RFID, Sensor Technologies Can Build Smarter Supply Chains, IBM Says

According to the survey, however, only a small percentage of companies report having real-time visibility of their supply chains. IBM did not ask whether companies are specifically using RFID, sensors or other technologies, though it did query the executives as to why they lack real-time visibility into their supply chains. At the top of the list of reported barriers was the existence of organizational silos—divisional differences that prevent the collaboration and sharing of processes and information—within the respondents' companies. Next, executives said they are too busy to work on projects that would improve real-time visibility. In fourth place (just behind misaligned performance measures with business partners that prevent and inadequately reward collaborative initiatives necessary for improving real-time visibility), executives claimed the tools and technology available to achieve real-time visibility are inefficient. And when asked about barriers to implementing risk management programs, respondents again cited a lack of enabling technologies.

But Butner takes issue with that notion. "The answer is most definitely yes," she states, to the question of whether radio frequency identification and similar technologies are available and affordable. Still, she acknowledges that companies may be averse to implementing such solutions in light of current economic conditions. The solutions do have to be specific, she says, noting, "Companies really need to focus—especially in today's situation, where we absolutely cannot have any financial mishaps—and zero in on their specific problem areas, and then look for integrated capabilities to solve those problems."

IBM describes the smarter supply chain as one that generates real-time information via sensors, RFID tags, meters, actuators, GPS and other devices and systems. In the study, the company predicts that the supply chains will "rely less on labor-based tracking and monitoring, as objects like shipping containers, trucks, products and parts report on themselves." IBM also suggests that LED screens on devices perhaps not yet invented could contain dashboard programs that would display the real-time status of plans, commitments, supply sources, pipeline inventories and consumer requirements, thereby providing companies with additional tools for building smart supply chains.

Furthermore, IBM expects the future will see unprecedented levels of interaction, not only among customers, suppliers and IT systems in general, but among objects—such as RFID tags—that monitor the supply chain. According to the report, intelligent systems will then be employed to assess situations based on the data collected, and in some cases be capable of learning and making decisions automatically, without human involvement.

The authors suggest, for instance, that an intelligent system "might reconfigure supply chain networks when disruptions occur. It could acquire rights to use physical assets like production capacity, distribution facilities and transportation fleets on demand through virtual exchanges. This intelligence will be used not only to make real-time decisions, but also to predict the future. Equipped with sophisticated modeling and simulation capabilities, the smarter supply chain will move past sense-and-respond to predict-and-act."

The new IBM study is now available. For more information, and to download a copy of the study, visit IBM's Web site.