Knowledge about RFID is good, however the main concern is cost, which is perhaps the major barrier to wider adoption.

RFID is set to make an ever-lasting change on supply chains of today. IGD has set out to explore RFID - to explain what the technology is, how retailers are planning to use it and what it means for suppliers. Abstracts from IGD's survey reveal some interesting views from retailers and suppliers. 

1.   Understanding of RFID developments seems to be good in the industry - 45% say they have above average or excellent understanding, 42% average.  Only 2% have none at all. 

2.   The majority of respondents believe RFID will deliver better benefits for the industry (68%).  The following benefits were identified: 

-     Greater speed and efficiency in the operation. This will be in areas such as booking stock in, stocktaking, scanning stock out and receiving Proof of Delivery for all stock delivered. When compared to the manual processes currently in place the savings could be significant. 

-     Help to track products throughout the chain, which is particularly useful when issues such as product recalls arise, where a particular batch of product can be immediately identified in any part of the chain. 

-     Enhanced forecasting through the ability to access greater aspects of a product's movement throughout the supply chain e.g. checking availability in the store. 

3.    The two most important factors viewed in the adoption of RFID are cost and affiliation to appropriate international standards. There is particular importance attached to understanding the return on investment. The problem lies in quantifying the true cost of implementing an RFID tag. Some manufacturers shared their concerns on RFID, for example if all the major customers did not adopt the technology then it would be difficult to unlock the full benefits from the supply chain. 

4.    63% say it will affect the consumer with many mentioning better availability. But other potential benefits were also cited, RFID could trigger automated payment systems in-store eradicating the need for consumers queuing up at the checkout. This would vastly reduce the average time for shopping.  Some early trials with DVDs at Tesco have made it easier for consumer to find the right product in the store. 

      Issues of perception and privacy could continue to make the consumer suspicious. It is essential retailers and suppliers are clear on their intentions in using RFID tags for improving the supply chain. It will be important the consumer understands the impact (if any) from the technology. 

5.   The jury is out on whether RFID will be the answer to availability.  A third say yes, a third no and a third don't know. Availability still dominates the agenda for most businesses. RFID has the potential to deliver some great benefits, but the industry is clearly not fully convinced that improved availability will be one of them. 

6.   Only 39% of respondents have been approached by a trading partner to undertake RFID. In the UK Tesco, Marks & Spencer and Asda have approached suppliers and outside the UK, Wal-Mart and Metro appear to lead the way.

 7.  35% of respondents plan to implement RFID to satisfy their customer requirements. However there are still some 20% that are undecided. 

8.   Only 4% think RFID will be widespread within two years time.  Most respondents think it could take between three and five years (65%). This is in recognition of time required for the technology costs to come down, for the standards for the tag to be fully adopted and for the technology to be fully tested in a live trading environment.

"The potential for RFID is tremendous but as we've learnt from experience, each technology has its teething problems. We now need to bridge the gap between pilot testing and mass application. I think we can guarantee it won't always go smoothly but with perseverance, RFID will start to transform the supply chain."

Joanne Denney-Finch, Chief Executive, IGD

The full survey accompanied with company profiles and case studies are published in IGD's upcoming report RFID - The Next Big Thing (visit www.igd.com for further details.)