Firms will adopt RFID tags faster than barcodes, despite cost hurdle

Radio frequency identification tags will be adopted faster than barcodes were 20 years ago, but there are still major hurdles to...

Radio frequency identification tags will be adopted faster than barcodes were 20 years ago, but there are still major hurdles to be overcome before the technology is in widespread use at consumer level, analysts have warned.

A survey of 250 senior executives from retail, consumer products and clothing companies, conducted by AMR Research revealed that 60% of respondents are currently evaluating RFID tags, and 10% already have projects in place.

Companies view RFID as holding great promise for improving B2B processes, such as reducing out-of-stocks and warehouse operating costs, the survey found.

However, the use of RFIDto improve the consumer shopping experience will have less impact, with companies concerned about the public perception of the technology rather than its potential for delivering value to customers.

Companies need to consider the overall cost of putting an RFID-based supply chain infrastructure in place, warned Pete Abell, an analyst at AMR.

"While all eyes have been trained on the cost of the tags, the significant investment required to build up the infrastructure has been largely ignored," he said. "This will inevitably come under closer scrutiny as organisations evaluate the total cost of implementing RFID, weighing it against the expected benefits."

Despite fears over high costs, RFID tags, which allow goods to be electronically tracked along the supply chain from warehouse to point-of-sale, are beginning to gain support among UK retail and consumer goods companies.

Tesco and Woolworths are conducting relatively small-scale trials of RFID tags and earlier this month Marks & Spencer announced the first large-scale use of the technology in-store.

The retailer, which last year successfully implemented RFID tags on 3.5million product delivery trays in its food supply chain, will begin tagging individual clothing items this autumn, in conjunction with RFID technology specialist Intellident.

M&S will be the first UK company to use ultra-high-frequency tags, which offer faster data transfer feeds and longer read ranges than high-frequency tags. This makes them suitable for applications in which many fast moving individual items need to be read, even if they are in close proximity to each other, such as in rails of hanging garments or stacked shirts.

James Stafford, technical executive at M&S, is confident that clothing tagging will bring a number of benefits. "RFID is the next big thing in retailing," he said. "It means we can aim for perfect availability for customers. We can also reduce handling and counting to free staff to spend more time serving customers."

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