Though the technology is expensive due to heavy investment in hardware, the RFID market continues to grow every year.
New analysis from Frost & Sullivan (chemicals.frost.com), Asia Pacific Radio Frequency Identification (RFID) Markets, finds that the total RFID market earned revenues of $600-$800 million in 2009 and estimates this to be over $2.0 billion by 2016, growing at a compound annual growth rate (CAGR) of 17.7 percent.
"The emergence of source tagging and growing supply chain applications are also key growth drivers in the industry," observes Frost & Sullivan Industry Analyst Parul Oswal. "Source tagging is increasingly becoming popular, especially in Asia Pacific countries that are suppliers to big retailers in the United States."
With goods being tagged at the manufacturing or packaging stage rather than the store, store associates are left free to focus on customer service. Source tagging thus helps enhance sales and reduces shrinkage in the supply chain.
However, the cost of RFID hardware is still considered high and many companies are hesitant to invest in the technology fearing poor return on investment (ROI). Implementing a full-fledged system can cost $10 million to $25 million for a large manufacturer.
The cost of tags depends on the quantity ordered, the type of IC and antenna used along with the manufacturing method, the amount of testing, and the type of inlay packaging used. The cost of readers varies based on the read range required, the intelligence of readers required to read the information on the tags, and the ability to read multiple tags at one go.
Besides the cost of tags and readers, other expenditures include middleware, application software, and system integration costs, as well as other hidden costs.
"Ensuring compliance and understanding the broader strategic role of the technology is essential since companies will likely need to upgrade their networks and storage to cope with the volume of data captured by the RFID system," adds Oswal. "Hence, the complete cost of RFID implementation can be high for several organizations, especially small and medium size enterprises."
This issue can only be managed once the volumes become bigger and technological developments help reduce the cost of RFID. In the mean time, RFID vendors must concentrate their efforts and investments in applications that are increasingly becoming popular with a quick ROI for clients.
The technology, being environmentally friendly, is likely to be well received as enterprises focus on green supply chain and reduction of carbon emission. With the economy starting to show signs of recovery, RFID technology is expected to play a more vital role within enterprises.
If you are interested in more information on this study, please send an email to Donna Jeremiah, Corporate Communications, at djeremiah[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country.
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