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AMR Research: 2005 Another Transitional Year for RFID

AMR Research of Boston, Massachusetts, last week published the findings of a recent survey of 500 companies about their RFID plans.
Jul 25, 2005This article was originally published by RFID Update.

July 25, 2005—AMR Research of Boston, Massachusetts, last week published the findings of a recent survey of 500 companies about their RFID plans. Following is a recap of the most important points related to how companies are using RFID; tomorrow will feature the report's data about RFID budgeting trends and the vendor space.

One of the report's key findings is that return on investment for RFID persists in being elusive. The technology is expensive and immature, and standards are still not where they need to be. As such, most companies deploying RFID are doing so because they are under mandate to do so, be it from Wal-Mart, the DoD, or the handful of other retailers that have issued mandates in the last 12 to 18 months. A scant five percent of the companies AMR surveyed said they would be evaluating RFID even if they were not under mandate.

Pointedly, the concept of what RFID can offer is extremely attractive, according to the survey. Supply chain inefficiency was cited as the leading operational challenge by respondents, with the top three inefficiencies being lack-of-goods visibility, out-of-stocks, and inventory costs. It is in precisely these areas where RFID-enabled supply chain visibility promises transformative improvements. But until and unless the technology matures and cheapens, those improvements will remain a promise only, and other solutions to supply chain inefficiency will continue being sought.

The fact that compliance is driving RFID adoption means that the technology's "natural" evolution (generally 5 - 10 years for an emerging technology) is being "unnaturally" accelerated. This is good on the one hand, in that it incents RFID software and hardware providers to innovate and improve their product at faster rates than the market would otherwise demand. But on the other hand, it means that those companies under mandate are bearing the burden of integrating immature and rapidly changing technology. In essence, RFID innovation is coming at their expense.

The picture will improve, concludes AMR, but at a much slower rate than previously predicted. Only 8% of the survey respondents are fully deployed, with 61% planning to pilot, evaluate, or implement RFID in 2005. The result is that this year will be another transitional one for the greater RFID industry. "The focus will be on customer acquisition and market education versus real revenue growth," says the report.

More report details here
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