Your company supplies ceramic floor tiles to Home Depot, Lowe’s, and other home

Question

Your company supplies ceramic floor tiles to Home Depot, Lowe’s, and other home improvement stores. You have been asked to start using radio frequency identification tags on each case of tiles you ship to help your customers improve the management of your products and those of other suppliers in their warehouses. Use the Web to identify the cost of hardware, software, and networking components for an RFID system for your company. What factors should be considered? What are the key decisions that have to be made in determining whether your firm should adopt this technology?

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Explanation / Answer

Ans :

RFID System for Ceramic Floor Tiles Company Costs of Implementing an RFID System:

• Active RFID tags can range approximately from $10 to $50 or more.

• This cost is dependent upon the size of the battery, the mount of memory on the microchip, and the packaging around the RFID label

• Ultra-high frequency (UHF) RFID readers can be anywhere from $500 to $3,000.

• The price varies depending on the functionality of the reader.

• Forrester Research estimates that the cost of RFID middleware and servers is $183,000 for a

$12 billion manufacturer looking to meet the RFID tagging requirements.

• Since this is a ceramic floor tiling supplier, the cost for middleware will be significantly less than this amount.

• The company will also have to spend money on a network infrastructure.

• This can be done through a third-party vendor, although prices will vary.

• Other costs would include the installation and maintenance of the RFID system.

• Forrester Research estimates that it would cost a $12 billion consumer products goods

manufacturer $128,000 for consulting and integration, $315,000 for the time of the internal project team, and $80,000 for tag and reader testing. Next, determine the factors that should be considered when identifying the costs of RFID technology.

Factors:

• Size of company

• RFID labels

• Installation and maintenance

• Meeting RFID tagging requirements

Size of Company:

• The size of the company will determine how much hardware, software, and middleware is needed.

RFID Labels:

• The price of RFID labels varies depending on the size and functions of the labels.

• The company needs to determine what RFID labels are the best to use

Installation and Maintenance:

• The installation costs are vital in making sure that the system will work to the best of its ability.

• This will require a lot of testing which the company will have to pay for someone to perform these tests.

• Also, the company will have to continually pay to maintain the RFID system.

• This will include surveying the system to make sure that it continues to work with full functionality.

Meeting RFID Tagging Requirements:

• The company has to research the RFID tagging requirements in order to make sure that the system is being used properly.

• An assessment will be made on how much equipment should be purchased as well as making sure the system is working properly.

Lastly, identify and explain the key decisions that have to be made in determining whether to adopt RFID technology.

Key Decisions:

• Cost of all the equipment and software

• Cost to implement and maintain

• Profitability

Cost of Equipment and Software:

• The organization needs to determine how much it will spend on the hardware, software, and middleware.

• This requires knowing how much technology should be purchased with regards to the size of the company.

• The company doesn’t want to overspend on unnecessary equipment.

Cost to implement and maintain:

• Once the company purchases all the necessary technology, it needs to figure out the costs to install and maintain.

• This includes hiring a professional to install and properly test the equipment to ensure full functionality of the RFID system.

• The company also needs to train the employees to use the system, which will take time and money. Profitability:

• The organization needs to determine if switching to an RFID system will help or hurt the company.

• This usually requires an analysis of the current business model and an assessment of the company’s five-year plan.

• The company should make the switch if they can successfully predict that implementing an RFID system will easily balance out the investment costs and return profit margins.

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