Adoption of RFID continues at a slow pace, says eyefortransport study

Staff -- Logistics Management, 8/31/2006

LONDON—According to a new survey by London-based research firm, eyefortransport, 68 percent of respondents are using, piloting, or researching radio frequency identification technology (RFID), compared with 62 percent in 2005.

The report, RFID in Transportation and Logistics Survey 2006, was aimed at determining the percentage of companies that have actually begun to roll out an RFID solution, and examine where others are in the RFID cycle.

Of the 68 percent of survey respondents that are using, piloting, or researching RFID, 22 percent have already, or are about to, roll out their RFID solutions, 14 percent have taken RFID to the pilot stage, and 32 percent are engaged in researching and strategizing RFID.

The number of respondents who are waiting to see what customers and partners will do before taking any direct action has reduced to 25 percent in 2006, compared with 35 percent last year.

However, in 2006, 7 percent said they are not currently pursuing RFID, compared with only 3 percent in 2005.

3PL remains leader of the pack
The total percentage of companies that are using, rolling out, or piloting RFID solutions is lower in 2006 than it was in 2005 across all of the surveyed sectors, except trucking. A high percentage of companies from all segments retain a “wait-and-see” attitude.

The third party logistics (3PL) segment comprises the greatest percentage of companies already using or about to use RFID solutions—although the percent is down to 23 percent from 28 percent last year.

Manufacturing/retail remains the second-biggest adopter, proportionally. Although, in this segment the percentage is down from last year as well from—from 20 percent to 19 percent.

Why adopt RFID?
The need to comply with customers’ use of RFID was seen as the most significant factor by companies in 3PL/logistics (85 percent compared with 80 percent in 2005), trucking (92 percent, a substantial increase from 62 percent in 2005), and air, rail, and sea carriage (76 percent compared to 62 percent in 2005.

The largest factor for warehousing/distribution (86 percent), up from 70 percent in 2005, was the cost, productivity, and data-accuracy benefit of RFID.

The majority of manufacturers and retailers (63 percent against 50 percent last year) gave the nod to RFID’s potential to drive new sales.

Roadblocks
The cost of hardware, software, and integration is still considered the biggest obstacle. Seventy four percent of respondents now believe it is a “somewhat” or “very” significant obstacle, compared with 80 percent in 2005.

Several factors are considered more important obstacles than a year ago:

• Lack of industry standards (68 percent of respondents in 2006, compared to 66 in 2005
• Current technology can do the job of RFID (65 percent up from 58 in 2005)
• Products handled are not optimal for RFID (41 percent, up from 38 percent in 2005)