Signs are Pointing Up for RFID, AMR Analyst says, though Broad-based Supply Chain Applications still Lagging

Is RFID starting to gain some level of critical mass?

Maybe yes, maybe no.

From a RFID equipment and solution provider perspective, there have always been pros and cons associated with increased understanding and adoption of RFID technology.

Just as with the bar codes, RFID's auto ID predecessor, at a certain level of critical mass and understanding, RFID technology becomes more heavily standards based, interoperable, and routine, leading a to level of commoditization in equipment and basic services that can impact the amount of support customers need and sales margins.

The smallest mom and pop retail store, for example, for many years has been able to easily by and successfully implement and bar code scanning system. Some day, this will be largely true for RFID as well.

But prior to that, after a technology goes through its early pioneering days, there can be comparative booms times as adoption takes off, but the technology has not yet fully commoditized.

Are we close to entering that period for RFID?

Various observers are sensing, in the post-Walmart RFID era, that activity and adoption are starting to move forward at a fairly steady pace.

That includes AMR Research analyst Dennis Gaughan, who wrote this week that he has observed a variety of somewhat anecdotal data points that are leading him to think that RFID may at last be moving towards something like critical mass.

"I've seen a spike in the volume of [RFID] inquiry requests just within the last month," Gaughan says. "These companies aren't just kicking the tires on RFID, but looking at broader production deployments."

This is a "striking" difference, he says. In past years, too often companies "were doing RFID pilots that never went anywhere because they were either based on some compliance mandate or were IT driven."

He cited one recent discussion in which he was talking to an IT person about RFID middleware software, but for a project for which there was no doubt that it was being led by the business with very clear goals and a focused sense of where the ROI would be.

Where is the RFID Action? 

While RFID seems to be gaining a strong foothold in many areas, most still tend to be outside the core supply chain, or niches within the supply chain, rather the type of cross trading partner applications originally envisioned by EPCglobal.

"Most of the applications are what I would classify as "closed loop", meaning that the implementation is strictly within the control of one company," Gaughan told SCDigest.

He cited the many production projects he has seen in applications such as patient and equipment tracking in hospitals, general asset tracking, and cargo tracking, but says he is also seeing growing interest in work-in-process tracking in manufacturing.

He said there is also activity in applications "that are more focused on improving customer experience through the use of RFID."

"I wouldn't say any of the examples that I have seen are anything new or revolutionary in how RFID is being applied, but it is interesting that the volume is up and all of the examples are talking about production deployments," Gaughan told us.

In the consumer goods to retail industry, the primary action continues to be in apparel sector, where a number of successful pilots and a few production systems are being deployed, with many more of each expected soon.

Gaughan also says that in his conversations with RFID vendors across several solution areas, the tone is increasingly bullish.

The past few years "have definitely been in the trough of disillusionment," for most RFID vendors, Gaughan observes. "The journey has forced them to reset their expectations and be more pragmatic about the opportunity."

Nevertheless, "Over the last few months, I've seen something new from many of the vendors - a quiet confidence," Gaughan says. " Some highlight increased levels of new prospects and others talk more about a steady flow of interest, but the common thread is that the work being done...is all for production use cases."

Gaughan adds that improvements in RFID-related software are playing an important role.

"I think we are evolving from a focus on pure middleware software to more packaged solutions around that middleware," he told SCDigest. "Having big vendors like Microsoft investing in RFID support for their middleware is helping the solution providers by letting them focus on building the specific solutions for different industry scenarios as opposed to spending all of their time on building the infrastructure. I think this is helping to reduce the time it takes to deliver some of these implementations which can lead to quicker time to value."

Source: http://www.scdigest.com/