RFID analyst forecasts cheap item-level tags by 2016

By Ahmed ElAmin

- Last updated on GMT

The tagging of items with radio frequency identification (RFID)
will take off in 2007 to becomethe biggest market by value by 2016
as prices fall dramatically, according to a forecast by a market

RFID has long been touted as the future of logistics for all companies by allowing retailers andsuppliers to track goods throughout the supply chain. Regulations on traceability and mandates fromsuch giant retailers as Wal-Mart and Metro are slowing forcing processors to make investments in thetechnology at the pallet and case level. High prices for tags and systems has been the major barrierto item-level use.

Item-level tagging refers to the use of the technology with the smallest unit of saleable goods,such as luxury foods and drinks.

IDTechEx said its research indicates that item level tags and systems will be the world's largest RFID market by value from 2007 onwards. Item level RFID tagging will rocket to $13 billion in 2016 from $0.16 billion in 2006 for systems including tags.

In 2006, about 200 million items were RFID tagged around the world. The firm predicts that 550 billion items may be RFIDtagged in 2016.

"Those adopting item level tagging today do so willingly and are prepared to pay for good performance as they enjoy rapid multiplepaybacks,"​ IDTechEx stated in the report. "This is in some contrast to pallet and case tagging where consumer goods companies are required by retailers to fit the tags regardless of economics.The consumer goods companies are therefore reluctant purchasers of RFID and these tag and interrogator prices are in free fall from oversupply."

The biggest item level potential involves uniquely coding very high volume products, such as consumer goods, postal items, apparel, books, drugs and manufactured parts. These total 5-10 trillion items ayear, IDTechEx stated.

While many sectors are more open to RFID tagging, the food and beverage industry will remain alaggard. High priced items will be first as the tags will just be a small fraction of the total costof the good.

IDTechEx noted that the US Food and Drug Administration will make tagging of up to 20 billion prescription drugs a legal requirement inthat country. Globally, healthcare supplies, tools and assets are being urgently fitted with RFID for safety, security and cost control, including theft reduction. Boeing and Airbus are progressing the tagging of aircraft parts and equipment.

"At the other extreme it is tough to get down to the price that justifies tagging a can of soda in a supermarket or aletter,"​ IDTechEx stated. "Item level tagging has therefore started with the many lucrative intermediate requirements as shown below and it is rapidly widening in scope."

To get to that widespread use of RFID item-level tagging in low cost goods such as most foods thetechnology will have to evolve. Due to technological developments, such as RFID ink, IDTechExbelieves that the average price will reach just under one cent for an item level tag in 2016. Thisaverage covers a range from 0.1 cent primitive ink stripes and thin film transistor circuits to $8 tags for aircraft parts to high specification and even more expensive military tags.

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