RFID in manufacturing can boost productivity

The ability of radio frequency identification (RFID) technology to make the tracking and managing of assets more efficient and make inventory more visible offers an ideal solution for companies seeking to improve their manufacturing performance.

At the same time, as companies strive to tighten their brand security and protect their products from counterfeiting, RFID is emerging as the optimal solution to safeguard valuable products throughout the supply chain.

Frost & Sullivan finds that the European RFID Markets for Automotive, Aerospace and Industrial Manufacturing generated revenues of $23.7 million in 2005 and estimates this will reach $109.3 million in 2012.

The highly competitive nature of modern manufacturing is driving manufacturers to reduce costs and adapt business to increasingly demand-oriented systems. In this context, RFID can enhance product availability for customers and boost productivity across the entire production process. Moreover, its ability to enable just-in-time inventory control and asset management will allow companies to reduce order turn-around time and effectively manage fluctuating demand in automotive and consumer products markets.

However, the return on investment (ROI) from RFID deployments is difficult to quantify, as the full benefits of the technology depend on its degree of integration into wider business processes. Difficulty in identifying a clear stand-alone ROI, coupled with its high implementation cost, poses a significant challenge to prospective entrants into the RFID market. The excitement and euphoria surrounding RFID in recent years, fuelled by the early retail mandates and pilot schemes, have created unrealistic expectations of the technology among many industries.

The maximum ROI achievable from the adoption of RFID can only be realised if the designing of business processes allows operation within real-world environments and well-integrated IT infrastructures.