Within a few years, RFID (Radio Frequency Identification) tags on pallets and products could be as ubiquitous as bar codes now are, providing the manufacturing supply chain with more production and distribution data. But even with a limited mandate from retail giant Wal-Mart for its top 100 suppliers to use RFID beginning next year (See Factory To Foxhole: RFID Deadline Looms), the technology still is being defined as are its benefits and costs. Compared with bar codes, RFID promises to be a more accurate way of inspecting and tracking products, indicates Todd Warden, vice president of business development at Markem Corp., a Keene, N.H.-based maker of product identification equipment and software. Indeed, being better able to understand the flow of work through a plant and knowing where assets are two distinct benefits of RFID technology, says Jeff Wacker, an EDS Fellow and futurist at Electronic Data Systems Corp., Plano, Texas. "There are estimates that up to 30% of a capital budget are for items that are lost or stolen -- not where they should be when people need to use them," he relates. And in those instances where the absence of critical components keeps work from being done, "it's not just the capital budget that you hit but also the operational budget," Wacker emphasizes. Other RFID benefits to manufacturers, made possible by the extent of chip-contained data, include an enhanced ability to screen out counterfeit parts coming into the plant, the opportunity to improve decision-making and the provision of better after-sales customer care, whether it's recalling a product or streaming enhanced features to it, he adds. "You get a much more visible and secure chain by deploying the technology," states Markem's Warden. On the cost side of the value equation, tags range from 55 cents to $55 each; readers run about $2,000; a local server is about $5,000, and a encoding printer runs about $5,000, figures EDS' Wacker. Also needed are machines to put the tags on products and software to manage the data being generated, adds Warden. "As the price of tags comes down, the economics will work such that [people] can start putting them on lower-priced items," predicts Warden. Tag costs are coming down and are likely to continue to do so until they reach what Wacker terms "the end of silicon." At that point new technology will be needed to drive tag costs below 7 cents each. "There are technologies on the horizon, but they are five years out," says Wacker. Over the long term, Wacker believes, companies really won't have a choice but to adopt RFID. But both he and Michael Putnam, product marketing manager for RFID/AI at Markem, say that companies, generally, are still trying to assess what the returns on their investments will be at the enterprise level. They're asking: What are the physical infrastructure costs? What are the supply-chain savings? What will be the revenues from offering customers more?

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

 John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.
      
      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).
      
      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.
      
      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”
      
      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.
      
      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.
      

 

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