Dec 08, 2008I've been watching, with great interest, the saga of the U.S. auto industry, as the heads of the "Big Three" automakers have sought funding to keep their companies afloat. Some believe the rescue plan will just delay the inevitable, but it really depends on whether the car manufacturers simply cut costs to survive, or fundamentally restructure. I'm for fundamental restructuring—for the auto industry, and for other companies.
Look, there are two ways to go forward. You can reduce your head count, cut funding for all unnecessary projects, and hunker down until this economic storm passes. Or you can invest in new technologies that can begin reducing costs immediately, and make your company more competitive in the long term.
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The auto industry in the United States won't survive unless it learns to produce better, more fuel-efficient cars with fewer personnel, resources and funds. Radio frequency identification can certainly help, and the "Big Three" can look to Airbus for an example of how to proceed.
Airbus views RFID as an infrastructure that can be utilized to cut costs across its entire operations. The company is deploying RFID systems to enable it to track jigs, parts bins, tools and much more. Its goal is to create an infrastructure able to support new applications, and to enable the company to continually discover new ways to reduce operating costs. In other words, Airbus is investing in technology today so it can be more efficient for years to come.
You don't need to be a huge automaker, or Airbus, to rethink the way in which you do things. The current economic climate offers a unique opportunity to transform your business. You might need to let employees go, but instead of hiring them back as soon as orders pick up, why not put systems in place that would enable you to increase production with fewer workers? That way, you will emerge from the downturn leaner, but stronger and more competitive. And when you do hire, it can be employees that add real value to your organization.
RFID is also about automating processes. Some companies shipping tagged goods to retail partners automatically capture tag IDs and send them in advance shipping notices to confirm order accuracy, rather than having workers scan bar codes and count boxes by hand. Some companies have automated the process of receiving goods into inventory, capturing location information during put-away and directing forklifts to the proper locations to pick goods. This enables them to improve efficiencies and reduce the number of drivers required.
These are one-off applications that provide some benefits—the real benefits come when you take Airbus' approach and employ the same RFID readers and software infrastructure to automate more processes. Each additional RFID application costs little to deploy and helps companies continue to reduce costs. Over time, the effects can be transformational.
Unfortunately, not every company is as savvy as Airbus. Some businesspeople will simply take the short-term approach of reducing costs now to maintain their profit margins, or to remain profitable. I've spoken with some RFID technology providers who say they've had customers kill projects that had a clear ROI. Why? To get the capital expenditure off of their books. These firms are sacrificing the future for the present, however, especially if their competitors are investing in tomorrow.
I realize it's difficult to invest in new technology, particularly when profits are under pressure and credit is tight. But now is clearly the time when companies need to seize every opportunity and explore ways to do more with less.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog or click here.
