RFID means budget gains and jobs losses

Businesses are expected to spend an estimated $5 billion on radio frequency identification (RFID) technology during the next few years in an attempt to improve the efficiency of their supply chains, according to analysts The Yankee Group.

However, the deployment of RFID will mean that many workers who currently use scanning devices to track stock will lose their jobs, according to the report.

In the US alone, according to the Yankee Group, the jobs of some four million workers involved in data collection in the US alone could be in jeopardy.

RFID is a generic term for technologies that use radio waves to automatically identify tagged items. Unlike a bar code scanner, which has to ‘see’ the bar code to read it, RFID tags can be read as long as they are within the radio frequency range of a reader – this can vary widely depending on the type of RFID technology.

If deployed effectively, RFID can save money by reducing labour costs and loss of stock, and can improve sales by ensuring the availability of products. However, the price of the tags and the equipment make it prohibitively expensive for many functions, although prices are expected to drop in the next few years.

The Yankee Group expects the transition to be gradual: it could take as long as a decade for RFID technology to replace bar codes, it says – it took bar codes a similar length of time to gain widespread acceptance.

Accenture, Deloitte Touche Tohmatsu and IBM are among the technology consulting companies expected to benefit the most from initial RFID deployments. Large software vendors such as SAP, Oracle and PeopleSoft will also benefit, it says.

According to The Yankee Group, companies are currently spending about $500 million a year on RFID, but this is expected to rise to $3 billion a year by 2007.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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Supply Chain