IBM is set to announce this week a major radio frequency identification(RFID) strategy that involves integrating the next-generation supply-chainand tracking technology with existing data systems.
Seen as a refinement and eventually replacement of barcode supply-chaintracking and inventory, the wireless tags and readers are slowly gainingtraction in the market, which is expected to top US$3 billion within fouryears. Much of the RFID adoption is being driven by directives and deadlines from major retailers, particularly Wal-Mart.
However, analysts and industry players alike recognize that RFID canreach its full potential only if it moves beyond tracking boxes to anintegrated source of data that is used with other business planning andoperations applications. IBM, which a year ago announced an RFID middlewareinitiative, is combining the technology with its WebSphere, DB2, Tivoli andother existing business software.
While some companies seem to realize the need for RFID to be part of thelarger convergence of data, networking and communications, many are limitedto dipping their toes in the RFID river, adopting the technology only asmuch as required by partners such as Wal-Mart.
Yankee Group senior analyst Mike Dominy said vendors such as IBM arepromoting RFID as the next big technology thing and are selling the use ofRFID not only for tracking goods and shipping, but also for overallbusiness operations.
Oracle, MS, HP
“As companies like Wal-Mart and others start rolling out RFID in thesupply chain, we’re going to see them integrating RFID data with otherdata,” Dominy told TechNewsWorld. “That’s the difference in the RFID marketwe see today.”
Dominy explained that while RFID was previously closed off from other ITnetworks and data, it is increasingly being folded in with inventory,quality assurance, production, demand and other applications.
While Wal-Mart, Best Buy, and other major retailers have spurred RFIDadoption among their partners, semiconductor companies such as TexasInstruments and Philips are working to improve and reduce cost of thetechnology.
On the IT side, the larger hardware, software and services providers –Microsoft, Oracle, IBM, HP and others — appear to be the most trusted andbest-positioned for RFID integration, according to Dominy.
“Our research shows the user or enterprise preference is toward using bigplayers to implement RFID,” he said.
However, Dominy cautioned that despite IBM and others’ pronounced supportfor open standards, customers relying on their RFID solutions may belimiting themselves.
“IBM sells a host of technology used for RFID,” he said. “So obviously,there’s going to be a bias to IBM solutions as opposed to solutions thatdon’t necessarily rely on IBM technology.”
AMR Research senior analyst Kara Romanow told TechNewsWorld that despitethe RFID adoption being driven by Wal-Mart’s requirements — which includeRFID implementations from its top 100 partners by the end of the year –there are still hurdles for wider adoption.
For example, Romanow said even companies that realize the advantages ofRFID are still reluctant to adopt the technology because of the price of the actual tags and the accuracy or RFID reading.
However, those issues are being addressed and RFID pilot projects are nowbeing expanded to include other parts of business planning, analysts agreed.
World of Lessons
Dominy said while North America is a bit further along in the deploymentof RFID technology, Europe and other regions are also moving quickly towardadoption. The U.S. is further along in supply chain RFID, but Europe is more advanced in “closed loop” or internal use of the technology, according to Dominy.
The analyst said there are still questions, however, regarding how thetechnology will roll out in Asia, particularly in China. The fear is thatRFID may get bogged down in the standards and frequencies mess that slowedwireless technology.
“We have to use the lessons from wireless and apply them,” Dominy said.