Report Shows Manufacturers Pay More For RFID Technology
The analysis was conducted as manufacturers and retailers begin to consider the costs and benefits associated with adopting the technology as mandated by retailer Wal-Mart and the U.S. Department of Defense.
Manufacturers will incur one-time charges, plus the recurring charge of placing RFID tags on their pallets and cases (as mandated by Wal-Mart).
Wholesalers, who will benefit from the technology through a reduction in inventory time and number of personnel and more accurate and customer-friendly inventory management, may have to wait for manufacturers that delay adoption of the technology due to alternative choices they have to meet the mandate.
A.T. Kearney suggested these alternatives: using other technologies, delaying implementation until the per-tag cost drops to a reasonable level given each company's business case, and negotiating information sharing with their retail partners to take advantage of the increased inventory and sales information EPC will provide.
Retailers will incur the same one-time charges as manufacturers, but also will see benefits in three primary areas - reduced inventory through a one-time cash savings, an annual benefit from a reduction in store and warehouse labor, and a reduction of out-of-stock items. The cost of EPC and RFID adoption to retailers is estimated at $400,000 per distribution center and $100,000 per store, with an additional $35 to $40 million needed for systems integration across the entire organization.
The full report by A.T. Kearney is available at its Web site, www.atkearney.com.