‘Closed loop’ RFID gains momentum

More companies are adopting radio frequency identification (RFID) technology across various industries beyond supply chain management, according to a recent end-user survey by ABI Research.

The study found that while open-loop supply chain applications have been the primary haven for RFID adoption, closed-loop RFID applications that provide internal tracking for companies – such as asset management and security access control – are now finding greater use. The results were gleaned from over 175 organizations across a variety of industries.

ABI Research director Michael Liard said that more companies in areas such as manufacturing and health care are starting to see the value of RFID. But, he said that with the right frame of mind, nearly any company can benefit from RFID applications.

“What we’re finding as we talk with more end-users is that companies are using really unique and innovation applications of this technology,” Liard said. “This survey is a validation that RFID is a theme with a thousand variations and the application opportunities or truly limitless.”

One such variation was when Calgary-based Database Information Services (DBiTS) decided to use RFID technology to track and stores conference registrants’ movements during a Star Trek convention earlier this year.

Info-Tech’s George Goodall agreed that RFID adoption is starting gaining traction; however, the numbers have yet to show anything significant. “Adoption certainly isn’t as widespread or as rapid as proponents of the technology have suggested,” Goodall said.

Info-Tech research cited by Goodall suggested that, as of Q4 of 2006, only five per cent of Canadian companies have deployed any type of RFID system, based on data from 200 respondents. In addition, over 66 per cent of companies say they currently have no interest in deploying RFID, as well as, 29 per cent saying may look to RFID as an option.

Even the ABI Research survey found that, despite the growth across vertical industries, it was compliance that was the single most significant driver for RFID adoption. Mandates imposed by companies like Wal-Mart and Target, or governmental agencies such as the U.S. Department of Defense were cited as major factors.

The survey also indicated that respondents which evaluated RFID but decided not to deploy the technology provided reasons such as limited application relevance, the success of existing automatic identification solutions, and concerns about return on investment.

And while Liard admits that many companies still look at RFID as a niche system, he said that often times it’s a case of companies lacking clarity on the technology’s potential benefits, and in turn, never giving it a chance.

“The companies that do have some automatic identification technologies in place, such as barcodes, consider that to be effective for what they’re trying to do right now,” Liard said. “Companies feel they have no application requirements for RFID and it won’t fit in their business. But there is so much being done with RFID today that it may just be an application awareness issue for the end-users that feel this way.”

Srdjan Milutinovic, vice-president of systems development at cStar Technologies, said RFID use will only be limited by a company’s ability to experiment. His company develops various applications for RFID technology, one of which involves a bracelet embedded with an RFID chip which will allows hotel guests to open their rooms, play games and even operate the vending machine using.

“It’s something that’s going to grow and if you ask me, it’s actually going to overshadow the market of supply chain management,” Milutinovic said. “The reason the barcode system is still big is because everybody knows about it right now.”

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