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The Cost of RFID Implementation: Is it Worth the Investment?

  • Akansha Sharma
  • May 10, 2023
  • RFID
Costs of RFID Implementation

Radio Frequency Identification is a type of technology that communicates data wirelessly through radio signals. These systems allow for the automation of essential processes like Asset Tracking and Identification, Inventory Control, Security, Resource Management, etc. So, the question is, should you invest in such a system? And if yes, then how much will it cost?

Lucky for you, today that is exactly what we are discussing.

How Does RFID Implementation Affect Existing Day-to-Day Operations?

Radio Frequency Identification integration can optimize a lot of operations of a business. This is bound to affect the production and operations cost for the business. Our goal today is to find out will that cost reduction be significant enough to counter the cost of implementing and maintaining an RFID system. So, our first step is to check out how does this technology affect our business.

Process Automation

With the help of RFID, businesses can optimize a large majority of time-consuming unproductive tasks like asset tracking, inventory management, maintaining a manifest, access control, etc. RFID systems facilitate the complete automation of such processes, allowing you to reposition the human resources engaging in those processes to another productive task.

Accuracy

In an AIDC system like radio frequency ID, the reader scans and identifies any tag within its interrogation field. Manually recording and logging information into the database at the day’s end has a risk of errors and doesn’t provide real-time information. By using RFID, you can get all the information regarding the movement and location of items in real time, it is also invulnerable to errors.

Streamlining

With the induction of automation and improved accuracy, the implementation of this technology makes the day-to-day operations of a business very efficient. RFID technology can save a lot of time that your business wastes on tasks like, inventory management, tracking items, creating logs for incoming supplies & outgoing products, etc. It also makes tasks like attendance, datasheet creation, and database updating far more efficient.

Data Collection

An essential part of developing and operating a business is the collection and analysis of data. Entrepreneurs can use this data to optimize processes like replenishment of inventory, areas with issues in productivity, etc. They can also analyze the data to create custom marketing strategies and devise campaigns aimed at boosting sales.

Now you know the majority of the processes that are optimized by the implementation of this technology. The introduction of RFID into a business can create positive effects like a reduction of costs relating to labor, carrying inventory, stock shrinkage, and stock-outs. It also improves fulfillment rates, customer service experience, and brand reputation.

RFID Implementation Cost

Similar to any technology, there are installation and maintenance costs associated with the implementation of RFID in your business. These costs can vary depending on several factors like the type of RFID system, Scale of Business, Size of Facility, Volume of Items/Products/Assets, Nature of Business, etc. However, we can focus on the various costs that go into setting up an effective RFID system.

(A). RFID Tag

This is one of the primary components of a radio AIDC system, these are responsible for storing and communicating the information about items & assets. The cost of implementing tags depends on a few factors like the type of tag, volume of items, operational lifespan of the tags, etc. For example, a business can select from a variety of tags depending on their products and facilities, so below are the average prices of some common types of RFID tags.

Tag Name

Average Price Per Unit

Inlay

₹7 - ₹10

Mifare Tag

₹11 - ₹15

Wet Inlay

₹9 - ₹15

Hard Tag

₹15- ₹60

Windshield Tag

₹15 - ₹25

Active UHF Tag

₹200 - ₹500

(B). RFID Reader

The other essential components of a radio frequency identification system are the readers. These devices are responsible for converting the signals received by the antenna into a readable format and sending it to the system. Some readers come in with an internal antenna, however, most readers have in-built adapters that can allow it to connect to multiple antennae. There are different types of readers available in the market, suitable for different types of applications and operating on different frequency ranges.

Type of Reader

Average Price (Per Unite)

Fixed Mounted Reader

₹18,000 - ₹1,80,000

Integrated Reader

₹22,000 - ₹1,22,000

Handheld Reader

₹40,000 - ₹2,99,000

Wi-Fi Reader

₹25,000 - ₹80,000

NFC Reader

₹3,000 - ₹35,000

(C). Antenna

An antenna is an essential component of a radio AIDC system, they are needed in order for RFID readers to work. An antenna is responsible for broadcasting interrogation signals from the reader and receiving signals from the tags. There are different types of antennae available in the market, with different features & applications. In addition to the difference in prices, the range and orientation compatibility of antennas also affects the cost of implementation. For example, a near-field antenna only has a range from a couple of centimeters to a couple of meters. So, you will need to install a lot of them in a big facility. When it comes to polarization, a linear polarized antenna can only read tags that are oriented in the same plane, so, you need to use multiple antennas if the transportation line is oriented in multiple axes.

(D). Asset Identification & Tracking Software

Once you get done with the hardware, the next step is to focus on the software that operates the RFID system. These software are responsible for facilitating the communication within the RFID system, and the communication between the reader and the computer system. An RFID software receives the information from the reader and logs it in the database, it also provides the users an interface to properly utilize the AIDC system. The cost of these software varies depending on the developer, features & licensing rights, but it can range anywhere from ₹20,000 to ₹1,50,000.

(E). Installation Services

Once you do all the initial shopping, the next thing to focus on is the cost of installing. Generally, you would need to hire professionals to install the RFID readers all around your facility, set up the asset tracking and identification software & program RFID tags. These services don’t cost much compared to other costs that go into implementing an RFID system. In addition, if you make the manufacturer/supplier with a good enough order, you may even get a nice discount on the installation charges.

(F). License Subscription

The user rights for any software can come in two types, either a lifetime license or a subscription. The same is with Asset identification & Tracking software that RFID technology utilizes. Some developers may keep their products on a subscription basis. In that case, you will need to pay a regular licensing fee to the developer. In addition, even in the case of a one-time license purchase, the developers may have additional services & plans that are sold on a subscription basis. These services provide you with additional capabilities and better optimization. Some examples of these services are Backup & Restore Data, Customized Reports, Cloud Hosting, etc.

(G). Maintenance Cost

Lastly, this is the one cost that you will have to incur from time to time, till you are using an RFID system. You will have to engage in maintenance costs of different components like readers and antennae. In addition to that, you will also need to replenish your inventory of RFID tags regularly.

What is the Return-On-Investment of the RFID System?

Now that you know all the costs that go into the implementation of an RFID system, let’s check the outcomes that you can expect from using radio frequency identification solutions. Due to the initial cost involved, you won’t see an initial growth in net profit, instead, you’ll probably see a rise in the cost of operations. However, in some tie, you’ll see the productivity of your venture rise as it covers the implementation cost and eventually increase your net earnings. Let’s see some statistical data on the performance and effects of RFID implementation.

(A). Studies show a consistent reduction in the cost of managing Supply Chains, about 3% to 5%. Although this may seem low, it is a significant benefit when you realize that supply chains comprise about 10% of the total operating costs of a business.

(B). RFID improves the overall accuracy and visibility throughout the supply chain with its ability to automate and make data collection in real-time. This has been shown to increase the Net Revenue of companies by 2% to 7%.

(C). With its security applications, RFID significantly improves the loss incurred by the loss of assets due to security breaches. Although stock shrinkage & theft does not account for a large portion of the total non-operating expense, it is still an unnecessary cost. And if left unchecked can grow to become a far bigger issue. You’d be glad to know that RFID has been shown to decrease item theft by up to 75%, and stock shrinkage by up to 55%.

Conclusion

If you’ve reached here, hopefully by now you understand the costs and benefits of implementation of RFID systems. It is obvious to say that they are not a panacea to all types of businesses and productivity issues. However, AIDC solutions like radio frequency identification allow you have to a keen insight into the workings of your business operations and provide you with the tools to optimize them. In a large majority of cases, integrating this technology into your business will lead to a rise in productivity, a reduction in cost & overall growth of your business.

Frequently Asked Questions

Q1. Is it expensive to implement RFID?

Ans - The answer to this question depends on the comparison between different types of AIDC solutions. If you compare it with barcodes, RFID implementation is around 10 times costlier. However, RFID also provides better asset identification and tracking solutions and real-time capabilities. In addition, the total cost of implementing such a system compared to the overall growth and rise in net revenue is negligible.

Q2. How much does a RFID reader cost?

Ans - The cost of RFID readers depends on factors like the type of reader, operational frequency, and read range. But, on average, you can get a good quality RFID reader within the range of ₹25,000 to ₹50,000.

Q3. Should I buy RFID?

Ans - There are many factors that you need to consider before deciding on investing in an RFID solution for your business. Carefully analyze the following – the size of your operations, the type of your business, possible applications of RFID, and the nature of your product. If you need some additional information, check out our blog above to see the benefits and potential costs of implementing an RFID system.

However, on a personal note, if you are operating a business that is medium to large sized, and deal with a large volume of products like retail, warehousing, etc. Or valuable items like artwork, jewelry, etc. Then, yes, you should probably invest in an AIDC solution like a Radio Frequency Identification system.

Disclaimer: The information presented here is for general information purposes only and true to best of our understanding. Users are requested to use any information as per their own understanding and knowledge. Before using any of the information, please refer to our Privacy Policy and Terms and Conditions.


  • Created on May 10, 2023
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