Identification of the main factors influencing an RFID implementation in the automotive and pharmaceutical industries

Abstract: This is a result of a master’s thesis project initiated by Stralfors BA Labels in Gothenburg. The purpose of the thesis is to identify the main factors influencing implementation of radio frequency identification, RFID, in the automotive and pharmaceutical industries. These factors are thereafter analyzed and concretized to provide Stralfors BA Labels with a better understanding of present and future business opportunities provided by the RFID technology in these two industries. The thesis is focusing on applications of RFID that are related to supply chain management applications, and a theoretical framework on this subject is therefore included. The technology of RFID is described, analyzed and compared to barcodes, which is the prevalent technology used for product identification today. RFID can be used in varied forms in both the pharmaceutical and automotive industry, based on the characteristics of the RFID technology we have chosen to divide possible RFID solutions in open system and closed loop system. In an open system the tags are discarded after they have passed through the supply chain and in the closed loop scenario the tags are reused and moved through the same processes of the supply chain multiple times. We believe that the main factor for an RFID implementation in the pharmaceutical industry is the recommendations and potential mandates from the FDA to attach RFID tags on every pharmaceutical product that enters the U.S. pharmaceutical market, thus forming an open system. In the automotive industry we believe that the main use of RFID in the near future will be in closed loop solutions for instance to improve asset management. There are already pilot projects running and many of these projects indicate extensive benefits from the use of RFID. Implementation of RFID in open systems is delayed by technological immaturity, profitability concerns and a still on-going standardization process.