Costs set to rise as RFID and barcodes battle

Cost will be a major inhibitor to any major radio frequency identification roll-out, with RFID investment pushing up overall IT...

Cost will be a major inhibitor to any major radio frequency identification roll-out, with RFID investment pushing up overall IT costs, analysts have warned.

John Davison, vice-president and research director at analyst firm Gartner, has expected the emergence of a dual barcode and RFID environment in the supply chain for many years.

"This will mean RFID and barcode processes having to coexist for some time - thus adding extra complexity and extra costs into the supply chain," he said. Gartner predicted that RFID would not become ubiquitous until 2018.

George Lawrie, senior analyst at Forrester Research, said the cost of tags would remain high for several years and that professional services to support RFID pilots were costly and were likely become more so.

Forrester research also warned that consulting and systems engineering skills were in short supply and expensive. It estimated that a business could spend £66,000 to RFID-enable a distribution centre.

A supplier taking part in Wal-Mart's RFIDtrial would need to spend nearly £42,000 to test the readability of tags on specific product types, said Forrester.

The analyst firm echoed the lessons learnt by logistics company Exel which found that something as simple as the placement of tags on packages was critical to RFID processes. Exel said that with tagging it became a largely manual process, making it inferior to barcoding. "Unless you can do this automatically, costs are prohibitive," Lawrie said.

Despite these problems, research company Analytica said many logistics providers are convinced that implementation know-how and consulting services will be their strongest selling point for RFID in the years to come.

Logistics firms hold back but are key to widescale RFID roll-out>>

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