The use of RFID within the supply chain is an emerging technological trend that has attracted a lot of attention in the US, Europe, and Asia.

Uptake of the technology is largely being driven by the potential benefits that RFID is perceived to deliver, particularly in the area of enhancing supply chain visibility.

Major retailers and leading corporations around the globe are either testing or implementing RFID, and many are claiming to have achieved competitive advantage and return on their investment.

Retailers such as Wal-Mart and Tesco have mandated that their top suppliers adopt the technology and this has helped accelerate the global use of RFID. But what has take-up been like in the local market?

More than 100 organisations recently took the opportunity to be involved in a University of Auckland survey to explore the adoption status of RFID in New Zealand’s supply chains.

Invitations to take part in the survey were included in a recent iStart e-newsletter and were also sent out via e-mail newsletter distribution lists belonging to the Chartered Institute of Logistics and Transports, New Zealand Trade and Enterprise, NZ Retailers Association, and the Chamber of Commerce. A total of 105 responses were received.

About 44 percent of the respondents were from small-to-medium enterprises and 24 percent were from multinationals. Overall they represented a wide range of industries with the largest response rate coming from the ICT sector followed by retail, education, manufacturing, the wholesale trade and business services industries.

The survey’s findings are best examined by separating out the three groups of respondents: the “end-users” of RFID in supply chains, the RFID “solution providers” and academic institutions. Including the perspectives of RFID solution providers and academic institutions enabled us to get a view of their perspectives on the development of RFID innovation and the availability of hardware, software, and solutions in New Zealand.

End-user uptake
The majority of end-user respondents were in the business of manufacturing, supply and production (21 respondents), warehousing, distribution and transportation (10), or retail (10).

Thirty percent of end-users said they are either adopting or planning and testing prior to adopting RFID. On the other hand however, at least 34 percent of the respondents are not adopting and do not have the intention to adopt RFID.

When asked the reasons for adopting or not adopting RFID, the adopters stated the following: better inventory visibility, improve labour efficiency, product traceability requirement, and speed up order fulfilment.

A closer look at these responses revealed that the adopters who perceived benefits of better inventory visibility also required product traceability at some stages of their supply chains. The manufacturers, suppliers, producers and retailers made up the majority of the adopters reporting the above reasons for adopting the technology.

Similarly, respondents who reasoned that RFID improves labour efficiency also believed that it will speed up order fulfilment. The warehouse/distributors/transporters made up the bulk of the adopter respondents giving such responses. Thus there are two RFID adoption trends in New Zealand industry.

To the same question, the non-adopters reported the lack of standards, the lack of integration, and the lack of expertise/knowledge as the main reasons for not adopting RFID.

Both the adopters and non-adopters cited high investment cost as their main concern. In addition to investment cost, the non-adopters were also concerned about the compatibility of standards and accuracy of scanning at their sites.

Analysis between the adopters and non-adopters revealed four concerns that were significantly different between the two groups. The adopters were generally not so concerned about compatibility of standards, security of data, difficulty with scanning accuracy at their sites, and the usefulness of data collected by RFID. As early adopters, they would have already investigated and tested the technology and thus were at ease with the technical aspects of RFID.

The non-adopters, in contrast, might not have sufficient knowledge about the technology leading to unclear perceptions of how the technical difficulties may be overcome. The investment on RFID reported was not substantive.

Sixty percent of the adopters had invested less than $20,000. When asked about future investment, 40 percent of the adopters intended to invest not more than $50,000 while 30 percent of the non-adopters indicated the same range. The majority of the respondents declared no further investment was planned.

Solution providers and academic institutions
Seventeen RFID solution providers responded to the survey, the majority indicating they provide software application and project management services. Other services offered include IT integration, hardware, process mapping, business case analysis and advisory services.

Eight academics responded to the survey. Although there were not many RFID courses available, 50 percent of the academic respondents revealed there was on-going research on RFID of various sorts.

However, only two New Zealand universities are offering RFID courses or papers at the under-graduate level. Also, most of the research projects at the university level did not appear to be extensive at this stage although several universities maintained that RFID software application, data management, and privacy issues were being extensively studied.

The more popular RFID research projects typically revolved around the physical aspects of radio frequency and RFID in the supply chain.

Conclusion
It is clear that there is a lot of interest in RFID across New Zealand businesses and organisations although the adoption rate is low.

Only 15 percent of respondents are using RFID at present and about 34 percent do not have the intention to adopt RFID at all. The remainder of respondents are either testing or planning to adopt. On the whole, about 70 percent are not adopting the technology.

The survey results provide valuable insights into the barriers facing RFID adoption. The lack of standards, integration, and expertise seem to be the main deterrents holding potential users back from taking up the technology. These concerns, while valid, can be remedied through providing adequate education on how to support the technology’s assimilation.

As a result of the study, we now know that the adopters and non-adopters differ in the extent of concerns around issues such as standards compatibility, data security, scanning accuracy, and the usefulness of data. Providing information on these factors relevant to each group can, on top of alleviating their reservations, help the non-adopters to better understand how RFID can be designed to suit their operations and business values.

On top of everyone’s list when mulling over an RFID project was the costs of investment. It is obvious why investment cost is an important consideration and often an impediment to any technology adoption. There are numerous research projects on reducing the cost of RFID tags. More research attention is warranted to evaluate the cost of systems integration particularly in the area of fitting RFID systems into existing infrastructure and legacy systems.

On behalf of The University of Auckland, our research team would like to thank all the participants and the committees that supported this survey. We are glad to see increasing local interest in RFID resulting in more collaboration between industry and academic institutions to help New Zealand businesses adopt innovative RFID technology. This survey remains open and we hope more participants will share their opinions to validate its findings. Please contact me if you would like more information about the survey or planned future studies.

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