by Rod Harrison, Cornerstone Solutions
o Prove the concept of RFID as a viable technology within the enterprise.
o Test the selected technologies and communications to insure they work and will be compatible with the current infrastructure.
o Determine the impact on current distribution operations.
o Scope the costs and expected ROI of the initiative.
o Develop a project plan for rollout of future phases.
All Wal-Mart suppliers should make compliance with their directive a first priority after the completion of a successful pilot phase. Given the amount of revenue many suppliers receive from Wal-Mart business, companies will want to make sure they have the time and resources needed to achieve compliance by the specified deadline.
Because compliance is a condition of doing business rather than a cost-saving measure, companies will want to begin extending their RFID applications to take advantage of potential efficiency and productivity gains once they are certain the compliance piece is working properly. As with the compliance phase, however, any additional RFID applications will have to work side-by-side with existing applications and infrastructure for an extended period.
The basic assumption of the transition phase is that companies have huge investments in systems, equipment and communications that they cannot rip out to start over with RFID. It would be cost prohibitive. Nor would it make sense to introduce entirely new RFID-based processes across the warehouse all at one time. There is also the reality that RFID technology is not mature enough to accomplish all the processing envisioned for the future potential benefits. The only logical solution, therefore, is to deploy RFID technology one step at a time, focusing first on those applications for which the technology is ready and which provide the greatest return on investment. It would also be least disruptive to other operations to concentrate on self-contained functions such as receiving or trailer loading. Changing processes in these areas will have minimal impact on other functions, whereas introducing RFID into picking or other wide-area functions could have significant negative impact on operations.
As RFID rollout to one function is successfully completed, the next RFID application can be implemented. The plan for which applications are to be implemented and their sequencing will depend on the needs of each organization and the ROI each will produce. The guiding factors for selecting and sequencing applications should be the expected ROI, technology availability, customer requirements, and the least disruption to other operations. One thing is clear for this staged RFID deployment, existing systems will need to be modified to permit seamless side-by-side operations with existing processes. Warehouse management and labor management systems will be most affected by this. They will have to support concurrent data capture from RFID and RF or manual sources and be able to process this data interchangeably for downstream processing. The positive side of this duality of operations is that RFID operations can be easily phased in with traditional RF and manual operations without significant disruption. This allows the investment and risks of new initiatives to be balanced with expected ROI and advances in the technology.
The ultimate goal for RFID technology is to transform supply chain operations. Often this is defined as replacing current RF processes with more efficient scan-free processes and eliminating many manual tasks. However, the real value will come from fundamentally changing the way warehouses and distribution centers receive, store, move and ship product. What RFID has the potential to do is remove the human element from locating, tracking, recording and transmitting information about objects in the warehouse. Those objects could be pallets, cases or individual items, but could also be lift trucks, pallet jacks, rack locations or other equipment.
Currently tags are not created based upon a single standard. Air interface protocol used between the reader and the tag is not a single standard. Protocol between the reader and the host server is not a single standard and, in fact, is proprietary. The middleware is not based upon a single standard. The Wal-Mart desired direction Class1Version 2 tag will probably require hardware change to what is available today (specifically readers).
About the author: Rod Harrison, Cornerstone Solutions, can be reached at 260-496-8259.
Defense Department Scales Down RFID Plan; http://story.news.yahoo.com/news?tmpl=story&u=/cmp/20031209/tc_cmp/16600185
Defense Dept. working to resolve RFID standards issue; http://www.computerworld.com/softwaretopics/erp/story/0,10801,87808,00.html
Wal-Mart to begin phased RFID tag rollout next year; http://www.computing.co.uk/News/1148506.html
Wal-Mart's RFID Deadline: A Chunky Mess; http://www.eweek.com/article2/0,4149,1414163,00.asp
AmEx Expands RFID Payment Trial; http://www.rfidjournal.com/article/articleview/505/1/1/.html
Military's RFID Alternative: IPv6; http://www.rfidjournal.com/article/view/609.html
RFID is big but nobody understands the costs; http://www.usingrfid.com/news/read.asp?lc=k19752px58zu.html
Other articles in this series: