Heed the Business Case

“We are working with EPC, but less with RFID, due to cost per unit”, is what a friend replied when I asked about his RFID program. The decision was made with more than a million dollars invested to explore RFID for the purpose of item-level track and trace, and especially for purpose of preventing counterfeit product from entering the distribution chain. Based on careful analysis, even with a paramount need to prevent counterfeiting, his plan is “EPC yes, RFID no”. They will use EPC for unique item-level identification, but for the foreseeable future, the EPCs won’t be affixed to products via an RFID tag.

After much anticipation about employing the perfect marriage of EPC and RFID, the conclusion to forego RFID is on one hand, a disappointment. Even my friend’s company, with significant resources to plan and execute for large-scale and long-term, couldn’t make the business case work for item-level tagging. It’s disappointing at first, but on the other hand, deferring to business case over emotional attachment to technology deserves much respect.

When the business case doesn’t make sense, it’s best to call off the deployment early and avoid the more painful reality of bad economics later in the deployment. Moving ahead when the business case doesn’t make sense only results in high-visibility, costly failures. Failure to heed a bad business case will trigger a “gun shy” attitude and undermine support for future RFID deployments, even when they do make business sense. Failure to heed a bad business case will also present an unwarranted warning to others that will bias their intuition against RFID projects.

Asset tracking with RFID can pay highly-respectable returns. Pallet tagging, case tagging, and a wide range of other RFID applications can pay highly-respectable returns. In spite of my friend’s company deciding against it, item level tagging can, whether today or in the future, also pay respectable returns. Over time, as the technology continues to mature, as the advantages of scale economics increase, as infrastructure and knowledge develop, more applications will pay more handsome returns. The key to achieving those returns is understanding when and where to invest.

It’s true that one-size-fits-all does not apply to RFID and EPC solutions. Each type of need should be addressed individually. It’s also true that one-size-fits-all does not apply to RFID and EPC business cases. The business case for each situation needs to be considered individually. There’s no valor in forging ahead with a deployment that doesn’t make business sense, and then later encountering the harsh reality of economics. It’s better to do careful business analysis and invest accordingly. It’s better to get a solid business case, one way or the other, and heed the business case decide.