RFID has long been touted as the future of logistics for all companies by allowing retailers and suppliers to track goods throughout the supply chain. However high prices for tags and systems hasheld enthusiasm at bay despite mandates from retailers like Wal-Mart, which last year announced it would require its top suppliers to implement the tracking technology.
Analysts have predicted that tag prices will have to fall to about five cents (US) each for the technology to become an economical alternative.
Last month Alien Technology cut the price of its on pitch labels to 12.9 US cents, while Avery Dennison cut the cost of its inlays to 7.9 cents. Previously the best tag price was at about 15 centseach and required a large order.
Even that sub-eight-cent price is still well above the five cent point that some industry analysts earlier touted as the price needed to ensure a viable RFID industry.
Other analysts, such as ABI Research believe the new price level may not be the answer.
Erik Michielsen, the company's director of RFID and ubiquitous networks said other recent events, such as the development of global RFID supply chain standards, may serve to boost the take up of the technology.
EPCglobal, a non-profit organisation for industry users, last month certified new software and hardware standards for companies using Electronic Product Code (EPC) to track their productsthroughout their global supply chains.
The royalty-free standards developed by EPCglobal, which includes a new Generation 2 RFID standard, are the foundations in the continuing construction of a global supply chain information networkthat uses RFID.
"These new low prices may represent loss-leaders," Michielsen stated. "But when you tie them to the new products and services offered by software companies to helpend-users make sense of their RFID data, and to the recent spate of EPC Gen 2 announcements, we may have a three-headed 'benevolent monster' that will promote demand."
The unified data system being developed by EPCglobal would allow changes in information about product sizes, weight, name, price, classification, transport requirements and volumes to beimmediately transmitted along the supply chain. For example it would allow shippers to immediately know if the amount of product stacked on a pallet had changed, or give a retailer time to adjustdisplay space.
"What we are starting to see is lower cost hardware, tested and proven performance requirements around a new standard, and software that enables non-technology focused end-users to makebetter decisions and find ways to drive revenue growth and cost refinement," he stated. "All together, these factors support widespread RFID deployments across a wide range ofvertical markets, to a degree we have not seen before."