RFID Strategy -- A 'Back to the Basics' Approach Produces Surprising Value

Sept. 15, 2005
Marlo Brooke is president of Avatar Partners, a consulting services company specializing in RFID and supply chain implementation. I'm often asked how to implement RFID beyond bare minimum slap-and-ship compliance in order to produce some added value ...

Marlo Brooke is president of Avatar Partners, a consulting services company specializing in RFID and supply chain implementation.

I'm often asked how to implement RFID beyond bare minimum slap-and-ship compliance in order to produce some added value whether that be improved customer service or return on investment in the warehouse. To accomplish such a request, I always go back to the basics of RFID.

Simply put, RFID is a tracking device. Despite the seemingly lackluster functionality, there is a lot of potential power in how RFID can be used as a tracking device. RFID can trace environmental conditions, track the history and movement of an item, and even trigger activities without human intervention. We call this the 3 T's: Trace, Track and Trigger. Why is this important? Because everything in business has to do with information and for many years RFID has been providing information that no other technology can.

For the past sixty years, and long before WalMart joined the RFID cheerleading squad, RFID has been used for practical, non-sexy applications involving the tracking and security of high value items. The list of item types is exhaustive, ranging from automotive parts to gas cylinders to returnable beer kegs.

But advances in RFID technology, particularly the past several years, are opening up less obvious opportunities within the enterprise. To get to the heart of RFID benefits, James Williams, senior practice leader at Avatar Partners, insists on asking his clients, "What are my most valuable items that require the highest levels of security? And what is the cost of not securing them?" There are two categories of items: those that remain internal to a company, and those that pass through to other trading partners. Often, items that are considerations for RFID fill both categories.

RFID Eliminates Human Error

As more companies shift their business model to outsourcing, there is an increasing demand on trading partners to ensure the highest levels of security through the product life cycle. Any company that stores, manufactures, services or transports high value items on behalf of its customers can dramatically reduce risk with RFID. Most manufacturing, services or logistics providers rely on a combination of security processes through a combination of bar codes, security cameras and manual processes in order to secure its customers high value items. But this approach increases risk to the company providing the service, because it relies so strongly on employees sticking to processes and procedures within the warehouse or factory floor. Any breach in these processes could spell disaster. RFID is the perfect solution to the problem of security. Obvious examples of companies that could benefit through RFID technology are warranty repair, value-added manufacturing of high dollar items, and even post film post production labs that are responsible for the WIP of film media. Utilizing RFID to eliminate human error could provide compelling competitive advantage.

RFID Controls Shrinkage

RFID advances provide new opportunity for distributors of high dollar items, such as computer equipment, to reduce shrinkage. In the past, because of technology restrictions, distributors and manufacturers of expensive goods would track items with bar codes. But bar coding does not create automated triggers if an item is moved, or if it slips out the back door through shrinkage. RFID eliminates this problem by creating an internal GPS-like environment within the warehouse and throughout the entire life cycle of the item, giving real-time visibility of any given item within as little as a few feet.

Any company that procures high-value items for internal use can utilize RFID to reduce shrinkage. Deon Nel, practice leader at Avatar Partners, contends: "we have initiated very rapid ROI even at small companies just by tagging their expensive internal equipment which can easily become lost or stolen. It is amazing how often even large items can be misplaced."

RFID Mitigates Risk

Some industries are particularly poised to benefit from RFID's ability to mitigate risk. Manufacturers that utilize chemical and other hazardous elements in their facilities, such as biopharmaceutical labs and chemical plants, are subject to intense regulatory requirements. With RFID these companies can now use RFID to automate the whereabouts, usage and movement of raw goods, from receiving through to disposal.

Key Considerations

Exploring RFID for item traceability and increased security involves a careful evaluation of multiple factors. With over 200 RFID vendors and extremely rapid improvements in the technology, an organization must carefully understand their needs. Decisions must be made as to preferred frequencies, tag types, tag classes, tag placement, and software integration needs. A given solution might involve up to 8 vendors, so it pays to work with those who really understand the RFID landscape. Whether your explorations into RFID are initiated by your trading partners or proactive internal improvements, we recommend going back to the roots of RFID, which is high value item traceability -- the opportunity for ROI is tremendous.

Marlo Brooke is president of Avatar Partners, a consultant and systems integrator based in Irvine CA specializing in supply chain automation and RFID troubleshooting, implementation and systems integration. She is six sigma black belt trained, and serves on the board of directors of eSupplyChain User Group. She welcomes your call at (949) 622-5557.

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