The more I investigate and learn about Radio Frequency Identification technology, the more I believe that it truly is the “missing link” when it comes to management of the world’s supply chains.
In 1985 the concept of Quick Response (QR) was developed as a full cycle cross company integrated logistics and replenishment model with potential savings in General Merchandise identified at circa $ 25 billion annually. Almost 20 years later these benefits have only been partially achieved with significant dollars still on the table.
In 1993 a similar concept was floated in the Grocery Industry called Efficient Consumer Response (ECR) with equally impressive annual savings of $33 billion dollars touted as the prize for successful implementation. Again 10 years later only a small portion of this has been realized.
Although there were a myriad of cultural and trust issues which crippled these projects, one of the key disconnects was related to technology, specifically product data synchronization. With manufacturer and retailer systems containing conflicting, inaccurate or incomplete product data integrating logistics activities between firms was next to impossible due to the many exceptions created by bad data.
Even within firms, the attempts over the last five years to implement full supply chain management systems have for the most part failed. Figures discussed at industry conferences projected $3.5 billion dollars in high end SCM software had been sold that either failed in implementation or was never implemented at all.
Fundamentally, there is nothing “wrong” with these systems, what the issue is and remains is the difficulty in getting the actual supply chain activity and movement data into these systems on a timely basis to allow them to perform their SCM magic in an accurate manner. In many cases, those implementations of these systems which have worked have required the establishment of legions of planners and analysts to enter and ensure the accuracy of this data on an ongoing basis.
The major reason for these data difficulties is in my estimation the use of barcodes and the lack of product data synchronization. Although light years ahead of manual recording systems, the problem with barcodes is that if a worker forgets to scan or scans the wrong carton then the event “didn’t happen” or is recorded incorrectly.
So why is RFID or Radio Frequency Identification the “missing link”? Simply stated, it removes this human element from the data capture as RFID portal systems are presence sensing and if set up correctly, will record all items passing through the portal being monitored.
In this way, a direct linkage is made between the physical products and the supply chain systems managing those operations leading to my assertion that RFID is the missing link in the ongoing evolution of supply chain management.