TCO: A Glaring Comparison Of Four Tagging Strategies

By Clarke McAllister, Chief Technology Officer, ADASA Inc.

When faced with the task of selecting a method for encoding and applying RFID tags, you have a range of options including automatic and manually applied tags. Automated solutions are capital intensive, manual methods are labor intensive. This paper shows that mobile encoding solutions require minimal capital and minimal labor. The table and graph illustrate that mobile encoding offers the lowest total cost of ownership (TCO) of any other tagging solution during the formative years of RFID adoption.

When considering the cost of an RFID tag most people have referred only to the direct material costs of the tag. Costs representative of current market prices are shown in the graph below as a function of annual tag purchasing volume.

It is really more important to understand the total cost of ownership (TCO) of an RFID tag. The TCO or the total burdened cost of tagging includes capital investments, labor, and materials. This paper explains the four major tagging strategies and the TCO for each as a function of total tags shipped annually. The methods compared are: Source Tagging in Manufacturing, Automated Tagging in Distribution, Slap-and-Ship in Distribution, and Mobile Encoding.