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Listen Up, Laggards!

It's time to get up to speed on RFID, before your competitors leave you in the dust.
By Samuel Greengard
Apr 27, 2016

Several years ago, being an RFID laggard could be considered a safe, even smart move. After all, RFID was an expensive new technology that didn't always work so well. Let other aerospace and energy companies, hospitals, manufacturers, logistics providers and retailers figure out where and how to use it—and whether it was possible to achieve a return on investment.

Well, early adopters in each of those industries did exactly that. They worked with RFID providers and standards organizations and, as a result, the technology has improved, prices have dropped and standards have coalesced. Just as important, companies in each industry have developed solid business cases for employing RFID, and many have shared information documenting the benefits, including cost savings, improved efficiencies, better inventory control, safer operations and more satisfied customers.

Illustration: iStockphoto
To be sure, RFID is still not a plug-and-play technology. Any reliable RFID provider or systems integrator will advise companies considering RFID to first conduct testing to demonstrate proof of concept and then pilot the technology. That's one of the critical best practices early adopters have developed for deploying the technology successfully.

And RFID has not yet reached the tipping point in any industry, though that's likely to occur in apparel retail within the next year or two. The need to compete in an omnichannel world is one of the business cases driving adoption. Retailers now understand that in-store inventory accuracy is key to omnichannel retailing, and RFID is the only efficient way to achieve it. In a recent Tuned In column, Bill Hardgrave, dean of Auburn University's Harbert College of Business and founder of the RFID Research Center, said: "I firmly believe retailers must adapt to an omnichannel world or they will not survive."

RFID adoption is making steady gains in most other sectors. Recently, David Johnson, American Woodmark's materials technology and projects manager, said custom and office furniture manufacturers "are coming around to RFID" because they understand how the technology can address manufacturing problems by providing visibility into the production process (see Automating Craftsmanship). American Woodmark adopted the technology enterprisewide to better compete in the remodeling and new-home construction markets.

In fact, there's been a notable shift in this magazine's Vertical Focus articles, which examine RFID adoption in particular sectors. In the past, each story typically highlighted a few early adopters that were benefiting from RFID and explained the challenges the industry faced in using the technology, including identifying the business case, cost and tag readability. Now the benefit-challenge balance has shifted in diverse industries, including steel manufacturers, mining companies, airports, horticultural firms, and wine and spirits makers. In each sector, the business cases have been identified, and while some deployment challenges still exist, more end users are adopting RFID and seeing a return on their investment.

In some industries, government regulations are driving RFID adoption. Farmers worldwide, for example, are using the technology to identify livestock for disease management and prevention. In the United States, medical device manufacturers and food producers are exploring the technology to meet U.S. Food and Drug Administration (FDA) mandates. The FDA's Unique Device Identification system requires that most medical devices carry a unique device identifier to facilitate quick and efficient recalls. The Food Safety Modernization Act, which takes effect in January 2017, will require growers to monitor environmental conditions. Other companies are adopting RFID to comply with the Sarbanes-Oxley Act or facilitate state audits. In each case, organizations that adopt RFID to meet these regulations also find internal benefits.

In 2016, being an RFID laggard is no longer a smart or safe move. "In today's global business environment, technology innovation is the key to success," states Nandini Bhattacharya, a Frost & Sullivan senior research analyst. "Laggard companies are left behind by their peers. RFID is a critical component because it works in tandem with many other technologies."

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