| Last week, I offered
some perspective on the state of RFID, which in summary was
very positive long term, lots of questions short term, and
suggesting we needed more clarity about how to get from here
to there.
As promised, with the help of SCDigest’s Technical Editor Mark Fralick,
I’ve put together a list of The 10 Things Necessary for RFID/EPC to Thrive,
the full article of which you’ll find by clicking
here.
Compiling that list led to some thoughts around “tipping points.” This
is usually discussed in the context of when a company can reach a level of
volume at which it becomes economically feasible for a company to move EPC
tagging from being a function of distribution processes (very expensive) to
manufacturing. But the reality is that for RFID to bring real value and
reach critical mass, there are a variety of interesting “tipping points” that
must be crossed at both the industry and individual company level. These include:
- Volume
Tipping Point: When is there enough volume for
an individual SKU or complete product line to justify more
economical EPC tagging further upstream in the supply chain
(manufacturing, suppliers)?
- Cost Tipping
Point: When will fixed and incremental EPC costs
reach a point where a true ROI is possible?
- Performance Tipping Point: When will
read rates reach a level of consistent, virtually 100% performance
that systems and process can be designed with confidence
and automation?
- ROI Understanding
Tipping Point: When will the real ability of RFID
to generate substantial ROI be understood at the level
of understanding that we have traditionally required of
technology?
- Ecosystem
Tipping Point: When will there be enough support
throughout the supply chain, including the incredibly challenging
effort of having suppliers do source-level tagging, to
enable RFID to be used throughout the chain, and tagged
and read where it optimizes cost and benefits?
- Software
Tipping Point: When will there be scalable software
that can take advantage of RFID data, and when will those
be deployed and start delivering value?
Thinking about these tipping points led to our list of 10
key developments that must occur for EPC-based RFID systems
to thrive and deliver real ROI to users on all sides of the
value chain. They are discussed in more detail in the full
article.
- Clear identification must emerge of the incremental
benefits of RFID over other auto ID technologies and/or
the general benefits of new supply chain software applications. Today,
this is often too muddled.
- Total supply chain costs must be lowered. This
means net of variable tag and fixed infrastructure costs – regardless
of who nominally pays for the tags.
- Reference to the “five-cent tag” should
stop. At this point, it’s almost counterproductive.
- Tag and tag application costs must come down. Obvious,
perhaps, but there just can’t be real ROI at current
variable costs.
- Real global standards must emerge. Getting
close with EPC Gen 2, but not quite there yet.
- Technical performance must improve. Still
too much science project.
- Roll-outs should be pushed at a measured, ROI-driven
pace. Must be more sync between costs and benefits
for manufacturers.
- Thought leaders need to share more specifics about
ROI. Let’s hear more detail from those companies
that think they really have the insight.
- RFID-centric business applications must emerge. RFID
doesn’t provide value, business applications using
it do, and these are very immature right now.
- Ecosystems to enable upstream tagging must develop. Efforts
to get upstream/offshore suppliers to tag (where it makes
most sense) will be very hard.
What do you think of these 10 keys?
Agree or disagree? What would you add, or which do you think
are wrong?
Let
us know your thoughts.
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