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Euro Logistics Providers Rank High for RFID

A study by market research firm IDC shows that logistics companies are leading the way in piloting and deploying RFID in Western Europe.
By Jonathan Collins
Jan 19, 2006Logistics companies are leading the way in piloting and deploying RFID in the European market, according to a new report from market research firm IDC.

The study, "The Status of RFID in Western European Verticals," finds that 17.5 percent of companies in Western Europe's manufacturing, retail/wholesale and logistics sectors piloted or planned to pilot radio frequency identification in 2005, with 5.1 percent implementing it or planning to implement it.

Ivano Ortis
The survey was carried out in March and April of last year with 286 respondents, generally CIOs and IT managers from across Western Europe taking part in phone interviews. Respondents working for discrete manufacturing companies accounted for 34 percent of those surveyed; process manufacturers, 26 percent; retail/wholesale organizations, 20 percent; and transport/logistics providers, 20 percent.

IDC found logistics to be the sector most actively investigating RFID. Some 23.2 percent of companies in logistics/transportation are planning to pilot RFID, while 19.3 percent in discrete manufacturing, 16.9 percent in process manufacturing and 14.2 percent in retail are planning to do so.

"Logistics companies see RFID as a way to help improve their own internal processes," says Ivano Ortis, program manager for retail and transportation at IDC European Vertical Markets. "The technology also wins more support from key influencers within the company. Logistics/transport respondents indicated a higher influence from CEO/managing directors, further confirming that executive sponsorship is a critical factor to drive RFID adoption among Western European organizations."

More efficient management of inventory is one key benefit expected from the implementation of RFID in the verticals covered in the survey. Improved control over inbound logistics is another perceived advantage. Approximately two-thirds of all respondents cited improved inventory management and control over inbound logistics as key benefits, while nearly 70 percent of respondents from companies in discrete and retail/wholesale saw loss prevention as a key potential value.

Using RFID to identify and track pallets continues to be an important goal of many respondents, particularly those working in the process manufacturing and logistics/transport sectors. Approximately 80 percent of process manufacturers and 67 percent of logistics/transport providers cited pallet tagging as a primary goal, while 54 percent of discrete manufacturers expressed an interest in using RFID to track returnable assets (containers, trailers, pallets and reusable packaging).

Of the companies that have run pilots using RFID technology, the survey found only a very small percentage (less than 1 percent) where the pilots have not been followed by implementation. One main reason mentioned by those companies for not implementing RFID is that its adoption by other companies in the supply chain is still limited, creating delays in achieving the overall value.

The survey's results counter those of an earlier study from U.K. analyst Analytiqa, which found that reluctance among European third-party logistics to deploy RFID was threatening to slow down the deployment of RFID in supply chains across Europe (see EU Logistics Providers Shirk RFID Role). The IDC report is available for $4,500.
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