Consumer goods, pharmaceutical companies eye RFID

An online end-user survey recently completed by ABI Research has found that radio frequency identification (RFID) is being used or evaluated for a growing number of applications across a wide range of vertical industry sectors. Two of the markets of greatest interest to RFID vendors are the high-growth, high-volume sectors of pharmaceuticals and consumer packaged goods (CPG), which together accounted for about a third of the total survey responses. ABI Research has, therefore, published a deeper exploration of RFID usage in these two markets, providing a more detailed picture than has been available until now.

According to ABI Research director Michael Liard, “We were interested in five parameters: the average current and anticipated installed base of RFID hardware; the operating frequencies being used or piloted; users’ target ROI timeframe expectations; estimated annual expenditures for RFID systems; and average annual RFID system budget allocations.” 

In the CPG sector, because of the large base of manufacturers and the powerful influence of compliance mandates from Wal-Mart, the U.S. Department of Defense and the Metro Group, a high percentage of companies has gone beyond testing and evaluation, and has actually installed RFID systems. The “need-to-comply” for many retail CPG respondents trumps the importance of price declines as an adoption driver: in order to comply with customer mandates, manufacturers have had to adopt RFID regardless of the cost/price point. However, price reductions will exert a positive influence on future market adoption, especially as end-users become more focused on ROI and TCO as we look to the next stages of deployment beyond minimal compliance.

Liard notes, “In the pharmaceutical sector, the frequency debate continues. Pharmaceutical survey respondents are leveraging either high frequency or passive UHF, with some evaluating both simultaneously. Those pharmaceutical manufacturers needing to comply with retailer mandates for their OTC products tend to favor UHF over HF at the item level, due to dual-infrastructure concerns.”

The ABI Research survey, “RFID End User Survey: Retail CPG and Pharmaceuticals,” provides RFID adoption data obtained from 35 retail CPG and pharmaceutical manufacturers. It delivers analysis of RFID system usage and evaluation plans; primary adoptions drivers; current and future supply chain management applications by tagging echelon; and RFID system requirements. It forms part of the company’s RFID Research Service.