Bring on RFID -- if you must

commentary Compared to the hype over the consumer privacy implications of radio frequency identification (RFID), the potential of the technology for business in Australia has received scant attention.Until now.

commentary Compared to the hype over the consumer privacy implications of radio frequency identification (RFID), the potential of the technology for business in Australia has received scant attention.

Until now.

According to new research conducted on behalf of Accenture, decision-makers at retailers and manufacturers in the Asia Pacific -- most notably Australia, China, Japan and South Korea -- are hardly running to embrace radio frequency identification technologies.

In fact, the feeling from many of the respondents surveyed (25 in each country)-- in Australia and Japan in particular -- is distinctly lukewarm.

To generalise about the Australian experience, it seems that while many respondents believe implementation to be inevitable and acknowledge some positives (particularly in the areas of production and inventory visibility, with the benefits accruing primarily across the extended supply chain), the return on investment is expected to be minimal.

Cost issues and market standards and stability are cited as major impediments to implementation, which by far the largest proportion of respondents in Australia are either planning for 2007 or beyond or don´t know.

ZDNet Australia approached Accenture in Australia for comment on its research, to be told that the relevant manager had been called away into the region on business and was unavailable for immediate comment. However, the company did send us its local presentation on the results, which contains some illuminating statistics and even more illuminating remarks from both participants and analysts.

Accenture quoted several unnamed manufacturers in Australia as commenting positively on the benefits of radio frequency identification (one cited benefits as "being able to track our inventory or assets through the supply chain, with an end-benefit of reduced out-of-stocks, improved sales, better return on assets and a more collaborative approach to working with our partners"). However, the analysts noted that retailers were "able to identify theoretical benefits, but comments lack the impetus that would imply action".

On the barriers, manufacturers seemed to be concerned about market standardisation and benefits through the extended supply chain. (One said "We need a unified standard approach to both implementation and use of the technology, so that all parties involved ... get the rewards and benefits of the technology. My concern would be that maybe smaller companies would struggle with the implementation cost and not necessarily understand or receive the benefits".) Retailers seemed more concerned with cost issues.

Of the manufacturers who commented on implementation, one noted speed would be driven by the major retailer groups. "Coles Myer for example will dictate implementation, they have 25 percent of the retail activity in Australia -- so if they demand it we will use it.

One food manufacturer under mandate to implement the technologies probably exemplified the overall tone of the feedback, saying "honestly, in the 35-page position paper that we have on RFID, the benefits are labour-saving and marginal improvements in inventory accuracy. That´s it. In all the business cases from a worldwide perspective in the last two years, we don´t see that it will provide a positive return on investment".

In short, the Accenture research confirms that many in the manufacturing and retail communities in Australia are not exactly champing at the bit for radio frequency identification, despite the hype. While the technologies will become pervasive -- due largely to mandates from the big players -- many in the retail and manufacturing sector seem to think the headaches of implementation barely worth the trouble. I would certainly like to hear from anyone who thinks otherwise.