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Focus on the Value of RFID

Companies must sort through the noise and learn where and how RFID can deliver real business value.
By Mark Roberti
Apr 02, 2007I never went to business school, but it's always seemed pretty obvious to me that if you want to succeed in business, you must offer a product or service that has value—one that saves someone money or time, or that makes their life or business better in some way. But creating value alone isn't enough. You must also convince companies or consumers that what you offer will benefit them, which can sometimes be as challenging as creating value itself. That's especially true in a new market, such as radio frequency identification.

Vendors of RFID hardware and software are having trouble convincing end users of the value they create. A vendor might have 20 or 30 customers that are getting a return on their investment, but most of those companies won't publicly endorse the product or provide specific ROI numbers. The fact is, RFID is creating value for tens of thousands of companies around the world, but there is a dearth of positive stories about RFID.

Instead, we see headlines such as Businesses Back Off RFID, and DHL Backs Off Plans for RFID on Every Package By 2015 and Wal-Mart Rethinks RFID. These stories imply there is little or no value in RFID.

The truth is much more complex. Take Wal-Mart, for example. Many recent news stories focus on how many distribution centers it has—or hasn't—RFID-enabled. But back in 2005, after touring an RFID-enabled store with Simon Langford, Wal-Mart's director of transportation and RFID, I wrote a case study explaining in detail how Wal-Mart uses RFID to reduce out-of-stocks. (A study by the University of Arkansas RFID Research Center confirmed the technology was reducing out-of-stocks by 16 percent on average, and up to 60 percent on fast-moving items, such as batteries, razor blades and soft drinks.)

We charge $189 per year for our magazine and premium content online because we believe in the value we create. A retailer would get more than $189 in value from that one case study on Wal-Mart alone. Similarly, a consumer packaged-goods company could learn about a way to boost its revenues just by reading our cover story in the March/April issue on how Kimberly-Clark is using RFID and software from OATSystems to increase sales of promotional items.

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