"how far, how fast: the state of rfid"–the review from europe

“How Far, How Fast: The State of RFID”

The View From Europe

March 2005

2©2005 Deloitte Touche Tohmatsu. All Rights Reserved

• The Survey

• Key Findings:

– The majority of European participants are in the early stages of RFID investment, as are companies in other regions

– Their expectations of the benefits of implementing RFID over the next five years vary considerably

– Many participants confront common technical, organizational, and cultural hurdles

• Going Forward

Outline

©2004 Deloitte & Touche LLPPresentation Name (View / Header and Footer)3

Survey Background


Our “How Far, How Fast” online survey comprises 122 IT participants globally one-quarter (33) come from Europe — The majority of companies are Retailers

Manufacturer (Apparel)

6%

Manufacturer (CPG)21%Retailers

60%

Transportation2%

Distributors11%

Other Countries Europe

Manufacturer (Apparel)

6%

Manufacturer (CPG)

6%

Retailers82%

Transportation3%

Distributors3%


European companies have slightly lower revenues over all

Except Retailers, who include larger number of $5B+ companies


0%

20%

40%

60%

80%

100%

Distributors Manufacturers Retailers Transportation

$499M or less $500 -999M $1B - 1.99B

$2 - 4.99B $5B and over

0%

20%

40%

60%

80%

100%


$499M or less $500 -999M $1B - 1.99B

$2 - 4.99B $5B and over


Like the rest of the world, most European companies are still in the early stages of investing in RFID

• Many Europeans are still defining timelines for deployment

• Many had low levels of 2004 RFID investments

• No Manufacturers say they tagged any SKUs in 2004

• Many have mixed levels of awareness on technology and standardization

• Softgoods and consumer electronics retailers are, on average, investing at higher levels


Few European firms have a clear timeline for RFID implementation

The exception are Distributors, who have developed timelines


0%

20%

40%

60%

80%

100%


Yes No

0%

20%

40%

60%

80%

100%


Yes No


Larger firms are the most likely to have a timeline for RFID implementation

This is especially true in Europe: only $2B+ companies have RFID plans


0%

20%

40%

60%

80%

100%

$499M or less $500 -999M $1B - 1.99B $2 - 4.99B $5B and over

Yes No

0%

20%

40%

60%

80%

100%


Yes No


Calendar 2004 budgets for RFID seemed low, and were somewhat lower in Europe

But other funding may be distributed across related firm initiatives


0%

20%

40%

60%

80%

100%

$499M orless

$500 -999M $1B - 1.99B $2 - 4.99B $5B andover

$0-499K $500K-999K $1-1.99M

$2-3.99M $4-6.99M Over $10M

0%

20%

40%

60%

80%

100%

$499M orless

$500 -999M $1B - 1.99B $2 - 4.99B $5B andover

$0-499K $500K-999K $1-1.99M$2-3.99M $4-6.99M Over $10M


Most allocated less than $500,000 directly for RFID in 2004

This is the case for European firms as well—except for Distributors, whose allocations average $2-4M


0%

20%

40%

60%

80%

100%


$0-499K $500K-999K $1-1.99M$2-3.99M $4-6.99M Over $10M

0%

20%

40%

60%

80%

100%


$0-499K $500K-999K $1-1.99M$2-3.99M $4-6.99M Over $10M


Most believe they allocated sufficient money for RFID in 2004

Europeans are somewhat less likely to feel that way


0%

20%

40%

60%

80%

100%


Yes No

0%

20%

40%

60%

80%

100%


Yes No


1-50 SKUs40%

None52%

More than 200 SKUs

4%

101-200 SKUs4%

0%

Generally, few Manufacturers expected to tag more than 50 SKUs in 2004

But no European Manufacturers say they tagged any SKUs in 2004

None100%



Participants have somewhat different levels of awareness about technology standards

But European Manufacturers and Retailers do share roughly similar awareness levels


0%

20%

40%

60%

80%

100%


1 (very low) 2 3 4 (very high)

0%

20%

40%

60%

80%

100%


1 (very low) 2 3 4 (very high)


Expectations of RFID –

The First Five Years After Implementation


Expectations of the benefits of RFID vary considerably

• Distributors are the most optimistic, especially Europeans

• Reduction in human error emerges as a key opportunity

• Retailers are seeking more revenue possibilities from their suppliers

• A significant number of these companies are seeking greater efficiency in RFID-enabled order processing


215%

315%

4 (very high)12%

n/a27% 1 (very low)

31%

Three in four companies expect increased revenue from RFID within the first five years of implementation

For Europe, revenue expectations are somewhat lower than elsewhere

217%

316%

4 (very high)9%

n/a21%

1 (very low)37%



n/a25%

1 (very low)75%

Among Manufacturers, the majority have very low expectations of increased revenues due to RFID

Expectations in Europe are far lower than in other regions

8%

219%

315%

4 (very high)8%

n/a4%

1 (very low)54%



219%

319%

4 (very high)15%

n/a25%

1 (very low)22%

Retailers other than the lead adopters have low expectations of increased revenue

But European Retailers are more optimistic

216%

314%

4 (very high)6%

n/a28%

1 (very low)36%



Distributors have high expectations of quicker order processing/customer payment from RFID

337%

4 (very high)18%

n/a18%

227%

All Countries


20%

325%

4 (very high)25%

n/a25%

1 (very low)25%

Manufacturers have mixed expectations for quicker order processing/customer payment from RFID

Manufacturer expectations in Europe vary even more

225%

325%

4 (very high)4%

n/a4%

1 (very low)42%



215%

322%

4 (very high)15%

n/a19%

1 (very low)29%

Retailers have mixed expectations of quicker order processing/customer payment from RFID

The same is true in Europe

219%

328%

4 (very high)9%

n/a25%

1 (very low)19%



Most companies expect a beneficial reduction in human error from RFID

European Retailers feel more strongly than elsewhere


0%

20%

40%

60%

80%

100%

Distributors Manufacturers Retailers Transportation 0%

20%

40%

60%

80%

100%


1 (very low) 2 3 4 (very high) 1 (very low) 2 3 4 (very high)


Challenges


European companies confront a number of challenges in deploying RFID:

• Technical challenges primarily relate to tags

• Cultural and organizational challenges include aversion to risk, fear of change, and concern about disrupting existing processes

• Management at European Manufacturers may have more difficulty with adoption due to historic distrust toward IT Departments

• Logistics companies are concerned about disruption of well-established processes by RFID implementation


“We can't find a tag that produces a sufficient read rate"

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors30%

38%

17%

50%

0% 10% 20% 30% 40% 50% 60%

Transportation

Retailers

Manufacturers

Distributors 100%

0%

22%

0%

0% 20% 40% 60% 80% 100% 120%

Transportation

Retailers

Manufacturers

Distributors


Other common technical problems:

• “We have trouble affixing tags to our products”

• “We are getting interference from other RF devices used in the building”

• “We are getting interference from nearby machinery”

• “Major disruption to our existing product handling or storage procedures”

• “Potential conflict with Health/Safety regulations”


‘Resistance to change hinders deployment’

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors50%

25%

34%

0%

0% 10% 20% 30% 40% 50% 60%

Retailers

Manufacturers

Distributors

Transportation

100 %

50%

37%

0%

0% 20% 40% 60% 80% 100% 120%

Retailers

Manufacturers

Distributors

Transportation


‘Aversion to risk’

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors10%

42%

30%

0%

0% 10% 20% 30% 40% 50%

Transportation

Retailers

Manufacturers

Distributors0%

75%

26%

0%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Transportation

Retailers

Manufacturers

Distributors


‘Lack of an innovation culture’

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors40%

29%

23%

50%

0% 10% 20% 30% 40% 50% 60%

0%

50%

33%

100 %

0% 20% 40% 60% 80% 100% 120%

Transportation

Retailers

Manufacturers

Distributors

Transportation

Retailers

Manufacturers

Distributors


‘Distrust of or animosity toward the IT department’

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors20%

13%

15%

0%

0% 5% 10% 15% 20% 25%

0%

50%

11%

0%

0% 10% 20% 30% 40% 50% 60%

Transportation

Retailers

Manufacturers

Distributors

Transportation

Retailers

Manufacturers

Distributors


‘Major disruption to existing product handling/storage procedures’

Transportation

Retailers

Manufacturers

Distributors

Type of Company


Transportation

Retailers

Manufacturers

Distributors20%

17%

8%

0%

0% 5% 10% 15% 20% 25%

0%

0%

7%

100%

0% 20% 40% 60% 80% 100% 120%

Transportation

Retailers

Manufacturers

Distributors

Transportation

Retailers

Manufacturers

Distributors


Going Forward


A number of companies are implementing cross-functional RFID teams

European Distributors are far more likely to do this than those elsewhere


0%

20%

40%

60%

80%

100%


Yes No

0%

20%

40%

60%

80%

100%


Yes No


Europe

0%

20%

40%

60%

80%

100%


Yes No

Larger firms are much more likely to deploy cross-functional RFID teams

This is the case in Europe too

Other Countries

0%

20%

40%

60%

80%

100%


Yes No


Going forward . . .

• 70% of unannounced Retailers with $5B and above in sales are applying resources and will implement some form of RFID in the next 18 months

• This could cause the “chicken and the egg” problem to disappear

• Different levels of commitment throughout the supply chain continues to hamper widespread RFID adoption

• Most companies are not looking at SKU-level implementation until layer adoption issues, i.e., technology standards, cost, and distrust of IT departments, are resolved

"how far, how fast: the state of rfid"–the review from europe

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