September 21, 2005
RFID adoption part II
RFID implementation should be such that it supports scalability, handling increasing volumes of data, and business integration in a cost-effective manner. On occasions, this is not possible when the emphasis is on implementing a mandate-driven RFID solution. Ideally, an RFID implementation should consider the following factors:
- The ability of the infrastructure to cope with the amount of data that will be generated by RFID, bandwidth requirements, storage capacity, etc.
- The choice of middleware to manage the flow of data between the tags and the applications.
- The type of data that will be required by the workers and the management to take more informed decisions.
- The type of technology that will best fit in with the legacy systems, wireless technologies, and with the systems present with the business associates on either side of the supply chain.
The ability of the RFID system to improve existing business processes and introduce new practices. RFID should be integrated in stages, with each stage signifying a level of maturity achieved in the implementation process. The first stage is to determine the objectives of an RFID implementation, getting this right will enable a company to move ahead without having to come back to the drawing board. A strong business case for implementing RFID should be made next; this should be strengthened by developing an implementation plan and setting the objectives of a pilot run. The system requirements should be met; inventory management and replenishment benchmarks should be created. Detailed information on stock-turn, gross and net margins, markdowns, etc should be available for own as well as competitor stores. Sometimes, companies do not go through the background work mentioned above, they prefer to settle for a “slap and ship” implementation that is aimed at satisfying the mandate of their distributors and retailers. Such a step only serves to increase the operation costs and the benefits in return are minor improvements in inventory management and order fulfillment. The following issues should be considered before embarking upon an RFID implementation program:
- Infrastructural scalability to manage the amount of data gathered.
- The data management systems should be reliable enough to maintain the integrity of the data that travels through them.
- The solution implemented should be able to comply with new standards that will be developed as the drive for uniform standards gathers steam.
- RFID systems should support integration with other management tools like WMS and ERP.
- The system should support remote monitoring and troubleshooting of equipment.
Other management applications should be able to access RFID data in real-time so that relevant accounting and management decisions can be taken fast. This is critical to obtaining ROI quickly on RFID implementations. For RFID to support integration with other tools, the following things need to be considered:
- Availability of plug-ins that facilitate real-time delivery of data to the various databases in desired formats without lengthy configuring and setup activities that eat into programming time.
- Connectivity and interworkability of software between partners, the solution should be able to add EPC information into sales orders, purchase orders, and other such documents. It should also be able to manage real-time queries as well as the data that flows in batches from the EDI application.
- The storage must be able to accommodate the vast amounts of data generated by RFID and the platform must be robust and reliable to route information consistently without human intervention.
The next level of maturity in RFID implementation allows the companies to collate the raw data and obtain actionable perceptions from it. This should lead to alterations in business processes such that they help in responding quickly to the information provided by RFID. In order to ensure that the RFID technology being implemented is in sync with the company objectives and will facilitate process improvements, it should be assessed for the following things:
- The system should be run on an architecture that is based on rules and driven by events such as an order, a delivery, a return, a stock out, etc. The growth in the number of events will lead to the development of business rules that will lead to an improvement in the process.
- The data should be accessible to the decision makers in a proper format via a user-friendly interface.
- The application should be flexible enough to allow for easy incorporation of changes in rules and processes as per the situation, without requiring extensive coding efforts from the IT department.
The next level of maturity in RFID implementation enables companies to preempt a situation based upon analysis of data presented and taking the necessary preventive action. However, performing predictive business intelligence requires collaboration across departments. The benefits that accrue from analyzing the data mined using RFID include:
- Improved communication across supply chain resulting in better forecasting, aligning of production to sales to reduce excess inventory as well as stock outs.
- Buffer stock can be reduced; in fact goods in transit can serve as buffer stocks.
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