RFID: ROI more than 2 years; high-speed bar-code matching

Vast majority of electronic product code (EPC) applications of radio frequency identification (RFID) technology expect return on investment greater than two years, a recent ARC Advisory Group study of 24 companies suggests.


Vast majority of electronic product code (EPC) applications of radio frequency identification (RFID) technology expect return on investment greater than two years, a recent ARC Advisory Group study of 24 companies suggests. In separate, but related news, Accu-Sort Systems announced what it calls the first successful matching of RFID and bar code data in a sortation system. More on these, and other items including a new RFID lab, RFID smart label printer, and an article on RFID and bar codes, follow.

ARC Advisory Group talked to 24 companies actively investing in EPC RFID Just one company ARC talked to expects return on investment (ROI) under two years; 95% of the respondents believed ROI would exceed two years. January 2005 is the deadline for Wal-Mart’s top 100 suppliers to apply passive RFID tags based on EPC-global standards to cases and pallets headed toward three Texas distribution centers. Other retailers have followed suit.
ARC says to improve cost mitigation:

  • Reliability of reads needs to improve greatly;

  • Cost of tags must drop;

  • Critical mass of retailers have RFID mandates in place; and

  • More efficient warehouse receiving and better management of inbound materials may have to wait until companies have been able to negotiate with upstream suppliers to engage in more RFID tagging.

EPC RFID: a year of numbers

Typical responses among 24 interviews of those implementing electronic product code radio frequency identification.

$10 million = 50 million cases shipped to Wal-Mart x 20 cents/tag
$1 million = RFID infrastructure
$0.5 million = New warehouse labor processes operating costs
$11.5 million = First-year costs

$1 million = lower chargeback fees, with Wal-Mart’s help
$0.5 million = miscellaneous savings
$1.5 million = First-year savings

Source: Control Engineering with data from ARC Advisory Group

Accu-Sort (ASI) lowers cost of entry into RFID by matching bar-code data with RFID data in high-speed tracking application. In what it calls "the first successful matching of RFID and bar-code data in a sortation system," ASI says a material-handling system can increase read performance by using both data points. The result is higher throughput via higher read rates. Existing bar-code applications use a legacy system to transmit data to host systems. ASI RFID allows manufacturers to leverage that existing infrastructure to increase performance and manage costs.

Associating bar code with RFID data is extremely important to companies that place high value on speed and throughput, says Troy Herman, ASI RFID solutions specialist. "Bar-code data can help with RFID singulation, while RFID’s non-line-of-site technology can increase system read rates." By using RFID in conjunction with legacy bar-code systems, manufacturers can achieve greater performance without adding costly infrastructure, Herman said.
Related reading: for more on RFID, see:

And, to brush up on bar code versus RFID, take a look at an article from Control Engineering ’s sister publication, EDN , " Reading between the lines: RFIDs confront the venerable bar code ."

—Mark T. Hoske, editor-in-chief, Control Engineering, MHoske@cfemedia.com

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