RFID adoption will surge in 2004, according to new Ernst & Young survey

Packaging Digest Staff

February 1, 2014

6 Min Read
RFID adoption will surge in 2004, according to new Ernst & Young survey

ATLANTA, GA–Packaging Strategies, the leading trusted source of competitive information and analysis on global packaging markets, and Cap Gemini Ernst & Young (CGE&Y), a global leader in management and IT consulting, have found that the global packaging industry is bracing itself for the rapid adoption of RFID beginning this year. According to a Packaging Strategies/CGE&Y pulse survey of 275 participants attending the 17th annual Packaging Strategies Summit conference yesterday, more than half (54%) of those surveyed believed that Wal-Mart's 2005 supplier mandate will be a "catalyst" for the evolution of RFID adoption in the industry, compared to less than one in six (15%) who feel it is "overrated." In addition, more than half of respondents (51%) believe RFID is "a major business driver this year" or are initiating a program and action plan in 2004.

The survey also found that while more than half of respondents (58%) agree that retail will be most impacted from the first wave of RFID adoption by 2010, nearly one-third (31%) believe that the health & pharmaceutical industries will be transformed by RFID leading to improved security for prescription drugs and reduced shrink/grey market losses. Not surprisingly, half of all respondents (50%) believe that globalization and off shoring will be the 2004 business imperative that will have the greatest impact on the future of packaging strategies during the next 3 years.

"The survey illustrates that global as well as local supply chains are heeding the wake-up call to prepare for RFID by taking it one step at a time, from insight to pilot to road-map to implementation to deployment," said Greg Cudahy, global supply chain leader for Cap Gemini Ernst & Young. "Those suppliers who go ?beyond compliance' mandates can gain the benefits of new enabling technologies such as RFID, mobility and in-store customer interaction solutions and change the game."

RFID as a "Game-Changing Technology" in 2004
While the vast majority of survey respondents were US-based, there was some participation from Europe (10%), Canada (6%) and Asia-Pacific (3%). Half of the respondents (51%) worked for companies with annual revenues of less than $1 billion, and nearly one-quarter of respondents (22%) were c-level executives. The conference also featured a keynote session on the manufacturing economy by Jerry Jasinowski, president of the National Association of Manufacturers, as well as an engaging session on RFID entitled "Beyond Wal-Mart: The Benefits of RFID for Your Packaging Operation" featuring commentary from CGE&Y's Cudahy as well as Phil Henry of Intel and Mark Niemaic of Global Packaging Innovations.

The Packaging Strategies Summit, produced annually since 1988, attracts nearly 350 people every year from around the packaging world. The conference has been called "The Summit Meeting of the Packaging Industry" because the CEO of every Top 10 packaging company in the world has addressed this meeting since its inception. The annual Packaging Strategies conference provides attendees the sometimes hard-to-see "big picture" in packaging. At this eagerly awaited meeting, attendees don't hear rehashes of what has happened; they learn what will happen next in packaging trends. For complete RFID survey results visit www.us.cgey.com or www.packstrat.com after March 26.

"Our survey shows that brand owners, retailers, distribution chain partners, converters and technology developers and systems suppliers all can see well beyond RFID's temporary hurdles like lack of standards, high cost and low volumes," said David Luttenberger, CPP, Director of Packaging Strategies. "We believe RFID has real and significant growth potential that is prompting the commitment to develop and adopt RFID and systems today that will be used to radically transform the entire distribution chain and retail environment tomorrow."

Other survey highlights include:

• Half the packaging industry respondents (51%) believe that "improved product availability" will be the #1 benefit to consumers from RFID adoption, while less than one in five (19%) pointed to consumer savings stemming from reduced product costs.

• The jury is still out on the primary benefit of RFID adoption to retailers/distributors, as nearly four in ten (39%) chose "improved inventory turns," while another one in three (33%) pointed to reduced logistics costs/handling.

• According to one-third (34%) of survey respondents, manufacturers will benefit most from RFID adoption around "improved marketing data," while another one in six (17%) say there will be no benefit because RFID "is just another barcode."

• In terms of potential worries around an RFID solution for a packaging organization, almost half (46%) point to implementation/integration, while two in ten look to problems with tags (21%) or software (18%) for their biggest potential headache.

• An overwhelming majority (71%) believe supply chain/operations should have organizational control over RFID programs, while only one in ten point to finance, sales or marketing (12%) or IT (11%) to champion the RFID cause internally.

Consumers Are Starting to Pay Attention to RFID
The results of this week's Packaging Strategies/CGE&Y survey of the impact of RFID on the packaging industry are even more interesting in the context of an October 2003 CGE&Y survey of 1,000 US consumers on their current mindset which was presented at the 2004 National Retail Federation conference in New York in January. While only one-quarter (23%) of US consumers had heard of RFID last year, almost half (42%) of those who are familiar with RFID have a favorable impression of the technology. The CGE&Y consumer survey also found the top five potential benefits of RDID adoption to consumers are 1) faster recovery of stolen items; 2) improved car anti-theft capabilities; 3) consumer savings stemming from reduced product calls; 4) improved security of pre-scription drugs; and 5) faster, more reliable product recalls.

"Our consumer survey shows that the benefits of increased safety and privacy score higher that the potential for lower costs due to RFID adoption, while the Packaging Strategies/CGE&Y survey highlights how improved product availability will be the pri-mary benefit to consumers from RFID," Cudahy added. "There is little doubt that the roll-out of RFID technology will ultimately impact the entire ecosystem of physical goods movement, but both surveys show the real winners in the RFID revolution will be those stakeholders who learn how to enhance the capability to deliver on the customer experience while reducing cost and securing the integrity of the product."

About Packaging Strategies
Packaging Strategies is the leading trusted source of competitive information and analysis on global packaging markets, technologies, issues, and drivers. Since 1983, it has published its twice-monthly Packaging Strategies Newsletter, a subscription-based publication with circulation in 38 countries. The Newsletter is highly regarded among packaging end-users and suppliers for its concise reporting style, insightful analysis of issues, simplified explanations of technologies, and quick-read format.

Packaging Strategies also publishes a complete library of multi-client studies and Hot-topic reports focused on identified emerging packaging technologies, manufacturing economics, and market trends. The company is also a world-class producer of packag-ing-segment-focused conferences, technology expos, and networking events. It also has the capability to provide custom market research on nearly any packaging-related technology or market topic.

About Cap Gemini Ernst & Young
The Cap Gemini Ernst & Young Group is one of the world's largest providers of Consulting, Technology and Outsourcing services. The company helps businesses implement growth strategies and leverage technology. The organization employs approximately 48,000 people worldwide and reported 2003 global revenues of 5.747 billion euros.

Joey Paterson, CGE&Y
[email protected]

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