Retailers could increase sales by 3% and manufacturers could boost revenues by 1% by adopting radio frequency identification systems, says research from Accenture.
It predicts the next generation barcoding technology could be saving billions of dollars a year by improving efficiency as early as 2005.
On the retail side, improved stock levels, reduced labour costs and a reduction in product loss would be the biggest benefits.
The cut in product loss could equate to nearly 1% of sales, according to Accenture.
It predicts consumer electronics, pharmaceutical and clothing retailers will be using RFID tags at item level in the next year to 18 months.
And by 2005, many manufacturers, especially those in the consumer electronics and grocery sectors,will be using RFID technology at the pallet and case level, according to Jeff Smith, global managing partner of Accenture's retail and consumer goods practice.
The smart tags lead to improved quality and customer service and are capable of reducing manufacturers' working capital from 2% to 8% by reducing the level of raw materials inventory in production, said Accenture.
The consultancy said their use could reduce the cost of fixed assets by between 1% and 5% by better maintenance and use of equipment.
Accenture is a board member of academic and industry institute the Auto-ID Centre which is developing standards for RFID smart tags.