Is there an Economic Justification for RFID?
Thursday July 24, 2008
In the world of supply chain, I am constantly reminded that Radio Frequency Identification, or RFID, is the latest hot topic. Its benefits are written about frequently and I often listen to supply chain managers who ponder how to justify the introduction of RFID at their company. Companies have invested time and money into RF and bar-coding technology and have seen significant benefits. But justifying the upgrade to RFID based on potential cost saving has been a challenge.
A recent article showed that when RFID was compared with a barcode system in an average goods receiving area, the saving in labor costs would amount to a little over $20,000 per year. Considering the cost of implementing the RFID system and on-going expenses, any justification for RFID is going to have to focus equally on the non-economic benefits such as product visibility and data accuracy. In the end it may be that outside factors such as pressure from customers and suppliers may force companies to adopt RFID even when there is no economic justification.
A recent article showed that when RFID was compared with a barcode system in an average goods receiving area, the saving in labor costs would amount to a little over $20,000 per year. Considering the cost of implementing the RFID system and on-going expenses, any justification for RFID is going to have to focus equally on the non-economic benefits such as product visibility and data accuracy. In the end it may be that outside factors such as pressure from customers and suppliers may force companies to adopt RFID even when there is no economic justification.
Comments
That’s true at last. It was only an illusion that RFID is a kind of upgrade of bar codes. RFID is a transmission method of a signal about an object after its identification. However this is a very weak method and must be enforced by appropriate equipment to confirm that transmission has been successfully realized. This additional equipment is both complex and expensive. All it was discovered by life experiments without any scientific support, because of belief that it is a method of identification. Though Donald Rumsfeld have mentioned five years ago, that a message that nothing has happened is very important the majority of scientists haven’t noticed that such the message is absent in RFID technology and in contrast is present in bar code technology. At that time it was the “most baffling remark” but this is the reason why we are now where we are. It is good that this wrong convince will be destroyed by economy, but it is bad that not by methodology of thinking.
“Concerning RFID” at http://www.okulewicz.republika.pl/koresp.htm#LE_1, 2005.