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Aberdeen on RFID Adoption in Manufacturing

Research firm Aberdeen Group last week released the latest installment in a series of reports on RFID adoption by manufacturers. Entitled , the report is available free. In this guest contribution, report author Russ Klein summarizes the key findings and recommendations for action.
Feb 05, 2007This article was originally published by RFID Update.

February 5, 2007—During the last six months, Aberdeen's Emerging Technology Practice surveyed more than 150 manufacturers using or planning to adopt RFID technology. They expect the technology to help in three general areas:
  1. Optimizing the procurement and management of raw materials
  2. Monitoring tools, equipment, parts and personnel in the production environment
  3. Providing forward demand visibility into the supply chain
Penetration of RFID into the manufacturing sector is only three or four percent today; but, growth is strong -- over 112% in 2007 -- and the average manufacturer's RFID budget will grow from $50,000-$75,000 per year in 2006 to $100,00-$200,000 in 2007.

Key Business Value Findings
  • New RFID initiatives in manufacturing planned for 2007 will add 51% new demand into the RFID market in that sector, and RFID budgets for manufacturing initiatives already underway in 2006 will increase an average of 61%.
  • Best-in-class manufacturers are twice as likely to select an RFID vendor based on the customer service and infrastructure maintenance record (and half as likely to select a turn-key solution) than average manufacturers.
  • Sixty-two percent of manufacturers cite data integration as their top cost concern when they consider an RFID initiative.
Implications & Analysis

There is a direct correlation between best-in-class performance and compatibility of the RFID solution to installed process management systems; to the type of manufacturing, industry, or materials; and to the manufacturer's primary performance objectives.

Recommendations for Action
  1. Anticipate a massive influx of real-time data and verify that your critical systems and business processes are ready to adapt to new sources of business intelligence.
  2. Prepare for close collaboration with supply chain partners. Your data-sharing policies and integrated systems will help reduce inventory overhead and out-of-stocks.
  3. Automate manual processes to reduce the likelihood of errors. Then leverage real-time alerting so that your staff can focus on the exceptions.
  4. Understand the big picture and the constraints that your legacy systems place on the RFID solution; start small, measure often and plan to grow rapidly.
The full report, available free on Aberdeen's website until March 30th, discusses each of these points and many others in detail.
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