RFID Demands a Measured Response

By Oliver Hedgepeth

One search for metrics is to examine the use of RFID at the intersection of its technology, the analysis of RFID functions and its actual application. But how?

The first step, based on RAND's Assumption-Based Planning (ABP) method for analyzing strategic operational military plans, is to examine a metric's assumptions. One assumption is that inventory levels will still be counted on the current monthly or weekly basis. Will this remain the metric and unit you use when you have second-by-second visibility of 120,000 retail items in one store—and more than 5,000 retail stores?

The second step is to identify the vulnerabilities of those assumptions, while the third is to identify any warning signs signaling that the assumption or one of its vulnerabilities is becoming invalid. Some version of ABP has proven to work in areas of great uncertainty, such as going to war, drilling for oil or developing a global supply chain.

In a warehouse, you might employ a worker using a hand-held bar code scanner to search for bar codes on multiple boxes stacked on a pallet. If each box had an RFID tag on it, then an RFID interrogator placed above the dock door could search your entire inventory and update the records accordingly. Your employee's time would be saved; the accuracy of the data would be preserved; and shipping dates would be more accurate. Now, your employee could move on to some other operational function.

We already have a controversy over what seems like simple metrics when processing products as they move in and out of a warehouse or a distribution center. We have differences of definition over such simple terms as "shipping date." The units of this metric are the day, month and year, and, sometimes, the time—but determining when and where this event takes place is still not performed in a standard way in the logistics industry.

The process of analyzing where to place a reader might create new metrics. If the reader is on a dock door, on a forklift, in a handheld or on a wearable attachment, does that mean we will have new metrics? Certainly, it would be possible to have new metrics for tracking goods as they move through a distribution center.

One new idea for using RFID technology for the milk industry comes from Matanuska Maid Dairy in Anchorage, Alaska. Joe VanTreeck, the company's president and CEO, says he would like to have RFID tags identify temperature problems in order to prevent premature spoilage, thereby becoming a tattletale for temperature abuse. Similar ideas are emerging all across industry and the military. One possible metrics decision may involve how often that tattletale wakes up and checks the milk supply. Should this occur daily? Hourly? And, who receives this data—the consumer, the retail store's manager or the milk company?

Metrics—whether quantitative, such as the monthly inventory count of tires, or qualitative, such as customer confidence—arise with the emergence of a new technology. Without questioning metrics, however, business-decision makers' expectations of RFID's benefits may lead to new problems instead of to new opportunities for improving visibility into our complex, global supply chain network.

Oliver Hedgepeth is the chairman of the logistics department at the University of Alaska Anchorage (UAA). He was also the first director of the Artificial Intelligence Center for Army Logistics.