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Disappointed in RFID Adoption?

The industry needs to look beyond price and fix these other issues.
By Jack Romaine
Jul 05, 2015

It has been commonly believed, and widely repeated, that the barrier to passive ultrahigh-frequency (UHF) RFID adoption is the cost of the tags. Deeper investigation and critical thinking indicates that while price is a contributing factor in certain applications, there are other problems that the industry must address in order to accelerate the technology's adoption. I believe that there are four challenges limiting RFID adoption: tag cost, industry fragmentation and segmentation, the cost of software infrastructure replacement, and the technology's environmental dependence.

Cost of Tags
This isn't generally the problem. Although tag cost is often cited as the biggest obstacle, it is really only an issue in open-loop applications. Such applications are those for which a tag is paid for and affixed to an object by a user that will then ship or transfer the item to another user outside his or her system, and thus lose the ability to gain additional value from the tag. An example of this is a supplier tagging a pallet right before it goes out the door to a distributor or end customer.

The cost of tagging or labeling is truly measured against the benefit gained each time the object is scanned. In open-loop applications, the opportunities to benefit from an RFID tag are limited, making the break-even tag price much lower. In contrast, closed-loop applications may offer hundreds, thousands or even tens of thousands of incremental benefits as a tag is used over and over again. A closed-loop application involving reusable bins or totes in which sanitization destroys bar codes is a prime example. Here, a bar code is good only for a single use, but RFID tags may be used for years. In this particular example, a typical manufacturer using RFID tags may save more than $100,000 annually versus the cost of utilizing bar codes, based solely on the benefit of RFID's increased durability.

If tag cost were the only factor limiting adoption, we would have seen widespread deployment of RFID in closed-loop applications years ago. Since this clearly isn't the case, the argument that price is the problem breaks down. Although price certainly matters in the wide array of existing open-loop applications, ignoring the other issues has been a significant factor limiting RFID's adoption.

Industry Fragmentation and Segmentation
Industry fragmentation refers to the lack of dominant suppliers. There are so many choices for customers seeking RFID solutions that the selection task becomes daunting, and it is easier to hold off on making a change. Recent consolidation in the industry has certainly helped, but more is necessary.

Industry segmentation refers to the wide array of suppliers required to pull together a complete solution. Customers typically find their way to the suppliers of tags and readers, but tags and readers alone do not solve customer problems. A complete RFID solution requires design, readers, antennas, tags, brackets or enclosures, cabling, RFID middleware, application software, software-integration services, installation services and training.


Stefano Coluccini 2015-07-10 05:44:51 AM
Hi Jack, very nice article. Anyway do not completely agree on the comparison you make with barcode technology. It is true that a barcode is much more simple to implement but that would be the same for and RFID system if you look for the same way of working: single item scanning. The point is that RFID opens new possibilities, otherwise it make no sense to invest more to obtain the same result. In my opinion bulk reading is one of the key feature and it requires a different SW (or a middleware) because it is a bulk reading, not because it is RFID, isn't it ?
Suresh SAWHNEY 2015-07-12 10:48:59 AM
Hi Jack Great article - many of the points you have brought out are extremely valid. The need of the hour is not a pure "middleware" but one which also has business rules built in to be able to provide standalone solutions. And yes, a single point of contact for implementation - for RFID I would not all him a System Integrator but a Solution Provider who designs, supplies and implements a full solution -including full RF service. Unfortunately the RF engineer is a rare breed which also has led to RFID getting a bad name. We at Dolphin RFID are moving ahead with this business model and are seeing a lot of traction -not only in India but also internationally through our Channel Partners using our complete solutions including the middleware. And the middleware - Edge Wizard - is cost effective , backward compatible to Bar Code infrastructure and-also IOT ready. As we are seeing a lot of traction, maybe this is thee auto go.

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