Business value of RFID-based supply chains remains elusive

Even though the use of radio frequency identification (RFID) technology can help firms recapture top-line revenues and improve bottom-line, deriving value from RFID-driven supply chains remains a challenge , according to a new survey from Forrester.

The industry analyst believes that over the past several years, RFID technology has matured beyond experimental lab testing into a technically viable solution for tracking the physical location of products, assets, and even people in a wide variety of operating environments.

Among these various applications, says Forrester, employing RFID for supply chain visibility has generated particular excitement as business process and applications professionals envision the technology’s potential to transform how products move from factories to warehouses and finally into customer stores.

Yet, intriguingly, Forrester poses the questions as to whether deploying RFID for supply chain visibility actually does make business sense. It believes that firms facing this question often wrestle with a few industry-centric parameters that can widely affect the business viability of their initiative, including: scope of the required tagging level; economics of tag cost relative to item value; position and relationship in the supply chain.

Forrester is advising firms that given these tremendous variations in scope, economics, and supply chain perspectives, it is imperative that business process and applications professionals objectively evaluate the financial impact on the business when considering the adoption of RFID for supply chain visibility as opposed to older systems such as bar codes. IT concludes that companies use a total economic impact model to systematically consider benefits, costs and risks.