RFID by Logistics Service Providers a Value-add Opportunity for Manufacturers in Asia

March 30, 2011. Logistics providers are in a good position to offer RFID (Radio Frequency Identification) service propositions to their manufacturing customers in China and South East Asia. Based on a November 2010 survey by M-Brain (formerly Global Intelligence Alliance) , over two-thirds of manufacturing sector respondents did not have a plan in place to invest in RFID tracking technology for location and route planning services.

According to the M-Brain (formerly GIA) survey which was carried out in November 2010 among 65 manufacturing companies in China, Malaysia, Singapore, Thailand and Vietnam, RFID adoption by manufacturers is being driven by China and (less so) by Thailand, with the Machinery, Automotive and Healthcare sectors leading the way.

Only 6% of companies surveyed had already invested, with industry leaders such as Panasonic and Huawei among them. Huawei, the Chinese telecom solutions provider, for example, has applied RFID systems into its supply chain centre in Shenzhen.

Chart: Interest in investing in RFID tracking technology for location and route planning services

Interest in investing in RFID_websmall

Source: M-Brain (formerly Global Intelligence Alliance), 65 manufacturers in China, Malaysia, Singapore, Thailand and Vietnam.

The majority of companies who do not have a plan to invest in RFID expect their logistic providers to introduce the benefits of RFID and offer service propositions that customers can choose based on their current needs.

As the global economy starts to recover, robust growth rates have been predicted for China and number of South East Asia countries. Manufacturers in the region are expected to be increasingly willing to pay more for better logistics management catered for their needs, including RFID systems.

The cost for manufacturers to invest in and implement RFID in their product tracking systems has been falling in the last few years. However, it is still expensive and not as competitive when compared to the cost of the commonly used barcode systems. Investment in RFID includes software, system integration, readers and tags.

Moreover, the majority of RFID technology applications are still in their pilot phases and various industry standards are in use. The return on investment from RFID investments within the manufacturing sector has not yet been proven to be high enough to stimulate large scale adoption.

If more logistics providers were to offer RFID-based services, manufacturers would be able to compare the benefits and drawbacks of RFID against their current barcode systems more easily. This would, over time, help to boost demand for the technology, expand the adoption of RFID across more sectors, further reduce investment costs and drive industry standardization.

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