The demand for increased integration of production and logistics activities in the automotive, aerospace and industrial manufacturing sectors will accelerate the growth of radio frequency identification (RFID) markets in North America, according to new analysis from Frost & Sullivan.
The report shows that the RFID market for automotive, aerospace and industrial manufacturing earned revenues of $71.3 million in 2005 and is estimated to reach $225.7 million in 2012.
The automotive, aerospace and industrial manufacturing sectors are concentrating on expanding their operations and decentralizing supply chain activities, and are demanding highly responsive and integrated information systems to help them meet these goals.
Greater deployment of RFID will enhance the demand and supply balance in automotive, aerospace and industrial manufacturing, the report noted.
In order to remain competitive and be more cost efficient, these industries are considering lean manufacturing methods and outsourcing operations across global supply chains.
"RFID has remarkable potential to integrate these supply chain and enterprise resource planning (ERP) systems with manufacturing applications," states Frost & Sullivan Research Analyst Priyanka Gouthaman. "It enables tracking and identification of inventory (inbound as well as outbound), work-in-progress (WIP), critical assets, spares, tools and high-value components, thereby providing real-time operational visibility across the length of the value chain."
But, according to the analysis, current technology-enabled processes concentrate mainly on specific areas such as procurement, manufacturing and warehouse management, rather than on the integration of the various systems across geographic locations and logistic partners.
"RFID will facilitate integration of such stand-alone systems and synchronization of data across supply chain partners, thereby aiding real-time tracking of assets," commented Gouthaman. "It helps manufacturers to improve production planning as well as reduce costs related to shrinkage, obsolescence, under-utilization of existing resources, warehouse space and transportation."
While these benefits will help to gain the acceptance of RFID among large manufacturers, smaller manufacturers will be seeking cost-effective systems as well as processes aimed at capturing value from investments.
"Most vendors offer starter kits that enable small end-user enterprises to experiment with limited investment scope and envision the potential benefits of the technology prior to large-scale pilots or deployments," explained Gouthaman.
The RFID the market is also receiving support from statutory authorities in the form of industry regulations and policies. These regulations could help in effective product recall management, which has been a major cause for concern in the manufacturing segments.
"The efforts of the Automotive Industry Action Group (AIAG) and EPCglobal data in integrating the B-11 tire and wheel label as well as RFID standard enables item-level tagging within the industry," stated Gouthaman. "The U.S. Federal Aviation Administration (FAA) is likely to propose a policy for the use of passive and active RFID technology for tracking cargo and aircraft components."
It is hoped that these legislative influences and regulatory compliances will stimulate industry-wide adoption levels and drive the growth of the RFID markets, the report concluded.