Wider adoption of radio frequency identification (RFID) across more industry verticals suggests the technology has quietly entered the mainstream but long-standing issues such as costs of the tags and readers continue to hinder uptake, observers noted.
According to Ann Grackin, CEO of supply chain management-focused Chainlink Research, RFID has quietly been accepted by businesses as a mainstream technology following increased traction among companies from a wider cross-section of industries. RFID usage can be found in security, surveillance, perimeter control, access control and ID cards, asset tracking, e-payment services, supply chain management for life sciences and medical products, among others, she listed in her e-mail.
This widespread acceptance, however, makes it difficult to track adoption according to verticals, said Ron Leckie, president of Infrastructure Advisors. He said that since RFID covers many industries and applications, it is difficult to characterize the technology in a classical marketing approach or pinpoint a single industry as the biggest adopter of RFID.
That said, he reckoned the retail industry is likely to be the largest RFID user base. This is because the volume of retail goods or apparel is so huge that RFID's ability to be monitored and read without being intrusive is a big advantage over traditional methods, both from an inventory management and security perspective, he explained.
Grackin pointed out that, over time, it's not just retail manufacturers that will benefit from RFID. Customers will also stand to gain as new applications can help customers with shopping, locating products and reading labels for ingredients and pedigree, she said.
In the Asian market, it is the transport and logistics sector that is the biggest adopter of RFID, noted Andrew Phang, regional product manager for advanced data capture and RFID at Motorola Solutions. He added in his e-mail that companies in this sector recognize the importance of being able to monitor the movement of goods quickly, accurately and robustly, and RFID technology provides the best solution.
RFID costs still a roadblock
The relative high costs of RFID tags and readers, however, continue to dampen demand for the technology, particularly for industries that manufacture low-priced goods, Leckie pointed out.
Today, RFID is used in many high-end products that are able to absorb the costs of deploying RFID tags, he said, adding that it is gaining popularity in mid-range consumer products too.
Significant investments will also be needed to deploy the readers used to decipher the radio signals emitted from the tags, the president noted. These investments will pay for the physical device, software and system management tools to run the entire ecosystem, he added.
Phang reckoned the cost of RFID tags will be more of a challenge for companies to overcome than deploying the reader devices.This is becasue setting up the infrastructure is a one-time investment, but there are recurring costs where the tags are concerned, he explained.
Grackin disagrees. She said RFID tags are fairly standard around the world but there is a need to have more readers, especially when there will be RFID tags "everywhere" in the near future. The costs of these readers also mean a pressing urgency for more innovation in this area to make them smaller, faster and cheaper, the CEO added.
She cited the example of a "smart shelf" that is equipped with RFID readers to detect how many products are placed on it to highlight how prohibitive costs can stop RFID deployments. Such an application "is more difficult and costly" to develop than you can imagine, which is why it has not taken off despite its apparent usefulness, Grackin said.