“The trend in [item barcoding] is toward miniaturization. The use of such micro-encoding will permit assignment of a unique number to any product whose value warrants tracking, whether it’s an automobile or a shipment of caviar—in plant or across the country. Within the next ten years, such product coding will be commonplace and, in fact, be standardized.”
I wrote those words for Material Handling & Logistics’ predecessor magazine, Material Handling Engineering, in the fall of 1972. And, although the prediction may have been a bit optimistic, the standards did come and today the technology is virtually ubiquitous.
Fast-forward ten years to 1982. That’s when I joined a band of Silicon Valley engineers to assist an entrepreneurial tanner (that’s right, a tanner) with adapting the somewhat primitive RFID technology the company had developed with Los Alamos National Labs to track cowhides from the ranch to the leather curing room. Applications were in manufacturing and distribution.
It was not an easy couple of years, but in 1984 with support from the automotive industry, we developed reusable tags and readers for closed loop, work-in-process tracking. The $80 price per tag was rationalized on the basis of its ability to make 200 or more trips through the manufacturing process at a cost per trip of less than $.50—a small price to pay to ensure that the right components were being installed on each vehicle.
For the next twenty years, RFID technology refinements evolved, but slowly, with tag costs and performance constraints restricting usage to closed-loop applications where the environment could be controlled and associated costs justified.
In the fall of 2003, nothing in the prior 30 years—not even bar codes—had as dramatic an impact on the supply chain as the release of mandates for RFID-based high-value-item, case, pallet and container tracking by the Department of Defense and Wal-Mart. Business journals and the national media called the announcements “revolutionary” and “game changing.” And, those of us who had labored in the supply chain vineyard for years were excited as well. Why?
Because in spite of the challenges that were likely to (and did) confront RFID deployment for item tracking over the next several years, the calls to action focused or reinforced corporate America’s attention on the critical role played by supply chain technology and systems in the nation’s economy—and the enormous potential value of RFID (and barcode as well) for improving network-wide visibility of goods in process from source to consumption.
The excitement was electric and, not unlike the enthusiasm that attended bar code standards announcements in the late 1970s and early 1980s, everyone seemed to jump on the bandwagon. But therein lay the challenge. As prospective users moved ahead with assessment of the implications of the RFID mandates for their operations, it seemed that there was no end to the list of consultants, integrators and suppliers ready to help—and, quite frankly, the technology was not ready.
Is RFID Ready Today?
Last April, I had the opportunity to attend RFID Journal LIVE’s 10th Anniversary conference and exhibition in Orlando. Some 2500 attendees looked at a variety of refined and new products from wireless infrastructure innovations to sophisticated tags for the challenges of apparel, metal and liquid container identification applications. Even real-time location systems (RTLS) were spotlighted, along with their role in keeping track of everything from items moving through storerooms and warehouses to supply carts traveling from receiving to surgery.
The event kicked off with several pre-conference workshops and training programs and featured multiple keynote addresses including a number focused on the supply chain, specifically manufacturing, warehousing and inventory management. The conference program included vertical industry tracks with 20 case studies focused on Defense/Aerospace, Health Care/Pharmaceutical, Manufacturing and Retail/ Apparel applications. 20 additional sessions talked to Achieving an ROI, Enhancing Visibility and Traceability, Improving Supply Chain Logistics, and Technology and Infrastructure. The sessions I audited, albeit only a sampling, provided more actionable substance than expected, clearly suggesting that the technology is beginning to deliver on its promises.
That said, we haven’t reached nirvana, but there are clearly a wider range of solution alternatives for prospective users than there were even five years ago.
What’s in it for You?
A consultant at Wal-Mart’s 2003 mandate announcement event said his organization had been monitoring “arfid” developments for some time and had the technical expertise to help prospective users quickly get up to speed. Although he was the only one I heard who could not pronounce the acronym, he was not alone in terms of blatant oversimplification of the challenges associated with RFID deployment. I did not see that consultant in Orlando in April.
What I observed at the 2012 RFID Journal LIVE event were informed and sophisticated users, perhaps battle scarred from abortive stints as early adopters, but back for more and armed with hard questions. They trust the answers to those questions will help them steer clear of repeating history. I also saw a mature group of exhibitors with sufficient chutzpa to respond honestly to those questions with supportable, experienced-based answers—even if those answers might defer or lose a sale.
Whether it’s compliance with a customer mandate or assessment of RFID for your own use, the first order of business is to quickly determine if deployment is worth the investment. What will the costs be—initial and recurring? Note that although broader acceptance of RFID will drive down tag, reader, antenna and infrastructure costs, base your analysis on those costs that suppliers are prepared to commit to today.
Other Questions to Ask:
• Where are the benefits for your operations?
• Can they be quantified?
• What is your gross margin on shipments compared to those of your customers asking for RFID tagging?
• How does that margin compare with the cost’s net of expected internal benefits?
• Does it make sense from this perspective to move forward?
• What are the consequences of delay?
• What will happen when other customers issue RFID compliance requirements—or if you offer it to them?
• Will the value proposition change?
If the answers to these questions show a favorable cost/value relationship or, alternatively, if the strategic value of retaining a given customer gives you no option, where do you start?
RFID deployment is still not a slam-dunk. To paraphrase James Borck (Info World, July 2001), “random infusions of technology will merely leave [your supply chain] in greater disarray.”
Successful installations of automatic identification technology and supply chain systems have always begun with measured assessment of current operations, establishment of realistic performance improvement targets and development of an implementation plan that defines all tasks, user/supplier responsibilities, schedule, milestones and related costs. Your approach should be no different.
Although perhaps daunting, the roadmap outlined above will enable you to build a comprehensive, defensible business case for technology deployment—or deferral. Even if the latter, the analysis will provide a foundation for fine-tuning your existing infrastructure to improve current performance.
And, back to “arfid”: If you decide to engage outside support for your analysis, caveat emptor. Look at credentials, ask for references and check the dirt under their fingernails. You are unlikely to reach your destination by tackling uncharted territory with an inexperienced guide.
John Hill is director of St. Onge Company (www.stonge.com) and a member of MH&L’s Editorial Advisory Board.