SAP RFID ROI

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There's been a lot of talk

about the cost burden of radio frequency identification (RFID) technology, particularly for small and mid-sized suppliers to

giant retailers like Wal-Mart. With Wal-Mart's RFID deadline coming up in just a few months, a lot of these smaller

companies are hustling to become compliant and not necessarily realizing that, once the initial investment is made, other

benefits await.

Take the case of Annin & Co., a company that manufacturers flags. Annin is mentioned in a SAP

press release as having deployed RFID in an SAP environment, with Annin VP Carter Beard saying that "We analyzed the cost of

the project and the RFID tags....we expect to reduce retailer charge backs for shortages by 50 percent when fully deployed.

That alone will pay for our project."

Beard attributes the ROI in part to Annin's integrated SAP environment. "The

flexibility of the RFID technology allowed us to model our RFID processes while automating business processes with EPC

information into our existing SAP platform. We were also able to leverage existing investments and skill sets in SAP within

our organization," said Beard.

This is precisely the dynamic that allowed Oracle to acquire Siebel just the other

day, apropos which AMR Research said, "Customers may not want best-of-breed vendors, but ultimately they don't want best-of

-breed products either."

The two (interrelated) reasons are cost and complexity. For Annin in particular, having SAP

as a system of record and a framework with which to manage RFID hardware and inpout from tags and readers resulted in what

Beard described as a relatively simple, ROI-justified process that will meet Wal-Mart compliance but go on making money for

Annin by reducing chargebacks. Of course, companies wrestling with heterogeneous environments, as well as companies tasked

with tagging RFID-unfriendly items (everything from beer to baby wipes and ice cream), might not have such a fortunate

experience.