Marlo Brooke is a principal at Avatar Partners.
I meet with hundreds of business people who know the power of taking an evolutionary, organic approach to business and that it rarely pays to overextend one's expenses on bleeding edge innovations. Not the least of which is technology.
And yet, manufacturers are time and again forced to keep up with the many requirements of their customers, who are often much larger than them. Whether it is the Department of Defense, WalMart, or apparel retailers doing the asking, it seems the small and medium sized manufacturers (SMB) take the brunt of the technology demands. Because whether you are a $1 million supplier selling 2 products to the military, or a $300 million supplier with 2,500 SKU's going to home improvement centers, the requirements are just as rigorous. At issue is the
widening disparity between technical requirement of the customer and business benefit to the manufacturer.
Make no mistake about it: RFID will be an inevitability in many industries, for most manufacturers, regardless of size. So how does one comply with these requirements? Furthermore, how does one keep up with these standards which seem to vary widely between each customer? Most critical is the question, how can everything be put together in a way that serves the manufacturer?
RFID represents a dramatic shift in how supply chains operate. "The reason for this," explains Deon Nel, RFID engineer at Avatar Partners, "is not so much the technology of RFID, but the Electronic Product Code (EPC), which essentially serializes every pallet, every case, and potentially every individual item." (Indeed, item-level RFID tagging is coming; it's already a requirement for some products shipped to European retailers).
RFID will place an enormous amount of data at our fingertips, and thus require a significant amount of database power to process that data and use it to make intelligible business decisions.
So here is a roadmap that allows SMB manufacturers to keep up with requirements of their retailers, while not breaking the bank.
Before RFID, a company needs to address four key areas:
Item Management. It is critical to look at how clean and up-to-date existing item files are.
- A company's ERP system must support product containment hierarchies and GTIN item numbering. Furthermore, all of the data about our items should be stored in one centralized location. Many companies do not collect all of the characteristics of an item needed by retailers today. It is essential to start collecting this data.
- Customer Catalogs and Data Synchronization. Data Synchronization is a requirement unto itself by many large customers. Starting with clean data, it is important that there are no redundancies, nor lands of Excel spreadsheets in which duplicate data is kept. It is critical to always keep a single point of record. Customer catalogs should be an output of a central single system; otherwise the likelihood for errors increases at a crippling pace.
- EDI and Electronic Commerce. Many times companies who implemented a band-aid EDI solution 1, 2 5 years ago are bleeding from the cost of inefficiency and outsourcing. For example, a small manufacturer is required to receive orders and send confirmations through Electronic Data Interchange (EDI). The first step to EDI compliance may have been an outsourced service, not integrated to any internal backend ERP systems (perhaps the manufacturer didn't have an ERP system at the time!). Great cost savings can be had from bringing EDI, and other trading requirements such as AS2 via XML or other file formats, in-house and behind the firewall. Bringing EDI in-house is critical before RFID because it gives a company control of the flow of data.
- Processes. All of the above-mentioned technologies are useless without good, solid processes and procedures. Processes can be cleaned up at the same time that technologies are streamlined.
RFID is coming, to small and large manufacturers alike, in the majority of industries that exist today. It is wise to put first things first, and prepare internal systems and processes for RFID, so that yet one more standard does not become a separate cost center. That way, all parties involved can realize the full benefits of RFID.
Marlo Brooke is a principal at Avatar Partners, an Irvine, California-based systems integrator specializing in supply chain and six sigma. They lead a 25-consultant team that has helped many companies implement EDI, Data Synchronization, RFID and other supply chain optimization.
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