"how far, how fast: the state of rfid"–the review from europe
TRANSCRIPT
“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
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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%
5©2005 Deloitte Touche Tohmatsu. All Rights Reserved
European companies have slightly lower revenues over all
Except Retailers, who include larger number of $5B+ companies
Other Countries Europe
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%
Distributors Manufacturers Retailers Transportation
$499M or less $500 -999M $1B - 1.99B
$2 - 4.99B $5B and over
6©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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
7©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Few European firms have a clear timeline for RFID implementation
The exception are Distributors, who have developed timelines
Other Countries Europe
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
Yes No
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
Yes No
8©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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
Other Countries Europe
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%
$499M or less $500 -999M $1B - 1.99B $2 - 4.99B $5B and over
Yes No
9©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Calendar 2004 budgets for RFID seemed low, and were somewhat lower in Europe
But other funding may be distributed across related firm initiatives
Other Countries Europe
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
10©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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
Other Countries Europe
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
$0-499K $500K-999K $1-1.99M$2-3.99M $4-6.99M Over $10M
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
$0-499K $500K-999K $1-1.99M$2-3.99M $4-6.99M Over $10M
11©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Most believe they allocated sufficient money for RFID in 2004
Europeans are somewhat less likely to feel that way
Other Countries Europe
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%
$499M or less $500 -999M $1B - 1.99B $2 - 4.99B $5B and over
Yes No
12©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
13©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Participants have somewhat different levels of awareness about technology standards
But European Manufacturers and Retailers do share roughly similar awareness levels
Other Countries Europe
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
1 (very low) 2 3 4 (very high)
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
1 (very low) 2 3 4 (very high)
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Expectations of RFID –
The First Five Years After Implementation
15©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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
16©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
17©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
18©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
19©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Distributors have high expectations of quicker order processing/customer payment from RFID
337%
4 (very high)18%
n/a18%
227%
All Countries
20©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
21©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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%
Other Countries Europe
22©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Most companies expect a beneficial reduction in human error from RFID
European Retailers feel more strongly than elsewhere
Other Countries Europe
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation 0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
1 (very low) 2 3 4 (very high) 1 (very low) 2 3 4 (very high)
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Challenges
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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
25©2005 Deloitte Touche Tohmatsu. All Rights Reserved
“We can't find a tag that produces a sufficient read rate"
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
26©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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”
27©2005 Deloitte Touche Tohmatsu. All Rights Reserved
‘Resistance to change hinders deployment’
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
28©2005 Deloitte Touche Tohmatsu. All Rights Reserved
‘Aversion to risk’
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
29©2005 Deloitte Touche Tohmatsu. All Rights Reserved
‘Lack of an innovation culture’
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
30©2005 Deloitte Touche Tohmatsu. All Rights Reserved
‘Distrust of or animosity toward the IT department’
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
31©2005 Deloitte Touche Tohmatsu. All Rights Reserved
‘Major disruption to existing product handling/storage procedures’
Transportation
Retailers
Manufacturers
Distributors
Type of Company
Other Countries Europe
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
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Going Forward
33©2005 Deloitte Touche Tohmatsu. All Rights Reserved
A number of companies are implementing cross-functional RFID teams
European Distributors are far more likely to do this than those elsewhere
Other Countries Europe
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
Yes No
0%
20%
40%
60%
80%
100%
Distributors Manufacturers Retailers Transportation
Yes No
34©2005 Deloitte Touche Tohmatsu. All Rights Reserved
Europe
0%
20%
40%
60%
80%
100%
$499M or less $500 -999M $1B - 1.99B $2 - 4.99B $5B and over
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%
$499M or less $500 -999M $1B - 1.99B $2 - 4.99B $5B and over
Yes No
35©2005 Deloitte Touche Tohmatsu. All Rights Reserved
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