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Small Victories

Little companies face big challenges when deploying RFID. But by working with a systems integrator or managed services provider, they may be able to keep costs down, and even earn a return on their investment.
By Beth Bacheldor
Apr 10, 2006—RFID may have earned a reputation as a technology better suited for large companies with big IT departments and vast budgets. Nonetheless, small companies—just like their larger competitors—sell to Wal-Mart, Target and the U.S. Department of Defense, which all require their suppliers to ship goods in cases and pallets labeled with passive RFID tags. Just because a company is small doesn't mean it can't get a good return on investment from an RFID deployment. Still, for small to midsize enterprises (SMEs) without hefty resources in money and staff, deploying an RFID system poses special challenges.

Typically, SMEs have less money to devote to an RFID implementation and few, if any, on-staff IT experts well-versed in the technology, whether the system involves passive tags (often used in supply chains) or active tags (used for asset-tracking applications). Having a smaller budget also means a company won't likely be able to spend the kind of money required to integrate RFID into the thick of their supply chains and generate any real return on their RFID investment.

Even if a company is blessed with a big budget and sizable staff, however, deploying an RFID system is not easy, according to John Fontanella, senior VP and research director of supply chain services at the Boston-based Aberdeen Group. Those that have tested passive RFID technology often have had to develop workarounds to overcome tag limitations, such as the fact that liquids and metals—two components often found in consumer goods and their packaging—can interfere with the RF signals, preventing RFID readers from getting data from the tags. To improve internal operations and achieve a solid return on investment, companies also have to consider revamping business processes and building links between RFID systems and the back-end systems that store order-fulfillment, inventory, logistics and other data.

"The difficulty for a small company is more of a technician issue than an engineering issue," Fontanella says. Aberdeen Group and many others generally characterize SMEs as those with revenues of $1 billion or less, while small companies are generally defined as having revenues of less than $50 million.

Standards-based, passive RFID tags, Fontanella explains, don't come with very many custom options. Companies can't really change what the tags do, but they can markedly change how RFID works in their environments by positioning the tags and readers in different places, or by using different types of interrogators such as fixed-position readers or mobile readers.

"It is almost like putting in a home theater—everybody's needs are different, so there's a lot of trial and error in determining the best way to set it up," he says. Although these challenges apply just as well to large companies, the smaller ones typically don't have the necessary staff or money to run the technology through numerous scenarios until getting things just right.
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