By Clarke McAllister, Chief Technology Officer, ADASA Inc.
Wal-Mart and SAM's Club have issued RFID tagging mandates to selected suppliers. However, most suppliers remain hesitant to respond to those mandates, choosing to limit their project objectives to tactical goals such as baseline compliance - calculating them as a cost of doing business rather than embracing them as a strategic customer alliance or business process initiative.
For most suppliers, this has resulted in a business process cost of $2 to $5 per RFID tag plus the cost of the RFID tag. Their hesitancy to fully embrace RFID, while understandable - prevents them from scaling up, keeps tagging costs high, and ultimately forces the retailer to apply the tags upon arrival at their receiving docks and charge the supplier for that service.
The cost of commissioning RFID tags (encoding the right data and applying the RFID tag to the right pallet or case) depends largely on the vendor's internal business process. Following Gartner's Hype curve1 through the 2004 spike of RFID-mania, tags were envisioned to be embedded in corrugated cartons, making for smart boxes that magically declared their arrival at key choke points in the supply chain. Then in 2005 people began to discover the dream of a smart box was exactly that, a dream for many years to come. There are significant technological and economic barriers to mass adoption of smart boxes.