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Deloitte explores Canadian corporations’ stance on RFID

TORONTO, Ont. -- According to a recent study by Deloitte, nearly half of Canadian retail and consumer corporations...

TORONTO, Ont. — According to a recent study by Deloitte, nearly half of Canadian retail and consumer corporations anticipate using RFID technology within 2 years.

The finding serves as notice to carriers with customers in these sectors who are looking to enhance their supply chain performance through investments in RFID.

Over 90 percent of respondents believe this technology will impact their company, according to the new qualitative study conducted among senior ranking executives within the top thirty retail and consumer product companies in Canada. The report, entitled the ‘2004 Canadian Radio Frequency Identification Study (RFID)’, commissioned by Deloitte’s Consumer Business Group, explores the Canadian market’s receptiveness, readiness and concerns relating to RFID technology.

"There is no doubt that RFID technology’s most promising application area is not in the tracking of lost pets and kids, but in the supply chain and the retail environment," says Christian Stephan, Partner, Consumer Business Group, Deloitte. "RFID has the potential to take supply chain management a quantum leap forward from bar codes, which have been around for about twenty years, essentially by practically eliminating human intervention."

Stephan adds, however, that there are a number of major considerations, issues and challenges that Canadian manufacturers and retailers face when assessing or planning for RFID implementation.

"Every corporation needs to totally understand the uses and advantages that RFID can bring, and ultimately – what the cost-benefit return is for their particular organization – before initiating RFID implementation," he says, pointing out Deloitte commissioned the 2004 RFID Study to gain a deeper insight and understanding on where the Canadian retail and manufacturing market currently stands concerning RFID technology."

The 2004 RFID Study main findings are:

Canadian Corporations’ Awareness, Understanding & Action Taken with RFID Technology

According to Deloitte’s study, the vast majority (73%) of Canadian corporations who participated in the study are aware of RFID technology, however, only 23% of the senior executives interviewed felt they were ‘very’ familiar with the technology, with nearly half of those interviewed expressing that they are only ‘somewhat’ familiar’ (43%). Only 14% of those who participated in the study stated that RFID technology had already been implemented to some degree within their corporation.

Overall, nearly all of the senior executives from the Canadian retail and consumer corporations who participated in the study believe RFID will have some impact on their company (93%). Interestingly, all of the senior executives from the ‘retail’ companies stated they believe the technology will have an impact on their company.

The vast majority (71%) of the Canadian corporations who participated in the study revealed they have already taken active steps with consideration to implementing RFID technology (including 43% who stated their company has researched the technology).

Probability, Timing, Triggers & Benefits for RFID Implementation

Nearly half of the corporations who participated in the study indicated a strong likelihood of implementing an RFID system (47%). Overall, the retail corporations expressed a stronger probability of implementing RFID compared to the consumer corporations who were interviewed for the study. Of the companies that indicated that they were likely to implement RFID, 50% believe they will implement an RFID system within two years. An additional 29% believe they will implement RFID within three to four years from now.

According to Deloitte’s study, Canadian retail and consumer corporations consider the main determinants and considerations that will trigger RFID implementation within their corporations to be the following: in response to a client request (20%), the cost of the technology (13%), the value of the technology for tracking purposes (10%), and the ability of RFID technology to reduce operational costs (10%).

The Canadian corporations that were interviewed mentioned a variety of benefits they felt an RFID system could offer. The most commonly perceived benefit was that RFID would better control inventory (23%), while the second most common perceived benefit was that RFID can track goods in shipment/transit (20%). Other benefits cited included that an RFID system would be less expensive than the current system (13%), the level of accuracy (10%), and better operational performance than the existing system.

Of the senior executives who indicated they are likely to implement an RFID system, the most common planned function was deemed to be for loading and unloading within a distribution centre. Other functions cited were for shipping purposes, to tag and track pallets, to improve overall operational efficiency and for general tracking benefits.

The Perceived Challenges & Obstacles to Implementing RFID

To assess the possible (or perceived) roadblocks of implementing an RFID system, the corporations were asked what they thought would be (are) the main obstacles. Half (50%) of the senior executives who participated in the study specified that the cost or expenses related to RFID is the biggest obstacle to implementation. Other obstacles were cited as being the time and effort to set up the RFID system (17%), the technical support and assistance required to implement RFID (13%), ‘big brother’ privacy concerns (10%), and the effort required to transition from the existing system to an RFID system (10%).

Of the corporations who took part in the study, only 14% stated that they are already using RFID technology to some extent. From those corporations who are not currently using RFID, the primary reason indicated as to why they are not currently implementing an RFID system is that the corporations feel there is currently no need or pressure to do so (23%). There were some Canadian retail and consumer corporations that indicated they are not implementing such a system due to lack of customer requests (17%). Moreover, there still appears to be some lack of knowledge and understanding regarding RFID (10%) and its effectiveness (10%), which may mean companies do not feel totally able to make an informed decision at this time.

In addition to discussing how much impact an RFID system would have on their company, the Canadian corporations who participated in the study were asked if an RFID system fit into their company’s current business plan. Nearly half (43%) of the executives interviewed stated that they felt that RFID would fit into their company’s business plan.

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