Adoption of RFID technology in the Asia-Pacific region is being help up by high implementation costs, which range from $US10 - $25 million for a large manufacturer, according to a new report from analyst firm Frost & Sullivan.

It found the cost of RFID hardware is still considered high and many companies are hesitant to invest on the technology fearing poor return on investment (ROI).

Though the technology is expensive due to heavy investment in hardware, the RFID market continues to grow every year. The emergence of source tagging and growing supply chain applications are also key growth drivers in the industry, observes the analyst of this research service.

Source tagging is increasingly becoming popular, especially in Asia Pacific countries that are suppliers to big retailers in the United States. The technology helps enhance sales and reduce shrinkage in the supply chain. With the goods being tagged at the manufacturing or packaging stage, rather than at the store, store associates are left free to focus on customer service.

The cost of tags depends on the quantity ordered, the type of integrated circuit (IC) and antenna used along with the manufacturing method, the amount of testing, and the type of inlay packaging used.

The cost of readers varies based on the read range required, the intelligence of readers required to read the information on the tags, and the ability to read multiple tags at one go.

Besides, the cost of tags and readers, other expenditures include middleware, application software, and system integration costs, as well as other hidden expenses.

Ensuring compliance and understanding the broader strategic role of the technology is essential since companies will likely need to upgrade their networks and storage to cope with the volume of data captured by the RFID system, adds the analyst. Hence the complete cost of RFID implementation can be high for several organisations, especially small and medium size enterprises.

“This issue can only be managed once the volumes become bigger and technological developments help reduce the overall cost of RFID. In the mean time, RFID vendors must concentrate their efforts and investments in applications that are increasingly becoming popular with a quick ROI for clients.

“The technology, being environmentally-friendly, is likely to be well-received as enterprises focus on green supply chain and reduction of carbon emission. With the economy starting to show signs of recovery, RFID technology is expected to play a more vital role within enterprises.”