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Organizations in many industries and government agencies are using radio frequency identification (RFID) for a variety of functions, such as tracking assets, managing inventory levels and boosting physical security.

The potential benefits of the technology include cost savings, more-efficient supply chains, greater productivity and improved customer services. But RFID implementations can be major undertakings and are not without risk. As with any significant technology deployment, enterprises need to conduct a thorough business case analysis before moving forward.

Companies in different industries have been successful in deploying RFID. Here are some examples:

• Construction materials provider Graniterock Co. uses RFID to improve service at its granite quarries and gather data about inventory and supplies movement. The company uses RFID to process the arrival and departure of trucks through its quarry loading locations. RFID is linked to a business intelligence and reporting application that provides information on different facets of the business, such as customer service, vehicle compliance and maintenance. Benefits include reduced time to move customer trucks through the quarries, labor savings through greater efficiencies, and improved customer service.

• Container shipping company APL Ltd. deployed RFID systems at one of its major port operations to track the location of more than 35,000 trailer chassis that transport thousands of containers. The implementation of the RFID-based, real-time locating system significantly improved the process of tracking the location of assets and containers at the terminal. The system enables the company to locate container-handling equipment and chassis and provides real-time visibility of inventory. As a result, APL has been able to improve service to truckers that pick up containers.

• Retailer Metro Group is using RFID to identify and track pallets and goods, such as garments, at a main distribution center. Data gathered from RFID readers enables Metro to automatically update its inventory system when shipments arrive at the center. Among the benefits are time savings, labor cost reductions and inventory management improvements. The company can more efficiently handle the shelving of goods in its warehouses and avoid out-of-stocks. Metro recently announced it was expanding use of RFID technology to about 200 stores and distribution centers in Europe.

• Dairy cooperative Dairy Farmers of America has deployed an RFID system in multiple production lines and plants to automatically tag cases in compliance with Wal-Mart Stores’ mandate that key suppliers use RFID tags on shipments. The organization saves on labor costs because the tagging process is automated.

What are some of the common factors organizations need to be aware of when considering an RFID deployment?

“First, companies should audit what they have; there may be significant pockets of piloted RFID hardware or software out there across the organization,” says Roy Wildeman, senior analyst at Forrester Research. “Then, any new initiatives should be prioritized by focusing on business value — not risk — to help promote innovation.”

Companies should consider working with multiple vendors that can help define and develop vertical uses of RFID and end-to-end applications, Wildeman says.

There are risks and challenges with RFID deployments, Wildeman says. These include the changing data standards, particularly for supply chain initiatives that span multiple trading partners. Other risks include changes in regulatory requirements and resulting compliance mandates — particularly around product serialization initiatives, he says. And there are changing technology standards with regard to tags and readers.

Given these concerns, the potentially high costs, and the changing landscape of RFID, it’s all the more important to do a thorough analysis of needs and the marketplace before jumping into RFID.

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