BUSINESS IMPLEMENTATION CHALLENGES
Cost and overall integration:
The Hardware, Software and re-engineering cost of switching from a manual-read bar code system to an RFID system are significant. Cost estimates in current literature are in line with $400,000 for warehouse conversion, $100,000 per store conversion and $35 to $45 million to integrate the RFID system into the entire organization. 1,7 These estimates point to software modifications and integration of the RFID data into a firm’s overall architecture as the leading cost.
For many firms, understanding how to maximize the use RFID data in their specific business application vice viewing it in the context of replacing bar code data will be a strategic implementation challenge. As RFID systems are in their infancy stages, all of the large RFID system early movers have implemented pilot programs to understand how to implement RFID technology within their organizations.
Cultural:
With implementation of RFID systems changes will come for employees across the organization. Many employees will have to modify how they conduct their daily routine, while not fully understanding and appreciating the value of RFID systems to the organization as a whole. Re-training of employees in warehouse, retail floor and cooperate supply management and IT systems personnel will be required. Successful implementation by early movers show that top management need to fully embrace RFID system implementation for the program to be successful.
Mandate issues:
With many large retailers mandating either Gen1 or Gen2 RFID systems, manufactures and smaller retailers will find themselves having to adopt RFID technology to remain suppliers to the large retailers or have the ability to utilize RFID tags (for smaller retailers) as manufactures covert to RFID systems. Smaller retailers will be faced with weighing the cost of implementing RFID systems while balancing the cost with expected (and desired) benefits. Additionally, RFID early movers who invested in Gen1 RFID systems will be faced with determining when and how to convert to Gen2 systems.