Manufacturers Find Little ROI In RFID

So far, RFID isn't worth the investment for consumer products (CP) manufacturers, according to a recent report by Boston-based AMR Research. The manufacturers, all involved in some way with Wal-Mart, reported they're unable to make a business case for using RFID and that they're limiting their projects to bare-minimum compliance.

CP manufacturers are spending $628,000 on average, with the largest and most active companies spending $1 million to $3 million -- nowhere near the $13 million to $23 million required to fully implement RFID.

Manufacturers cited high tag prices (18 cents to 30 cents per tag), the inability to understand RFID-generated data and a lack of collaboration from Wal-Mart and other retailers. Although many of the manufacturers surveyed said they think RFID could have some long-term benefits, it could be 5 to 20 years before the technology has any impact.

Despite the lack of optimism, manufacturers say RFID has potential. Executives say as the technology improves, many of the current hurdles may be eliminated. Additionally, many suppliers are also retailers that are beginning to explore targeted item-level tagging -- mostly for high-value products such as DVDs or pharmaceuticals.

For manufacturers to embrace RFID, the report recommends that readers and other systems must improve, data-analysis tools must be available and integrated and tag prices must drop.

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