RFID Stories of the Week: ARC: EPC RFID ROI is MIA, and AIM Global to Address RFID Skills

Companies that are actively investing in EPC RFID (Electronic Product Code Radio Frequency Identification) are doing so because they have to, not because they think they’re actually going to see a return on investment (ROI) anytime soon. In ARC Advisory Group’s Emerging Practices study, only one of 24 companies believed it could have under a two-year payback period. Ninety-five percent of the respondents believed the payback period would be greater than two years.

Dedham, MA-based ARC describes a typical scenario: Imagine a company that ships 50 million cases a year to Wal-Mart. Even at 20 cents per RFID tag — a very optimistic assumption — that is a $10 million hit. Add a million dollars in expenses to prepare the RFID infrastructure, and perhaps another half million dollars in new operating costs for labor added to warehouse processes. This company would need to generate about $11.5 million in new savings merely to break even. Now imagine that this company’s analysis of potential payback buckets shows that they might be able to generate a million dollars in lower chargeback fees, if Wal-Mart cooperates with them, and that the other savings buckets could come to, at most, a half a million dollars. ARC heard many stories like this during its interview process.

Though respondents almost universally believe that EPC RFID has a poor ROI, companies facing RFID mandates are actively searching for benefit buckets to mitigate the costs of these programs. Many Wal-Mart suppliers believe that, while certain areas have the potential for savings, they will not be able to actually reap these savings for several years. Benefits may not be possible until reliability of tag reads greatly improves, the cost of tags drops, and a critical mass of retailers have RFID mandates in place. And more efficient warehouse receiving and better management of inbound materials may have to wait until companies have been able to negotiate with their upstream suppliers to engage in more RFID tagging.

ARC Advisory Group’s “Emerging Practices in EPC RFID” study is now available. For more information, visit www.ARCweb.com.

Trade Associations Team to Address RFID Skills Shortage

What do you know about RFID technology? Not much? You’re not alone. Many companies eager to adopt the technology are beginning to be slowed in their efforts by a scarcity of qualified RFID integrators. Two leading trade associations are now teaming up in an attempt to address an industry-wide shortage of professionals knowledgeable about RFID technology. The Computing Technology Industry Association (CompTIA) and AIM Global (the Association for Automatic Identification and Mobility) announced they are working together to develop a vendor-neutral, multi-dimensional certification program for RFID technology.

According to the associations, organizations are also challenged because many of the skills required for successful RFID implementations are not typically associated with information technology (IT) staffs. As RFID adoption grows in 2005 and beyond, the skills shortage will become ever more pronounced. Representatives from more than a dozen companies and government agencies are to meet with AIM Global and CompTIA executives today and tomorrow (December 8 and 9) at CompTIA world headquarters in Oakbrook Terrace, IL, to discuss the RFID certification initiative. Issues the group intends to address include the business need for RFID skills development and the scope and structure of an industry accepted RFID certification.

For more information about AIM Global, visit www.aimglobal.org or www.rfid.org. More information about CompTIA is at www.comptia.org.

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