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A Better Year Ahead

Demand for RFID hardware, software and services will be stronger in 2008, but don't expect the volume of products purchased to soar.
By Mark Roberti
Dec 17, 2008Last week, I explained why 2007 was a year of retrenchment for providers of RFID hardware, software and services (see Good Riddance to 2007). This time, I will lay out the trends I see for 2008 and explain why I think next year will be a better one for technology providers, making them better able to meet the needs of end users.

1. Demand for passive UHF tags based on EPCglobal standards will rise, but not soar. There are many suppliers to Wal-Mart, Target, Metro, Tesco and the U.S. Department of Defense that are just doing the minimum—slapping tags on cases and pallets, then washing their hands of RFID. But a small group of forward-thinking suppliers, such as Kimberly-Clark and Procter & Gamble, continue to explore how they can use the visibility EPC data provides to improve how they do business. These companies will continue to consume more tags for tracking promotions and items that are often out of stock.

As these companies speak about the benefits, more suppliers will realize they are missing a huge opportunity by not tracking promotions and high-value or fast-moving products. But it takes time to get the systems in place to turn the data into actionable information, then change business processes to act on the data. So while I expect tag and reader purchases to increase, I don't think we're going to see enormous growth.

The one wild card here is the study Wal-Mart is undertaking with help from the University of Arkansas's RFID Research Center to determine whether it can improve sales across an entire product category. Wal-Mart is asking all suppliers in the test category—air fresheners—to tag cases and pallets of products sent to the pilot locations (see Wal-Mart, Sam's Club Push RFID Further Along). If the results show significant benefits for Wal-Mart and its suppliers, the retailer could encourage more suppliers to tag more cases.

2. End users will continue to find internal applications attractive. I conducted a question-and-answer session with Mike O'Shea, director of auto-ID sensing technologies for Kimberly-Clark, at our recent RFID Journal LIVE! Canada 2007 event. He mentioned that KC had launched a passive ultrahigh-frequency (UHF) asset-management system for tracking containers in its distribution yard. Even as companies like Kimberly-Clark aggressively pursue the benefits of Electronic Product Code (EPC) technology with Wal-Mart and other supply-chain partners, they are also seeking to employ the technology internally to solve business problems, improve efficiencies and enhance their operations.

This year, many companies launched "four-wall" applications—that is, projects involving processes within a company's own operations—and you will see plenty more in 2008. The word is out that RFID is not just about tracking boxes in the supply chain.

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