RFID Costs

Radio Frequency Identification (RFID) uses tags affixed to containers, totes and vehicles to transmit accurate, real-time information to warehouse, transportation and other supply chain applications. Recent RFID deployment and many case studies thus far prove that RFID stands true to its testament. Industry experts predict companies that lag behind in RFID technology adoption will face substantial catch-up issues years to come. The early implementers of RFID systems will reap the benefits of moving forward first RFID Costs are decreasing slowly, but will drop more rapidly as companies adopt the technology.

Standardization will bring the RFID Costs down drastically. The ability for the user to have a choice of vendors for equipment and tags will result in more competitive quotes and will be a major benefit. Despite the high RFID Costs now, experts are encouraging companies to do their research and then to give RFID a chance as soon as they can.

Radio-frequency identification (RFID) offers great potential, but visions of revolutionary change are a bit premature. Before RFID can provide its heralded benefits, developers need to improve the technology's reliability and accuracy, reduce interference, develop standards, and put the necessary infrastructure in place. In the market, RFID Costs need to drop significantly if the technology is to compete with the existing infrastructure of bar codes and other identification technologies.

RFID Costs to packagers estimated: The use of Radio-Frequency Identification (RFID) technology, as envisioned by Wal-Mart Stores, is estimated to bring savings to retailers and big capital investment costs to those who supply retailers. Retailers can be expected to see benefits such as reduced inventory, reduced store and warehouse labor costs, and a reduction in out-of-stock items. For retailers, the Kearney report estimates the costs of adoption of the Electronic Product Code (EPC) and RFID Costs at $400,000 per distribution center, and $100,000 per store.

RFID Costs Aren't Likely To Impede Adoption: The buzz surrounding radio frequency identification (RFID) died down somewhat when the consulting firm A.T. Kearney released a study that for the first time quantified the full cost of implementing that technology. The consulting firm estimated compliance costs for individual companies will exceed half a million dollars. Even so, companies under pressure to implement RFID aren't likely to drop their plans to incorporate it into their operations.

The consultants estimated that the cost for those suppliers to acquire and implement electronic product code (EPC) and RFID Costs capabilities that meet the retail giant's expectations will reach $400,000 per distribution center and an additional $100,000 per store. Additional costs for integrating the systems could range from $35 million to $40 million dollars. On the upside, the study notes, much of those expenditures will be fixed costs.

The future of Radio Frequency Identification: RFID technology adoption can be seen happening in two stages. In the short to medium term, RFID Costs for tag will not have dropped enough to apply the technology for item-level tagging. According to estimates by Forrester Research, it is only after the year 2007 that RFID Costs will have fallen to the 1-cent level, and item tagging will have become economically viable on a large scale.

At these price levels, new market opportunities will open, especially in sectors such as apparel, manufacturing, delivery, and pharmaceuticals. In the meantime, item-level tagging may be used in relatively high-cost items. RFIDs are currently available from around 28 cents (passive) to over $20 for rugged, high-performance tags. At that price level, you can expect that RFID tagging in the short to medium term will be used in container, case, or pallet applications.

Another big question in the future is cost effectiveness of RFID. RFID Costs consist of three different elements:

• Tag, where the costs depend mainly on read range, chip (or chipless) and possibility to rewrite the tag (or disposable).
• Reader/writer, where the costs depend on complexity and power (low frequency less costly) of reader/writer.
• System integration, which may be the biggest cost, depending on compatibility of other standards.

In the last years, it has seen low cost tags costing less than one dollar per piece. This development has created opportunities to use RFID in different lines of business. In spite of low cost RFID has created new market, there are still a lot of challenges before everyday products are provided with RFID tags. However, the potential is huge in the future.

Cheaper RFID solutions on the horizon: The RFID Costs solutions is much more than the cost of tags and readers. A large part of an RFID solution's cost lies in the software infrastructure and the enterprise application integration. Even in the supply chain market, a key application area of RFID technology currently, the cost of solutions is higher today because most are customized. However, the cost of the RFID solutions is expected to fall in the next couple of years as supply chain vendors begin integrating this technology into their product portfolio.