RFID Adoption Issues: Analysis of Organizational Benefits & Risks

What makes companies such as Wal-Mart in the U.S., Metro Group in Germany and Tesco in the United Kingdom, so willing to adopt RFID technology? More precisely, what are those factors that matter most and least to firms when considering an investment in RFID? And how does the importance of such factors vary between adopters and non-adopters? The answers to these questions are important because they indicate where future development effort should be directed to increase the rate of RFID adoption. To begin, we conducted a large survey of 133 RFID Journal readers. The industries represented in the sample include: wholesale trade, retail trade, transportation and communications, business services, communication services, manufacturing, finance and insurance, mining, government administration and defense. Firm size was well distributed, with 39% of the sample from small sized firms (less than 20 employees), 21% from medium sized firms (20 to 200 employees) and 40% from large firms (more than 200 employees). The methodology used to conduct this study allowed us to calculate the relative importance of 21 attributes that influence the decision to invest in RFID. The results indicate that those factors that matter “most” during the RFID investment decision are: (1) the benefits that RFID offers in terms of improved data quality, reliability and timeliness, (2) the amount of top management commitment by senior managers to provide resources that will support investment in RFID, and (3) improved alignment of information between suppliers and customers. One of the most interesting aspects of the study is that it shows quite clearly which attributes respondents are willing to abandon first. In other words, the factors that matter “least” to the RFID investment decision are: (1) privacy threats, (2) security threats and (3) standards ambiguity. Finally, the results reveal important differences between RFID adopters and non adopters. In the case of adopters, the perceived opportunity to derive strategic benefits from RFID through improved decision making is critical. Not surprisingly, the non adopting firms are primarily concerned with the high acquisition and other costs associated with RFID technology