open to using new technologies, including RFID.
By Mark Roberti
Mar 02, 2009Yesterday marked the seventh anniversary of the launch of RFID Journal's Web site. As I reflect on all that has occurred over the past seven years, I am astonished at the many applications of radio frequency identification around the world, the many companies employing the technology and the industries to which it has spread.

But I'm also a little surprised that RFID technology has been confined to a relatively small number of forward-thinking companies in each industry. That might be due, in part, to the fact that the technology is not as easy to deploy as, say, a Web-based application. And part of it, I suspect, has been the strong economy throughout this seven-year period.


If you're scratching your head and wondering why strong economic growth would impede RFID adoption rather than foster it, let me explain: In a healthy economy, CEOs are more willing to accept inefficiencies, and are not as focused on deploying new technologies to reduce costs, as they are during a recession. Rather, they are more intent on boosting sales. RFID will always have to compete with many other technology projects, and when times were good, I think a lot of money went to such projects as customer-relationship management and sales-force automation.

Many businesses ceased all new capital investment in the fourth quarter of 2008. Because of the sudden shift in the economic climate, many CEOs felt it prudent to determine how bad things might get—and most turned their attention to reducing costs. I know, from speaking to both RFID vendors and the end-user community, that all are examining their expenses much more closely now. As the CEO of RFID Journal, I've spent far more time on cost cutting in recent months than I had in previous years, and have also invested in some new technologies (voice-over-IP, list management software and so forth) in order to reduce costs wherever and whenever possible.

It's clear that the rate of economic decline has slowed, however, and will likely flatten out in the third or fourth quarter of this year. Credit markets are beginning to thaw, and companies will begin investing again. As CEOs look at reducing costs, they will undoubtedly consider new technologies, such as RFID—not just because many projects can deliver a return on investment (ROI) in less than a year, but because they can achieve that ROI in less than a year and use the technology to achieve longer-term efficiencies that will help them become more competitive and profitable when the economy ultimately bounces back.

Some have suggested that the current recession could end within 12 months, but the minutes of the recent U.S. Federal Reserve board meeting included this line: "A few [board members] indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment, and by an appropriate rate of inflation." If that statement is accurate, then reducing costs across a firm's entire operations is going to be even more critical than ever.

Back when I launched RFID Journal, I felt that radio frequency identification technology could be an extremely powerful tool for improving efficiencies, especially when used as an infrastructure for many applications. Based on the successful real-world deployments we've covered since then, I believe that to be true today, more than ever. A few companies, such as Airbus, have already adopted this infrastructure approach, and I think others will follow as well. RFID Journal's function, over the next seven years, will be to highlight those success stories so other companies can learn from them and achieve their own successes.

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 or click here.
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