Section 11.1. Current Hurdles to Using RFID

11.1. Current Hurdles to Using RFID

The following are some of the main hurdles cited for not using RFID in a business:

• Too expensive

• Too complex/does not work

• Existing solutions suffice

• Does not offer any business advantages

• Does not apply

The following subsections take a closer look at these reasons and some ways to bypass these roadblocks.

11.1.1. Too Expensive

This is probably the most common factor cited for not using RFID. Although RFID tags and readers are not some of the cheapest items available today, the prices are falling rapidly, and the technology is improving at an impressive rate. Therefore, if RFID is dismissed today solely based on this factor, the business is strongly advised to revisit its business cases at least once in the next two years. In addition, in this context, it is important to determine the tipping point, or price threshold of the system, at which the business can afford an RFID solution. Figure 11-1 shows an example scenario.

Figure 11-1. An example RFID system cost-versus-acceptance scenario.

Here, the tipping point, or the price threshold, is at the intersection point marked Acceptance Point of the two curves representing the cost of the RFID system needed versus its acceptable cost. The evaluation and adoption of RFID can begin after this point in time (that is, the right side of the line passing through the acceptance point as shown shaded). This determination is especially necessary in the situation where the business benefits of RFID are already apparent but the cost presents a hurdle. It might be possible to negotiate a price point that is either at or below the threshold with a vendor partner based on certain factors (for example, a large volume order). This option can thus alleviate the price issue without any need for waiting for prices to come down. Whereas every business might want a sub-1¢ tag, this desire raises one major issue: It might take a long time for prices to drop that low. For example, it might happen in another 10, 15, or 20 years, assuming it happens at all. Therefore, if a business waits for a sub-1¢ tag when its competitor has figured out a more realistic cost threshold, the former will be at a serious competitive disadvantage if the latter can successfully exploit the technology benefits when its cost threshold is met.

If the current price of RFID hardware is the main concern, a business should determine a realistic price threshold at which it can afford an RFID solution. It should then revisit its business cases after this threshold has been met.

11.1.2. Too Complex/Does Not Work

This conclusion sometimes emerges after the usual business justification and pilot implementation have been completed to evaluate the technology. Although the business reasons to use RFID might be compelling, the actual implementation of a test pilot might reveal several issues involving complexity and cost. Most of these issues can be traced back to two things: state of immaturity of the technology and the current cost of RFID hardware. For example, perhaps no suitable tags are currently available on the market with which to tag the desired items satisfactorily. Building a custom tag is an expensive proposition that can cost in the range of hundreds of thousands of dollars. However, vendors can customize existing tags (for example, by modifying the tag antenna of one or more of its existing tags) to eliminate any need for custom tags. In addition, an RFID system involves several variables that require time to experiment and optimize (see Chapter 9, "Designing and Implementing an RFID Solution"). This can frustrate someone who is looking for a plug-and-play, quick solution. Also, it is a good idea to seek out the advice of experts who have considerable experience in implementing real-world RFID solutions.

Patience is a much-needed virtue when it comes to implementing an RFID solution, especially in the beginning stages when it perhaps hits a roadblock. In such situations, you should always seek external help from people who have real-world RFID implementation experience.

11.1.3. Existing Solutions Suffice

That existing solutions exist is probably the third most common reason cited for not using RFID. However, a business justification for RFID is at least warranted before reaching such a conclusion. Otherwise, without objective data to rule out RFID, the business might just be exhibiting an "if it ain't broke, don't fix it" mentality, which might prove detrimental to the business (especially if competitors, customers, and business partners are eager to evaluate and use the technology to their advantage). In fact, such eager colleagues might change the rules drastically. For example, if a major customer demands the business to be RFID-enabled within a certain amount of time, noncompliance risks losing this client and hurting the bottom line (not to mention losing market share to competitors). In this case, the business has little choice but to move forward with some form of RFID adoption activity (perhaps even in spite of the fact that the business justification for using RFID for the business itself might not be so compelling).

Even if the business has not received an RFID-compliance mandate from its major customers, business partners, or suppliers, it should at least perform a business justification before deciding against using RFID. Even a small improvement that results from use of the technology (for example, a 5 percent reduction in inventory costs) can lead to substantial accrued benefit in the medium to long term (see Figure 11-2).

Figure 11-2. Potential accrued benefits of an example RFID system.

In addition, the use of RFID might itself lead to the discovery of unexpected areas of benefit not previously apparent.

11.1.4. Does Not Offer Any Business Advantages

This reason is also mentioned for not using RFID, and might actually mean two different things: First, RFID does not offer compelling business advantages based on its perceived potential; second, RFID cannot offer the needed benefits after the due diligence of business justification and evaluation pilots have been completed. The latter is the correct albeit the "hard" approach to objectively ruling out RFID. In contrast, the former might result from lazy "thinking" (or not thinking), basing an opinion on unrealistic figures, "anecdotal" evidence, "similar" case studies, and sweeping opinions in the media while bypassing the actual usefulness and impact of RFID on the business itself. The conclusions reached by such an analysis should be taken with several grains of salt, irrespective of its recommendation about the use of RFID. Why? Because such an analysis will most probably be too unrealistic or too pessimistic about the benefits that can be achieved from the use of the technology.

An objective analysis of the benefits of RFID and some level of actual evaluation are needed in the actual context of the business before accepting or discounting the use of the technology.

11.1.5. Does Not Apply

Although a business might rely heavily on data collection (and, remember, RFID is a data-collection technology) and the use of that data, that business might have concluded (at this point, anyway) that RFID does not apply to its areas of operation. Remember, however, that the potential uses of RFID technology are expanding and restricted neither to the supply chain nor to the examples provided in Chapter 4, "Application Areas." Therefore, although this business might be in that rare situation in which RFID, in fact, "does not apply," that situation might turn out to be an unexplored area of RFID application. Just because RFID is not applied to a certain area today does not mean it will not be applied tomorrow. Creative thinking and technological advances are the two major drivers of innovative RFID application potential.

Instead of giving up in despair, a business can either generate its own ideas or partner with a research organization to develop ideas. The business can then share these ideas with the vendors to create prototypes. With these prototypes, the business can quickly validate the effectiveness of the technology in the areas of interest. A successful outcome of such an endeavor might give the business a solid advantage over its competitors.