NATO upgrade underscores RFID demand

The North Atlantic Treaty Organization (NATO) has awarded a contract to upgrade and support an RFID (radio frequency identification) network launched last year to track multinational defense consignments between Europe and Afghanistan.

The contract with Savi Technology Inc. is for additional active, data-rich RFID tags and readers as well as network-wide software enhancements to the International Security Assistance Force supply chain, Savi said on Wednesday. Financial terms were not released.

The deal includes installation of Savi’s SmartChain Consignment Management Solution (CMS), which will allow NATO to improve its supply chain management and visibility and enable member nations to share information on national and joint multinational consignments, according to Savi.

The CMS 1.0 system will track and manage consignments tagged with all types of identification and data-collection devices for allied military organizations, including management alerts and support for “nested visibility” of assets and their contents as well as environmental conditions in transit, Savi said. ADIC devices can range from sensors and bar codes to passive and active RFID tags, as well as GPS (Global Positioning System) devices.

Savi also helped to build and maintain the U.S. Department of Defense’s RFID network, which the company claims is the world’s largest RFID cargo tracking system.

The NATO contract underscores the growing demand for RFID systems projected by research and consulting company Gartner Inc. in a new report.

The market for RFID (radio frequency identification) hardware and software is gaining momentum as companies and organizations begin to accept the benefits of using the smart-tag technology, according to the Gartner report released Tuesday.

The analyst group projects worldwide RFID spending of US$504 million at the end of 2005, up 39 percent from the year before.

Demand for RFID equipment will grow sharply beginning in 2006 as companies discover areas in which the smart tagging technology beats out conventional bar code systems, according to Gartner. Worldwide RFID license revenue is expected to reach $751 million by 2006 and soar to $3 billion by the end of the decade, it said.

Gartner advises businesses to think of RFID not as a replacement for bar codes but as a complementary technology. The two technologies will coexist, with users applying the right data collection technology for the right process situation, Gartner said.

The analyst group expects RFID adoption to be fastest in the logistics and pharmaceutical industries, in addition to retail, aerospace and defense.

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