As manufacturers struggle to meet the mandates of supply chains and retailers for tagged finished goods, they are showing increased interest in RFID for internal applications that will result in more return-on-investment (ROI). Because of this there are several pilot activities currently underway to evaluate the potential for RFID in manufacturing, but the amount of pilots that actually become commercial products will determine overall market growth.
According to a new ARC Advisory Group study, the global market RFID in manufacturing applications is projected to grow at a compounded annual growth rate (CAGR) of 8.9 percent over the next five years as standardization and technology convergence cause prices to drop and unit shipments to grow.
In 2006, the market was $208.8 million and it is forecasted to be more than $319.5 million in 2011, according to the study.
This healthy market growth is foreseen due to continued growth in existing applications, such as WIP tracking, combined with increasing adoption in growth segments, such as asset tracking.
“Compared to the challenge of generating ROI from mandate-driven RFID implementations, numerous opportunities exist for internal RFID applications to generate ROI for manufacturers,” according to Chantal Polsonetti, vice president and principal author of ARC’s “RFID in Manufacturing Applications Worldwide Outlook."
RFID's ability to enable process improvements has been one of the reasons for its adoption by manufacturers.
For example, the study notes, in applications such as in-process error proofing, RFID can take human functionality and its variability out of the ROI equation. For the automotive or aerospace industries, the ability to match the correct part or tool to the unit being built can also provide rapid process improvements.
The RFID market will also be affected by standardization protocols that are being introduced to all segments, whether passive, active, RTLS, or Wi-Fi/802.11. This is especially relevant to manufacturers, since many legacy RFID applications in manufacturing employ custom frequencies and proprietary protocols in closed loop, single vendor applications, the study said.
As examples of these standards, the ARC report said, is the crossover impact of the EPCglobal standards, currently for passive implementations only, but which may include active standards in the near future, as well as ISO 15693 for HF and ISO 24730 for Active RFID.
The report also takes note of the rising interest in Wi-Fi based location tracking, as more Wi-Fi providers make location tracking a feature of their networks.
