Are You Ready for RFID? (2002)

It was just last year when we were asking the question is RFID Ready for Prime Time? But now the question is quickly turning to Are You Ready for RFID?

For those of you who have yet to even begin investigation of this technology and how it can be potentially applied in your supply chain, mainstream RFID usage in some areas may be sneaking up on you.

I say this not because RFID will be widely implemented tomorrow, but because implementing RFID successfully is not even close to an overnight operational implementation. In fact to be truly successful with RFID will in some cases require significant rework and re-engineering of internal systems processes.

Even more daunting is the fact that to get the ROI possible from the technology and to rollout with any scale will require co-operation and functional implementations by a number of your trading partners as well. This being the case, the time to start this process is now.

There are three levels at which RFID can be applied and these are item level, case level and pallet level. Only in cases of high product value does item level currently make sense, but this will probably rapidly change as the price of RFID marking drops through introduction of low cost ePC chips by companies such as Alien Technology.

As well, once we get to the point where the full supply chain aspects and potential are demonstrated and exposed including full channel inventory reductions, EAS integration, replenishment, re-ordering and others, the numbers will then begin to fall into place.

Part of the way to get to the above level of understanding is through the demonstration of benefits at the other two levels beginning in my opinion with the pallet level. This is possible due to a number of factors including the fact that pallets, and therefore imbedded RFID chips, will be reused allowing the initial cost of the RFID marking device to be spread. As well, due to the reduced number of loaded pallets moving through a dock doorway at one time, this makes the task of portal reading less complex than reading every carton stacked on a pallet moving through a doorway, especially since some cartons are of course buried in the centre of the pallet.

This is a sheer matter of both numbers, but also of potential RFID interference from RFID unfriendly materials contained in some cartons. The materials included in this group are foils, metals and liquids to name the most significant from an interference perspective. So the fact that pallets can be RFID marked on the edge and these move through doors in a relatively uniform way, and in manageable quantities makes pallet level the natural place to start.

As far as the carton level is concerned, there is nothing to stop operations from integrating the use of RFID technology at the pallet level with conventional SCC barcodes present on most UCC/EAN compliant carton product.

For example, these SCC case codes can be electronically linked to the pallet RFID number and then the RFID tracked as it moves through the supply chain. In my view, at this point successful RFID implementations of direct RFID marking at the carton level will be found in conveyor related applications where cartons move by one by one and the use of technology beyond the level of barcodes can be otherwise justified.

It appears to this writer that widescale implementation of RFID will happen in a trickle down manner beginning at the pallet level, moving on to the carton level and finally to the unit level.

So which applications at the pallet level appear to hold the most promise from an ROI and savings generation perspective? In my opinion the number one application is Automated Product Shipping and Receiving. Shipping and Receiving is a time and cost intensive process which also slows the movement of product into and out of a building, reducing both truck, door as well as dock space utilization which are some of the most valuable elements in most distribution operations whether manufacturer, retailer or carrier.

But returning to my initial comment, to implement this successfully requires a co-ordinated effort of multiple trading partners. As well, for this to work in an optimal manner, ordering quantities must also be disciplined at pallet, full layer or multiple layer quantities, and the processes of both shipper and receiver must also be optimized and streamlined to simplify and facilitate the usage of RFID. As mentioned earlier if widescale implementation is to succeed the need is significant for entire trading communities to work together and adopt interoperable processes and standards. It is pleasing to see progress being made on a number of RFID Industry Initiatives as we discussed last month.

So if you’re doing some or all of these things, seriously investigating applications, participating in industry initiatives and preparing your processes, systems and operations for RFID you will be well positioned to take advantage of this breakthrough technology.

If you’re not, I only have one question for you. Are you going to be ready for RFID?

Jeff Ashcroft

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