Companies deploying radio frequency identification (RFID) devices are focusing on meeting the minimum requirements to comply with mandates, a recent survey has found. "Businesses are going to spend as little as possible and as late as possible (on RFID)," says report coauthor Tom Ryan, a vice president with market research firm The Aberdeen Group.

Aberdeen, together with Logistics Management and Modern Materials Handling magazines, polled more than 200 companies about their prospective RFID usage. Respondents ranged from CEOs to warehouse managers.

Manufacturers are having to mark shipments with RFID tags to comply with mandates from the U.S. Department of Defense and large retailers such as Wal-Mart and Target. Although they understand the potential benefits of RFID systems, the report noted, manufacturers are worried about the impact on their bottom lines. Indeed, some 46 percent said cost was their chief concern with respect to RFID adoption. Technology concerns were second, with 33 percent, followed by budget issues (13 percent) and mandate requirements (8 percent).

Those respondents said they believe that additional costs of 50 to 75 cents per case will erode their profit margins. In addition to the expense for individual tags, manufacturers expect it will cost $15,000 per tagging station and $150,000 per shipping facility.

Despite pressure to adopt RFID, only 28 percent of survey respondents called RFID deployment a high priority. When asked about a timetable for implementing this technology, nearly half said they would do so within the next year, and about 40 percent said they would implement RFID in the next two years.

Although current implementations are focused on compliance with customers' mandates, respondents plan to refocus their priorities in the future. Only 10 percent said that compliance mandates would be the most important influence dictating their decisions to invest in this technology. Another 38 percent said they would look to RFID to improve customer service. About 27 percent hoped to improve their asset management and return on investment, while 25 percent said they wanted to use it to improve operational efficiencies.

Based on the research results, Ryan says, he recommends that companies become proactive and learn how to take advantage of this technology to improve their supply chain performance.