Bob Trebilcock, Editor at Large

January 30, 2014

2 Min Read
Pinpointing the ROI in RFID

In February, several newspapers, including The Wall Street Journal, as well as magazines, online publications and others, ran a rather bleak assessment of Wal-Mart's radio-frequency identification (RFID) mandate [see Rollin Ford's presentation comments in our sidebar to this article]. While the world's largest retailer reports that it has reduced out-of-stocks and increased the efficiency of order replenishment, suppliers complain that the cost of serving Wal-Mart has done nothing but go up:

  • They've absorbed the cost of RFID hardware and software solutions to meet the mandate.

  • Applying tags has increased labor costs, and

  • They still haven't seen the reduction in tag costs that was supposed to come with scale.

Despite those hurdles, the market for asset tracking and real-time locating systems using RFID is going nowhere but up, according to Mike Liard, research director for RFID and contactless for ABI Research ( Liard projects the market for asset management solutions will grow from $233 million in 2006 to $874 million by 2011. Add in solutions for cargo tracking and security, and the market will grow to $1.4 billion by 2011, he estimates.

Why are companies that are skeptical of case- and pallet-tracking solutions so interested in tracking assets like lift trucks and work-in-process in plants?

"The value propositions are stronger in asset management," Liard explains. "There is definitely an ROI [return on investment]."

In fact, end users implementing an asset-management solution are demanding an ROI. "Our customers won't consider a solution without a six- to nine-month ROI," says Gary Latham, director of industry solutions for WhereNet (

Why is there a quick payback in asset management when suppliers for Wal-Mart don't see a return for years to come? One answer: Tracking assets in a closed-loop environment, like a factory, a distribution center or the yard, is easier to control than tracking a case or a pallet across an open environment like the retail supply chain. "If you're implementing RFID across a supply chain, all of your trading partners need to put in the infrastructure to get visibility," Liard says. "In a closed loop, you only care about what's happening in your facility or in your yard."

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About the Author(s)

Bob Trebilcock

Editor at Large, Modern Materials Handling

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