AMR Research on the Auto Industry and RFID

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New survey data from AMR Research sheds light on why the automotive industry isn't embracing RFID more enthusiastically to cut down on the wildly inefficient process of replacing nondisposable containers, a process that costs the industry an estimated $1.4 billion annually. This article elaborates.

Nov 04, 2005This article was originally published by RFID Update.

November 4, 2005—AMR Research reports that the automotive industry loses as much as $1.4 billion annually to the process of replacing nondisposable containers. It represents a huge opportunity for the application of RFID to improve a costly, inefficient process, thereby saving an industry very meaningful sums of money. But by and large, the auto industry isn't looking to RFID as a solution. AMR teamed with the Automotive Industry Action Group to survey 70 suppliers about the issue. Despite the fact that a full 75% of respondents complained about the container tracking process, 41% have no plans to use RFID. Here are some of the reasons why:

  • Standards. Almost a fifth of the aforementioned 41% without RFID plans cited the lack of standards as the main impediment to deployment. Even those companies that have moved forward with RFID complained of lacking standards; in their case, however, the benefits of RFID outweighed this shortcoming.
     
  • RFID is too expensive. Half of the respondents complained that RFID is still just too costly. Indeed, the inability to achieve ROI was cited as the number one hurdle to deployment. Even for those that have moved ahead with RFID, achieving ROI is a nagging problem.
     
  • Asset tracking is more attractive. The automotive suppliers are less interested in using RFID to tackle the issue of tracking nondisposable containers than they are in monitoring the location of their high-value assets.

This last reason is notable given its consistency with a larger trend: the increasing popularity of closed-loop asset tracking. There is continuing evidence that RFID, which initially captured the attention of suppliers and manufacturers due to customer mandates, is being applied more for asset tracking applications and less for cross-partner supply chain visibility. For more on this trend as represented by the real-time location systems (RTLS) market, see the following four-part RFID Update series contributed by Yankee Group.

  1. The Active RFID Market, Part 1
  2. RTLS Market To Exceed $1.6 Billion by 2010
  3. Overview of 802.11 RTLS Vendors
  4. Overview of Legacy RTLS Vendors

More on the survey from AMR Research

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