Focus on the Value of RFID

By Mark Roberti

Companies must sort through the noise and learn where and how RFID can deliver real business value.

image_pdfimage_print

I 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.

Many subscribers appreciate the value of our products and renew their subscriptions every year. But it’s sometimes a challenge to convince new readers of that value. They read so many free trade publications that don’t offer value, so they find it hard to understand our magazine provides the kind of detail that can really save them time and money.

Similarly, many RFID events have promised a great deal but delivered very little value. That’s why most events, including one last week, have seen such dramatic declines in attendance. While our events continue to grow, some end users are skeptical when we say that if they attend RFID Journal LIVE! 2007, they will gather enough good information to save them time and money researching RFID applications.

Going through the agenda for LIVE!, I count more than 20 sessions where a representative of an end-user company will present a case study involving a project that delivered real business value. Many other sessions will discuss how to actually design and deploy applications that deliver value. (If you are skeptical when I say our events are the only ones growing, view a list of some of the companies that have preregistered for LIVE! by clicking here.)

There are also RFID applications that will not deliver an ROI today, and I know many of our speakers will be honest about that, too. If RFID Journal can help you save money by not going down a dead-end street, we have provided a valuable service.

With so much noise in the marketplace—sometimes, it seems as if every RFID vendor is saying the same thing—it’s hard to know exactly which vendors are delivering value and which are pretenders. But if you follow in the lead of end users who have already implemented successful RFID systems and go with the vendors that have a proven track record, you will be able to use the technology internally or across your supply chain to generate real business benefits. And that’s what it’s all about.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.