RFID Demands a Measured Response

By Oliver Hedgepeth

At the convocation, Simon Langford, Wal-Mart Stores executive VP and CIO, said RFID's current benefits are just the "tip of the iceberg." The history of computer technology's insertion into logistics and supply chain activities seems to create such icebergs of benefits, as we have seen from the 1960s to the present. And with the global complexity of Internet-based data transfers available to today's businesses, the logistics threads—the critical arcs and nodes in the supply chains—may produce a new set and quantity of data, as well as benefits. How to manage and measure the use of the emergent RFID databases is still an unknown. Given that bar codes speak a dozen times in a product's lifetime, while RFID codes speak 200 to 1,000 times a second, the thread between measuring RFID supply chain performance and achieving supply chain management benefits may become a study into complex-systems behavior.

A few standard metrics for bar codes do exist, such as product number and retail price. There may possibly be hundreds of metrics, meanwhile, for an RFID tag's encoded data. These include a product's date of manufacture, its supply chain entry and exit points, the last location it was processed and its on-sale and expiration dates.

So, how do we find these metrics? We start with a systems approach, looking at the RFID functional and technical parameters, the goals and objectives of their use. The cybernetic landscape—that is, the communication links and threads along the supply chain network arcs and nodes for the flow of goods, information and cost—should help us examine the span of a product's supply chain, from its strategic production-planning system and its production to the dock doors in a distribution center, and on to the point of sale where a customer purchases it.

Metrics for RFID, then—much like transportation—are set to be a derived demand. Transportation engineers discuss how people's desires for goods and services actually create a demand for transportation, and how communications is a replacement for transportation. We see today that the desires of people, or of organizations such as Wal-Mart or the U.S. Defense Department, for goods tracked and traced in real-time is creating a demand for new metrics, new units of measurement, new understanding of the concept of supply chains, and new concepts of outsourcing logistics services. As such, RFID is creating a new demand, and metrics is a key part to understanding and responding to that demand. Communications technology such as the cell phone is essential to transportation and logistics services, and possibly as a new partner with RFID. New laws on the use of the cell phone are emerging—and the freedom of using your cell phone has new boundaries on usage. What will those boundaries be for RFID five years from now?