RFID and the supply chain Part 2

Markets

The RFID market is currently in a state of increased activity and heightened interest
triggered by various regulatory and customer mandates, necessitated by the need for
increased supply chain visibility and security. Visibility is the foundation of supply chain
event management. It is the glue that binds the total business decision-support and
technical processes to integrate the supply chain components, both within the business,
and with external providers, suppliers and customers.. These visibility and security
requirements have come about mainly as a means of cost control and maintaining the
integrity of goods within the supply chain and have been influenced by: longer and more
complex global supply chains; the increased threat of global terrorism; increase in
counterfeit goods; the emergence of grey markets; the need for manufacturers to protect
their brands.
The increased activity surrounding RFID is characterised by an increase in the number
of significant pilot projects by recognised companies and a plethora of RFID related
events, along with increased amounts of media attention. Research suggests that
interest in RFID is at its highest point and climbing, yet shipments have not soared to the
levels suppliers previously anticipated.
The increased activity, particularly in media coverage led a research firm, A.T.Kearney,
to describe RFIDs current transition as being firmly entrenched in the technology "hype
cycle." This cycle describes how technologies are introduced and how they mature over
a period of time through a boom, bust and stabilisation phase. According to the firm,
emerging technologies at first experience a steep "hype" curve as the benefits and
paradigm-shifting characteristics are promoted by industry pundits. A plummet then
follows into a "trough of disillusionment" as inflated expectations get pushed aside by the
reality of performance. Finally, as the benefits are better understood and realised,
mature and stable offerings emerge. The research firm indicate the boom and bust and
subsequent stabilisation of the E-commerce revolution as being a good example.
In the case of RFID/EPC it is indicated that the path to maturity should be a rapid rise
followed by a dramatic decline in interest, followed by a levelling off and industry
consolidation in two to three years. By which time, RFID hardware will become a
commodity product and system integration and services will dominate. For vendors,
2008/09 are likely to be important years of market definition and time for establishing a
firm presence in the future of the RFID/EPC vendor industry. Subsequently, the more
astute vendors will successfully manage this transition and emerge as wiser and
stronger players. Researchers go on to suggest that timing will be an important factor, as
first movers can quickly lose their advantage to savvy competitors that know when to
invest and when to wait.

Pilot programmes

VDC reports that in the short-term as the RFID market continues to develop momentum,
pilot programmes will continue to provide a moral boost to the industry, by demonstrating
the value proposition of RFID and can be seen as a prelude for broader adoption.
According to VDC, the rapid expansion of the RFID market has been in the main
subdued by the following factors: the lack of industry and application standards; the
approaching saturation of traditional RFID applications; the lack of education and
weakness of indirect channel support; the highly fragmented competitive environment
and lack of a convincing business case - primarily return on investment (ROI).
However, vendors have been quickly working to resolve these issues through partner
programmes, expanded product lines, standards initiatives, new application
developments and customer education.

The RFID Printing market

The Smart label printer/encoder is an enhanced thermal bar code printer and set to be a
significant revenue earner, through the extension of existing product life cycles, whilst
requiring minimal investments in terms of R&D. These printers are capable of printing
both traditional bar coded labels and on- demand RFID encoded smart labels.
There are many reasons for Smart Label Printer/Encoders: compliance mandates do not
relinquish the need to have human readable data, bar coded data, along with RFID
encoded data so there will be a variable mix of bar coded and RFID tagged items;
electronic systems fail periodically, having multiple data types can guard against system
redundancy; data consistency which is a must across the range of data provides a
means of validation.

The RFID reader market

The greatest demand for RFID readers in the short-term will be of the fixed sort,
strategically positioned within warehouses to monitor stock as they are received, stored
and dispatched. In the longer term, as tag prices fall and item level tagging becomes
more prevalent the demand for handheld portable readers will increase. These RFID
readers can cost from a few hundred dollars for a handheld reader to up to several
thousand dollars for a fixed reader.

The RFID services market

The market for RFID related services will be in greatest demand in the near-term given
the embryonic nature of the technology. As companies strive to meet compliance
deadlines they will seek outside help for successful implementation and turn to
consultancy firms, which will drive growth within the services area. Longer term, it is
anticipated that software will represent a larger percentage of the total RFID market,
given more enterprise deployments of the technology (as opposed to mere compliance),
leading to software upgrade cycles.

Part 3 to follow.

Maxatec Europe - POS Systems