The use of RFID technology is branching out beyond closed-loop supply chains, according to a report released July 17 by ABI Research. However, the report concedes, most RFID pilots and implementations are still compliance based.
In its 2007 Annual RFID End User Survey, ABI Research polled more than 175 companies in an online survey to determine their plans for either testing or implementing RFID (radio frequency identification) technology.
“The business case and value proposition for RFID is being realized across many types of organizations,” writes ABI analyst Michael Liard. “The results of [our survey] indicate that RFIDs opportunity is not limited to open-loop supply chain management; other application areas include asset management, security access control and inventory management in closed-loop environments.”
But according to Liard, while an increasing number of companies said they were using, evaluating or piloting the technology to support a number of different applications, “compliance is king.” In other words, the single most significant driver for RFID adoption remains the mandates imposed by Wal-Mart, the U.S. Department of Defense and the Metro Group in Europe.
Liard said the results of the study indicate that the greatest room for growth is in supply-chain-related applications such as tracking at the pallet, case and item levels.
He also said that of those respondents that decided not to use RFID technology after evaluating it cited a number of key issues: limited application relevance; the success of existing automatic identification software already in place; concerns about return on investment; and a lack of clarity regarding RFIDs potential benefits.
“These survey results mirror the patterns and pace of adoption that we have previously forecast,” Liard said. “They provide solid validation for our assessment of the direction of the RFID market.”