RFID for supply chain WILL happen in 2011/2012

I know that we’ve been saying this for years, but we still hold firm to the notion that supply chain applications will begin to take off in the 2011/2012 time frame.   Data collected from all RFID communities continues to indicate this.  Here’s what’s keeping us settled on this time frame, among other indicators: 

 

• Although RFID budgets have been drastically reduced due to the recession, more than 60% of supply chain end users responding to this year’s survey indicated that investment will at least return to their historical levels by 2010, with an expected increase in 2011.
• Many enterprises using RD for supply chain that participate in our program every year (minimum of 5 years in a row now), are indicating – for the first time – that they expect their evaluations/pilots/small deployments to convert to commercialized programs within the next 2-3 years.
• The technology has become more commercialized and standardized, and its value proposition, business models, and benchmarks have become established and proven. These were continually listed as some of the primary barriers to adoption for RFID in the supply chain by most end users – this year, the same end users did not list these as primary concern and have stated that they feel the technology is ready (for commercial scale deployments).
• RFID continues to be adopted throughout the value chain, finally moving toward the point of manufacture and retail floor. End-to-end solutions are on the rise (i.e.: Charles Vogele), primary players continue to adopt (i.e.: Wal-Mart), and the value proposition continues to expand (i.e.: analytics, visibility, ‘action-ability’, etc.)
• The price-performance tradeoff continues to improve, especially for the EPC GEN2 market, continually lowering the cost justification points. For example, two years ago, RFID could be justified for use on items with a value to the enterprise of at least $35. This value has since dropped to approximately $15-20 (or less, depending on volume), a trend expected to continue for several more years.
• RFID continues to be integrated into supply chain infrastructure, even if it’s not the primary technology. The continued convergence of RFID with legacy AIDC solutions (i.e.: Bar Code), enables the enterprise to accommodate the solution if it is used, provide redundancy , and future proof itself for the eventual shift to RFID in the long-term - all of which keep positioning RFID as an emerging, yet core solution.
• The increased level of understanding of the end user, compounded with more evolved and higher value-add applications and a lower price point continue to facilitate adoption and drive further innovation.

We therefore reiterate our forecast that these opportunities will materialize – with revenues – in the second half of 2011 or first half of 2012.  We would advise suppliers focusing on these opportunities to recast their financial models to reflect this, and plan expenditures accordingly.  Now would NOT be the time to move on to another market, now would be the time to recommit to the incremental innovations that will make your solutions less encumbered by technical or commercial barriers.