RFID Markets Slower, but Promise Remains
Once predicted to grow significantly and rapidly, RFID adoption, particularly in the healthcare industry, may materialize a bit more slowly. Analysts at a special insiders’ meeting at RFID World were optimistic, though, for RFID’s long-term prospects. “RFID will roll out in fits and starts,” said analyst Christopher Rezendes of VDC Research. “It is, and will continue to be, a project-based market for some time.” Rezendes joined Raghu Das of IDTechEx and Reik Read of Robert W. Baird during AIM Global’s Inside Track executive roundtable.
Closed-loop use of RFID seems to make up most of the demand for passive ultra-high-frequency (UHF) RFID. Analysts sized it up at about 80%. Das predicted that across-industry orders in 2008 could reach one billion UHF tags. “It is a lot of tags, but it is a lot of small orders.”
Das also sees interest in active RFID for real-time locating systems (RTLS) for applications such as container tracking. “Port companies are interested because containers are tampered with,” Das said. Such tracking may be of interest to pharmaceutical companies, given counterfeiting and diversion threats.
However, use of RFID for supply-chain security will most likely be driven in part by governments, predicted Read. “With respect to supply-chain security, I think this is where governments will likely provide a framework through regulation and law, and when combined with the market, will be a key driver of increased security, particularly with respect to international shipments and shipments of hazardous or controlled substances,” he said.
Past weaknesses have included read rates in the supply chain and a lack of successful projects, said Read.
Rezendes said that to overcome implementation barriers, RFID technology providers must address technical requirements for daily use in each market segment. “RFID is a collection of market segments. These segments have many unique and specific implementation requirements that can translate into ‘percolated standards’ for a segment, if you will. These can be as powerful as any globally voted technical standard,” he said.
Read sees the healthcare industry among the market segments with the most opportunity for RFID, but not necessarily pharmaceuticals. “Pharma has an open supply chain with many different constituents . . . manufacturers, a wide number of distributors, and retailers,” Read explains in Supply Chain Technology: RFID Monthly. He suggests that those firms that made initial investments have yet to realize a return on those investments as they wait for the rest of the industry to catch up. “By contrast, orthopedic devices, specimen tracking, and file tracking are essentially closed-loop systems that can offer a stronger, identifiable ROI relative to investment and to other solutions,” his report reads.
Rezendes, too, has seen resistance in healthcare. “Resistance occurs when implementation has a negative near-term impact on P&L [profit and loss]. This is the case in many primary care environments today. There are better near-term opportunities in teaching hospitals,” he said.
Rezendes remained optimistic for RFID. “It can bring velocity to certain markets by serving more customers, faster, and have them come back. And the best implementations can do more than that. In healthcare, for example, RFID has the real potential to enable accuracy, reliability, and its related benefits: service enhancement and cost reduction.”
AIM Global is the industry association on automatic identification and data collection technologies. It has developed technical specifications and guidelines that support the use of automatic identification technologies. The AIM Technology Leadership Summit will take place in Chicago in April 2009.