RFID production to increase 25-fold by 2010

By Wai Lang Chu

- Last updated on GMT

Related tags: Rfid, Radio-frequency identification

According to a new report RFID production is to increase 25-fold in
four years, buoyed on by the scramble by pharmaceutical
manufacturers to comply with the new RFID Certification program,
which aims to synchronise the industry's transition to RFID
technology.

The figures compiled by market research firm, In-Stat, suggest that it is becoming increasingly vital for businesses to provide their labour force the skills they need in order to ensure a smooth transition to RFID technology.

It is a widely known fact that the pharmaceutical market incurs annual losses in the billions of dollars worldwide due to drug counterfeiting. Many in the industry view RFID tagging as a method to significantly curb these losses.

This is set to become the primary RFID industry driver, already happening now and expected to continue at a rapid rate over the next several years.

An additional growth factor is the compliance with mandates from customers and trading partners. However, more and more organisations are looking to implement RFID solutions for business process improvement reasons that go beyond simple compliance.

But Dave Sommer, CompTIA director of Electronic Commerce, told In-PharmaTechnologist.com:"Evaluation and implementation of RFID solutions in the healthcare and pharmaceutical vertical markets is being driven by a different set of factors. These verticals are evaluating the technology purely from a process enhancement standpoint rather than compliance."

Currently under review following two months of beta testing, the RFID Certification program is scheduled for release in late March. Surveying business leaders across the US, The Computing Technology Industry Association (CompTIA) found that 80 per cent of respondents believe there are insufficient numbers of professionals that possess the skills needed to make the transition to RFID technology.

In addition, 53 per cent of these companies said that this lack of talent would have a negative impact on the adoption of RFID technology in the next two to three years.

The participation of the US Food and Drug Authority (FDA) through its directives regarding use of RFID has also supported the growth in interest in RFID for the pharmaceutical and healthcare markets.

Hospitals and other healthcare providers have very strong business cases for implementing RFID solutions.

Potential factors strengthening the business case for a hospital can include improved asset tracking and utilisation; and reduced costs from litigation resulting from administration of improper medication or unavailability of necessary equipment when required.

Additionally, the cost of medical equipment is much higher than a tag price; hence, investment in tagging medical equipment makes business sense.

However, Sommer was quick to point out that there were still barriers that existed in order for RFID to reach its full potential. "From the perspective of end-users of RFID technology, one of the biggest barriers to adoption is cost of implementation. Out of the components that make up the cost of implementation, tag cost is the most prominent."

"The next biggest barrier or challenge is the integration of RFID with legacy systems like barcodes and other automatic identification systems. The challenge also includes integration with management systems like enterprise resource planning (ERP) solutions, warehouse management systems (WMS), and fleet management systems,"​ he added.

The lack of clearly defined standards, low knowledge and understanding of RFID among employees, security and privacy concerns, availability of suppliers, and technical limitations of RFID are other barriers that may have caused companies to ease into their RFID investments.

Pharmaceutical manufacturers and producers are aware of the consequences of not complying with mandates and directives and Sommer commented that this had clearly driven companies to implement RFID solutions quicker than normal.

In some cases, the prospect of missing a compliance deadline may have caused a company to accelerate its adoption of RFID.

"The CompTIA/Frost & Sullivan study published in 2005 found that 40 per cent of the healthcare companies we surveyed were facing FDA mandates for RFID implementation,"​ he said.

There is of course, the high price of tags. The mid 1980's and early 1990's period witnessed usage of tags in the automotive manufacturing industry. However tags were priced at over $25 per piece.

Since then, tag prices came down and were available for as low as 20 cents per tag in 2005. With mandates and regulatory authority directives driving the market, industry participants expect that higher volume orders for tags would lead to further reduction in prices of tags to 5 cents per tag or lower.

However, through discussions with vendors and other ongoing RFID research being conducted by Frost & Sullivan, it is expected that it will take at least another 6-7 years for tag prices to reach the 5-cent level.

The year 2005 has seen development of strong business cases for RFID adoption, the only impediment in achieving a faster return on investment being high tag prices. Hence, it is pivotal for the industry to work towards lower tag prices.

Indeed, a clutch of companies have recently emerged as leaders in the RFID industry., in which many are helping in the development of RFID certification. They include, Texas Instruments, a provider of innovative digital signal processing and analog technologies and the world's largest integrated manufacturer of RFID transponders and reader systems.

There is also Zebra Technologies, a supplier in delivering on-demand printing solutions for business and process improvement and with 10 years' experience in RFID technology.

Intermec Technologies have emerged as a pioneer, particularly in the development, manufacture and integration of RFID technologies, including Intellitag Gen2, wired and wireless automated data collection, mobile computing systems, bar code printers and label media.

Related topics: Markets & Regulations

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