RFID in the automotive industry: the road ahead

03 October 2005

Ravi Mathur*, CEO, EPCglobal India, highlights the benefits of RFID in the automotive industry.

With its products being sourced by overseas auto leaders, the Indian auto industry has truly come of age. It has been a long and relentless haul getting accept in the global markets The companies first had to focus on issues like quality, vendors and marketing before they could think of going global. In the past four to five years, the more successful companies have not only fine-tuned their operations but forced transformation on the rest of the industry as well.

Consequently, India has not only emerged as a low-cost base but also a source for producing quality products. India is poised to emerge as a significant exporter of Automobiles and more importantly Automotive Components, as global companies are increasingly using India as a platform for export-oriented production.

According to SIAM, the performance of Indian automobile industry in exports is encouraging with a growth of almost 54 per cent. Exports of auto ancillaries (in rupees) from India expanded by 29 per cent in FY2004. In dollar terms, exports of auto components touched $1 billion during FY2004. This marks a 32 per cent growth over the FY2003 (by ICRA).

What is driving India's acceptance in the global auto markets is the ability of the Indian auto and auto components suppliers' to manage supply chains efficiently. In fact, supply chains have been evolving as the most significant value driver for the industry in deriving competitive advantage in the domestic and international markets.

The strong global competition left the Indian automotive industry with no option but to focus on adopting new technologies, which enabled manufacturers to improve their processes and products. Major initiatives in the automotive industry include just-in-time (JIT) manufacturing, mass customization, "zero error production", and reduced cycle time.

To accomplish these, automotive manufacturers increasingly rely on information technology to help manage processes. How low-cost RFID (Radio Frequency Identification) technology can be used for identifying and managing everyday items and how this technology might affect the automotive industry is worth looking at more closely.