The development and implementation of radio frequency identification (RFID) technology has its own pace and peculiarities in different regions throughout the world. Companies worldwide know what potential benefits large-scale use of this technology can bring but there is still a long way to go, turning promises into performance.
Elsevier Food International, Vol. 7, Number 4, November 2004
Marco Ziegler

RFID, an advanced method of collecting product, event and/or transaction data quickly and easily by tagging items with a small chip and antennae and processing information via the computer, is not a new innovation. In fact, in many environments, it has been used for decades, primarily in security applications and to track assets. The technology continues to evolve, however, and new developments include open standards, lower costs, broader scope, wider commercial viability and significantly greater potential to improve business performance. Leveraging EPC technology, which involves a unique numbering system that identifies a specific item in the supply chain, to communicate information, RFID has evolved to the point where the size, economics, reliability, and applicability of tags allow for additional commercial applications.
To some extent, mandates from government agencies and retailers, such as Wal-Mart, Tesco and Metro, have contributed to RFID’s recent metamorphosis, as they require manufacturers to attach RFID tags to cases and pallets. As the RFID/EPC technology becomes more widely used - through both mandates and voluntary use - it will enable seamless communication across the supply chain, from manufacturers to end users. It will allow companies to streamline processes, gain valuable insight from their supply chain and their customers and, for those striving for the highest performance, transform their companies and develop entirely new and more effective business models

Varying degrees of confidence
In order to understand how executives view RFID and to investigate their expectations of the technology’s return on investment, Accenturerecently conducted surveys among RFID/EPC decision-makers at major companies in the United States, Europe and Asia.
Globally, the survey found varying degrees of confidence in the expected return on investment (ROI) from RFID. In Europe, 28 per cent of respondents anticipated a high ROI whereas in the US, the percentage was 44.
Respondents in Asia, have a fairly positive sense of the value of RIFD/EPC technology with 45 per cent expecting a high ROI. When you look at individual countries within the region, however, you see varying degrees of confidence.
Executives in South Korea were the most optimistic, with three-quarters (76 per cent) of decision-makers expecting high returns.
Executives in Japan, however, seem unconvinced of RFID’s value, with just 16 percent anticipating a high return. Slightly more than half (56 per cent) of respondents in China and 40 per cent of respondents in Australia said they expect high returns on their RFI  investments.

Shared benefits
Whether expecting high returns or still unconvinced, nearly all participants appeared to agree on one point: the benefits delivered through RFID/EPC go beyond the four walls of individual organisations. When asked whether the areas that promise the greatest benefits lie within their individual organisations, across multiple organisations (i.e.,including suppliers and customers) or in store operations, the vast majority (86 per cent) of US and European respondents said that the greatest benefits would be within the extended supply chain. The majority of respondents in Asia also most expected RFID benefits within theextended supply chain. China, however, went against this trend with 91 per cent of executives saying that they expect the most value of RFID within their own organisations instead.

Short-term gains
For the most part, respondents did not intuitively recognise RFID’s potential benefits, remaining focused on its short-term gains. Overall, the top-rated benefits are those directly focused on the supply chain.
For example, US and European executives cited lot track and trace as key benefits (48 per cent and 65 per cent, respectively), followed by improved recall management (45 per cent and 56 per cent, respectively) and better shipping and receiving (41 per cent and 51 per cent, respectively).
Respondents in Asia, however, cited production visibility and inventory visibility as the main benefits of using RFID. More than half of those surveyed said they expect RFID to provide advantages in shipping and receiving productivity (57 per cent), order accuracy (52 per cent) and returns processing (52 per cent). Two-thirds (64 per cent) said RFID will bring strong benefits to inventory management, while 56 per cent cited improved accuracy of raw materials, and 57 per cent cited lot track and trace.

A variety of barriers
There are, of course, barriers to implementation, the most important ones in every market surveyed being cost issues, market standards and stability. In the US, where pressure to comply with mandates and business case development is somewhat advanced, market stability and standards are particularly important. Ninety percent of US respondents viewed costs of tags and readers as a slight or strong barrier to RFID implementation where as 73 per cent felt that way about the cost of implementation. Lack of standards was cited by 63 per cent as a slight or strong barrier and 70 per cent cited market instability.
In Europe, respondents were generally less concerned about the barriers to RFID implementation. Overall, 74 per cent of respondents named costs of tags and readers as a barrier and 68 per cent named cost of implementation. Almost half (48 per cent) focused on lack of standards as a barrier with exactly half seeing market instability as a barrier.
The barriers highlighted by executives in Asia were similar to those in the US and Europe but with interesting national differences. In Australia, cost issues and market standards are prevalent concerns, Japan and Korea are particularly sensitive to costs, and executives in China expressed concerns about multiple barriers, including 60 per cent seeing investment in current solutions as a slight or strong barrier.
Although consumer perception and privacy issues received a great deal of media attention, the respondents to the survey did not see these issues as significant barriers to implementation. European and US executives surveyed were not strongly concerned about any lack of executive sponsorship for RFID initiatives, intellectual property rights issues or legislative and regulatory policies.

Implementation issues
The Accenture survey results reveal wariness over the full-scale implementation of RFID/EPC technology.
Although nearly all (86 per cent) of the US companies surveyed are currently “building or evaluating a business case” for RFID/EPC - with 21 per cent in a pilot phase and three per cent rolling out implementations - the picture changes in other markets. In Europe, 40 per cent of companies are currently conducting RFID/EPC business cases, 16 per cent are piloting the technology, and seven per cent report rolling out an RFID/EPC implementation.
On the whole, implementations do not show a  marked upswing until well into 2005 in the US and Europe with many targeting full-scale implementations for 2006 or later.
In Asia, planned implementation varies per country. Of the four countries surveyed, Australia is most closely examining RFID, according to the findings. Both Australia and Japan anticipate implementation in 2005, while Korean respondents envision this in 2007.
Respondents from China seem to expect some implementations in 2006 with almost half (45 per cent) looking at 2007 or later. The responses from China overall are quite interesting with a majority expecting a high return on investment from RFID but at the same time communicating overall concern about barriers and a hesitancy about timelines.
As companies in China - and around the world- learn more about RFID, conduct business cases and start using the technology, we expect the industry to become more certain about where the value lies, how to overcome barriers and, eventually, to discover how to transform their overall business to achieve new levels of performance and efficiency.
Unsurprisingly, respondents correlated their priority implementation areas with those they see as areas of highest potential benefit. In the US and Europe, core manufacturing logistics were top of mind: more than half (54 per cent) of the executives rated track and trace as a prime focus, followed closely by warehouse management (53 per cent), transport and logistics (52 per cent) and inventor management (49 per cent). In Asia, management of inventory and stock proved to be priority areas, with 79 per cent of respondents citing inventory management, 70 per cent citing warehouse management, 60 citing order fulfilment management and 59 per cent saying out of stock management was important.

The future is RFID
Clearly, the survey results show that manufacturers appreciate the value - and expected value - of RFID, but some of the benefits remain unclear to them. Looking ahead, however, market leaders need to turn this hesitation into action, as RFID/EPC becomes pervasive across supply chains. When that happens, the technology will provide a launch pad for dramatic improvement. It can ultimately revolutionise the business performance of manufacturers, create opportunities for innovation, open the door to a host of competitive advantages and offer new ways of generating top-line growth, bottom line profitability and customer satisfaction. While the future may seem somewhat unclear at the moment, this time of investigation, testing and learning is quite important. Those companies that take the lead at this time will likely be the leaders that find the value of RFID/EPC, become adept in using the technologies and truly transform their businesses to realise an unseen level of performance.