Here are some thoughts on RFID market
opportunities within the United States. Generally speaking there are two types of RFID projects, open loop and
closed loop. Most of the real
deployments to date have been closed loop, that is, the user of the technology
controls the entire end to end product life cycle with the products flowing
between their and their customers facilities.
A good example of closed loop is apparel rental. Open loop, on the other hand, are projects
involve goods that are usually tagged at manufacturing and RFID is used
throughout throughout the supply chain so that each item has a full life cycle
traceability from manufacturing, distribution, retail, to purchase and even
returns. This means that each entity in
the chain of custody is using RFID to track inbound receipts and outbound
Retail and Consumer Goods
RFID in retail has suffered a fair amount of ‘bad press’ due to retailer compliance driven mentality. Big box shops and large department stores have taken the stance to force suppliers to tag their products. This push or threat has left a bad taste in the mouths of many.
The real opportunity in retail is with vertically integrated retailers (CLOSED LOOP) who own their product BOM, manufacturing, supply chains, and store execution. They can design RFID into their products and their processes and they receive direct benefit from it without having to impose or depend on a third party’s adoption of the technology. All RFID is deployed ‘in house’ and quality and proper use of it is controlled ‘in house’.
Another opportunity is with manufacturers of high end products. They want to design RFID into their product, leverage it during the manufacturing process for various reasons: to help with ‘pay for performance’ schemes related to piece work, to help with quality control, and/or to gain better and more accurate visibility into WIP, raw materials and finished goods inventory. In these cases, ROI is often realized before the product ever leaves manufacturing plant. Even though this may be considered an internal CLOSED LOOP type project, downstream parties like distributors and retail outlets (i.e. the OPEN LOOP entities) can benefit from the embedded technology.
On the opposite end of the product life cycle, brands use it to ensure they only provide warranty/repair service to legitimate products. Any product that suffers counterfeiting is a great candidate for RFID. There are many high fashion brands who are embedding dual tag (NFC and GEN2) technology into their products allowing consumers and even customs agents using NFC capable phones to verify the product is legit while allowing their supply chain partners to leverage the GEN2 tag for supply chain visibility and traceability.
In any rental scheme (CLOSED LOOP) in which the renter needs to have clear, unequivocal insight into 1) where the item is AND 2) how many times has it be out for rental, RFID will be the defacto standard for marking the item. RFID is embraced in textile (linen, uniforms, floor mats, etc) rental for hotels, hospitality, hospitals, Tux rental industry, etc.
A recent example of where the rental market is going is Patagonia. Patagonia is interested in rental of cold weather gear at certain parks and tourist locations. Essentially, following the bike rental model seen at many tourist destinations. There will be new rental companies and schemes coming to market and they will be looking for cloud based, RFID based platform.
Another great opportunity is women’s fashion and apparel rental. Today, a 10 minutes search on the internet will uncover at least 20 distinct lady’s rental companies.
Every industry has interesting
business cases for RFID, with many of them pertaining to fixed asset management
or maintenance. The ability to uniquely
and unequivocally identify an asset, with or without human intervention, is a key attribute of RFID technology. The types of RFID solutions are only limited
by our imagination.
AscentERP & Propel PLM: Digital Transformation
Friday, August 18, 2017
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