Creating Business Justification For RFID

A strong business justification is recommended before rolling out RFID in an enterprise because it enables you to accomplish fundamental goals below:

- Return Of Investment & Maximize return on investment. You need a careful analysis of business cases, so that you can quantify the benefits and the resources needed to implement an RFID solution. You can choose the areas that offer the maximum ROI as the potential candidates for RFID use.

- Objectively provides data about the benefits of RFID. With objective data, it enables you to determine whether to use the technology. Obviously, if RFID shows greater and substantial benefits, objective data will accelerate adoption of RFID in the business. Also, business justification is also build realistic expectations of the technology.

Although if the business has received an RFID mandate from the business partners, it still need to justify the use of the technology. Once the goals listed are achieved, it will definitely become apparent how and where RFID needs to be used and applied. Implementation and design of appropriate RFID solutions can then proceed. In general, a successful executing of these goals will set a solid foundation on which the RFID technology adoption can be built upon.

In total picture, you cannot just determine the ROI accurately just by making high-level assumptions regarding benefits. For example, the shrinkage in a certain type of business accounts on average for 30 percent of sales, a business of this type might be incorrect in assuming RFID will result in savings and cost down of 30 percent. Actually, the shrinkage of this particular business might be greater than or lower than this number. Secondly, the introduction of a nontrivial RFID solution in a business operations environment impacts the operations and the total business flows.

That is why, the final benefit numbers appeared might be off the mark. That is the reason an RFID solution cannot be designed in the technical space alone; we still need to look at business impact and analysis need to be performed, too.

A total RFID solution is a data-collection technology. With the data-collection part completed, you can address the fundamental question of how to use the analysis data. Obviously the answer will lies in re-factoring the flow of business processes so that you can extract maximum advantage from the available data. With that, business process and flow change will offer the ultimate benefit in using RFID technology. With that you can learn how to determine the benefit effectively. Our suggested method, the business process changes and flow for using RFID are determined first, follow by the impact of the changes is analyzed and the benefit determined as a result of the analysis. This approach can lead to accurate determination of ROI and hence realistic expectations regarding the use of RFID technology.