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The ability of RFID technology to make the tracking and managing of assets more efficient and make inventory more visible offers an ideal solution for companies seeking to improve their manufacturing performance, according to a market analysis by Frost & Sullivan.
At the same time, the report says, as companies strive to tighten their brand security and protect their products from counterfeiting, RFID is emerging as the optimal solution to safeguard valuable products throughout the supply chain. 116.30.145.87 This article is copyright 2006 UsingRFID.com.
Market forecast
The report notes that the European RFID Markets for Automotive, Aerospace and Industrial Manufacturing generated revenues of US$23.7 million in 2005 and estimates this will reach US$109.3 million in 2012.
"The unique features of RFID technology enable the development of a constant stream of innovative applications for manufacturing sectors", says Frost & Sullivan Research Analyst Rengarajan Srinivasan. "The rising need to accurately track valuable assets and products is creating significant scope for the use of RFID across a range of industrial sectors."
Highly competitive
The highly competitive nature of modern manufacturing is driving manufacturers to reduce costs and adapt business to increasingly demand-oriented systems. In this context, RFID can enhance product availability for customers and boost productivity across the entire production process.
Moreover, its ability to enable just-in-time inventory control and asset management will allow companies to reduce order turn-around time and effectively manage fluctuating demand in automotive and consumer products markets.
ROI hard to quantify?
However, the return on investment (ROI) from RFID deployments is difficult to quantify, as the full benefits of the technology depend on its degree of integration into wider business processes. Difficulty in identifying a clear stand-alone ROI, coupled with its high implementation cost, poses a significant challenge to prospective entrants into the RFID market.
The excitement surrounding RFID in recent years, fuelled by the early retail mandates and pilot schemes, has created unrealistic expectations of the technology among many industries, the report concludes.
"As the RFID market starts the transition from technology trial stage toward early adopter phase, a key challenge will be to clearly identify the range of expected benefits," warns Srinivasan. "The uniqueness of each new RFID implementation due to varying company environments compounds this challenge, making meaningful comparisons of new systems with existing implementations unreliable. Over-optimistic or unclear objectives for implementing RFID are likely to have a negative impact on ROI and deter wider adoption."
Optimising ROI
According to Srinivasan, the maximum ROI achievable from the adoption of RFID can only be realised if the designing of business processes allows operation within real-world environments and well-integrated IT infrastructures.
"Manufacturers need to establish a strong business case for implementing RFID systems and develop flexible frameworks for evaluating ROI," concluded Srinivasan. "New entrants are likely to have a better understanding of the nature of ROI that is practically achievable from the experience of early adopters and increasing numbers of credible pilot schemes."
About the report
The European RFID Markets for Automotive, Aerospace and Industrial Manufacturing report is part of the company''s Automatic Identification & Security subscription. The research report details market opportunities and industry trends that have been evaluated following interviews with market participants.
Key participants that contributed include, among others: Aegate Ltd, Alien technology, FEIG Electronics GmbH, Hitachi Europe, Intermec Technologies, Koninklijke Philips Electronics NV, MARC Global, Siemens Business Services, Symbol Technologies, Tagsys Inc, UPM Raflatac, Zebra Technologies Corp, EM Microelectronic Marin SA, Identec Solutions AG, INSIDE Contactless, Intellident Ltd, Microlise, Omron Electronics LLC, Proxximity Systems Ltd, SAP AG, Stockway Oy, TECTUS Transponder Technology GmbH, BT Auto-ID Services, LogicaCMG, Checkpoint Systems (UK) Ltd, Identec Ltd, TECTUS Identification systems AG, Texas Instruments, Bar Code Systems Ltd, ID Systems Ltd, Total Control Systems (UK) Ltd, AeroScout Europe, Christian Salvesen, Maersk Logistics, TNT Logistics, Exel Plc, Deutsche Post AG, BOC Group Plc, Airbus, Westland Helicopters, Rolls Royce and Toyota UK.
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