Compiled ByDeborah Austin Radio frequency identification (RFID) transponder cost reductions for single-use disposable "smart labels" will enable huge strides in item-level tracking throughout the supply chain, suggests a new report by technology research think tank Allied Business Intelligence (ABI), Oyster Bay, N.Y. By 2007 worldwide transponder shipments will reach 1.62 billion units, dwarfing 2002's 323 million, forecasts ABI. Supply-chain management applications will comprise 46% of the transponder market, versus this year's 1%. Worldwide markets for the transponder portion of the RFID industry -- and for RFID readers and associated software/service -- each will exceed $1 billion. Return-on-investment (ROI) models will drive RFID adoption, says ABI senior analyst Edward Rerisi. But managers must use proper inputs, counting both costs and efficiency gains for accurate ROI analysis.