Supply chain management is an application area with international dimensions, and it accordingly receives the largest amount of attention. It is a focus of the activities of the EPCglobal consortium, among other organizations. At EPCglobal, supply chain integration is one of the basic elements of the concepts for collaboration between trading partners – in particular efficient consumer response (ECR) and collaborative planning, forecasting and replenishment (CPFR). RFID supports comprehensive data integration in the ‘real-time enterprise’ context. The hurdles standing in the way of implementing these concepts are the extremely high costs and severe structural obstacles. Consequently, implementation is proceeding in stages, for example in the trade sector by using RFID tags first with pallets and later on with cases. This initially defuses the two factors that create barriers. Actual use occurs initially at the retail end, with supply chain integration being limited to transmission of dispatch notifications by producers. The cost/benefit ratio can be calculated due to value aggregation at the load unit level.
Market structure and application areas for RFID
The media hype around the use of RFID in the supply chain overshadows its economic successes in the asset management and process control areas. RFID is already a basic technology in the latter area due to the relatively low influence of the cost and structure barriers. However, this does not mean that suppliers or users should limit their efforts to ‘cherry picking’ in the first quadrant. The economic success of small-scale RFID projects not only acts as a motor for evolution of the technology in terms of functionality and cost, but also gives an additional boost to the standardization process. EPCglobal represents the essential standardization process that is necessary to release the extraordinary potential of applications in the fourth quadrant and thus enable suppliers to participate in the resulting market.
The cost and structure barriers for subsequent applications can be eliminated by the combination of utilization of RFID technology and rapid progress of standardization. This will enable RFID to evolve further towards the status of a basic technology for supply chain applications. Suppliers can use the quadrant chart to help them structure their range of goods and services and plan their investments rationally. A large number of market players have withdrawn from the RFID business in the past five years, perhaps because they did not take a sufficiently differentiated view of the market structures and selected the wrong strategy. This not only damages the individual enterprises, but also casts the wrong light on the RFID market, which in turn slows down the development process. The enormous market figures presented in the relevant studies are unquestionably realistic, but they will not materialize automatically. Instead, they can only be achieved by determined effort on the part of all parties concerned.