Survey: RFID Users Fret over Cost, IntegrationBy Jacqueline Emigh | Posted 2004-09-22 Email Print
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Users are gearing up with RFID pilots, but they still worry about integration tools, costs, standards, and "the early and untested market," according to new survey results. Analysts say these issues will work themselves out over time.Many organizations are trying to get ready for RFID, even if they're not sure all the technology is in place to support it, results of a new survey suggest. The concerns that users express in the survey costs, an early and untested market, standards, and lack of sophisticated integration softwaremesh with some of the observations made by industry analysts in recent weeks.
The survey, which was conducted among 135 attendees at last week's Frontline Solutions show in Chicago and released Wednesday, found that 22 percent of respondents have already launched an RFID pilot. Another 42 percent plan to implement RFID within the next 12 months, while 21 percent are looking at deployments 12 to 24 months down the road.
Why are they moving to RFID? Major expectations include improved ability to track goods and meet customer requirements, as well as greater efficiencies in shipping and receiving, according to the study, which was jointly produced by Wavelink Corp. and Frontline.
Warren Wilson, an analyst at Summit Strategies, theorized that users will start to reach goals around product tracking and shipping some time after initial compliance.
"Product suppliers have needed to start attaching RFID tags to maintain eligibility status with customers," he said. "The next phase is the benefits. The challenge is to leverage the investment [in initial compliance] so they can take further advantage of RFID in the future."
Also according to the survey results, many organizations have already gone ahead with the automated data collection applications needed for using RFID data within existing systems.
About two-thirds of the respondents either already use or plan to use these automated applications in inventory management systems, for instance.
The same holds true for 50 percent of respondents with regard to warehouse management systems and almost 40 percent for supply chain management systems.
But among those companies either already piloting RFID or planning to do so within the next two years, almost 60 percent cited costs as a major concern. Other worries included lack of standards (42 percent); integration issues (30 percent); and RFID as "an early, untested market" (36 percent).
Wavelink's Hermelee said that RFID costs and standards will ultimately fall into place, just as they have for some other technologies after the "early market" stage.
Wilson anticipates that passive RFID tags, now priced at about 20 cents apiece, will eventually drop to under five cents each, but not for another few years. By then, item-level tagging will start to make better economic sense, he said.
As he sees it, key drivers toward lower pricing will include development of industry standards and incorporation of these standards into RFID-enabled middleware.
Integration software vendors, though, face bigger challenges on the RFID side than with some other types of technologies, according to Wilson.
"Supply chain systems have traditionally been very proprietary," he observed.
Wilson foresees opportunities in the RFID integration space not just for software vendors, but for two main types of integrators: systems level integrators and specialists in various verticals.
The new survey doesn't talk about user doubts over issues such as how to deal with RFID tags in liquid or metallic environments.
But Wilson thinks that users might come up with easy workarounds to these problems during their pilot tests. The analyst mentioned one company that figured out how to raise the accuracy of RFID tags affixed to metal drums.
"They literally went to the hardware store and bought some weather stripping. They put the weather stripping on top of the drums, and the accuracy was great," Wilson said.
Meanwhile, a recent report by analyst firm Forrester Research identified three types of players in the emerging RFID middleware arena: pure-play RFID startups; supply chain vendors expanding into the RFID realm; and large systems vendors such as IBM, Microsoft Corp., and Oracle Corp.
IBM's emerging RFID-enabled WebSphere products will integrate software from the recently acquired Trigo Corp., said Sharyn Leaver, a Forrester analyst, in an interview with eWEEK.com.
Microsoft's RFID middleware scenario spans .Net servers such as BizTalk and SharePoint, the analyst noted.
Check out eWEEK.com's Supply Chain Management & Logistics Center for the latest news and analysis of enterprise supply chains.