It's hard to imagine that supply chain executives would choose to implement a technology that actually added costs to the supply chain. But, that's the reality so far for RFID, says supply chain consulting firm Tompkins Associates. The cost of a typical "smart tag" is about 50 cents per carton, with the full incremental cost per carton as high as 65 to 70 cents with equipment costs amortized over three years.

Despite the additional costs, there are three key reasons for implementing RFID, notes the consulting firm. First, the need to comply with a mandate. Even though there's an additional per-carton cost, RFID implementation is necessary to keep selling product to a particular account.

Secondly, the competition between third-party logistics providers. A 3PL that is able to provide RFID services for their clients has a competitive advantage over their non-RFID peers.

Finally, the potential for RFID to provide unique data to reduce out-of-stock conditions, inventory shrinkage, and product diversion, which ultimately reduces the cost of moving product through the supply chain.