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Sensing Supply with RFID
This guest contribution from Manufacturing Insights' Bob Ferrari considers the need for more actionable, real-time supply chain information and how RFID along with other sensor technologies can enable this possibility.
Jan 20, 2006—This article was originally published by RFID Update.
January 20, 2006—In today's more lean and globally-stretched supply chains, disruptions have the potential to take a heavy toll on a company's ability to fulfill customer orders in a timely manner, ensure product availability, and take advantage of emerging market opportunities. The catastrophic events of 2005 provide a clear reminder.
The devastation of hurricanes Katrina and Rita on the US Gulf Coast caused many supply chain disruptions at giants like Dupont and Alcoa, who warned of potential revenue shortfalls due to the cumulative effects on their logistics. Such damage provides ample evidence that more work is required by manufacturing companies in their ability to sense and effectively respond to any supply chain disruption that may occur. Companies like BASF, Procter & Gamble, and Wal-Mart were better equipped to respond to these disruptions because of the existence of enabling information technology that provided the most timely and accurate assessment of the status and available options for inventory replenishment, logistics, and fulfillment processes.
Corporate decision making is currently hampered by lack of timely and actionable data. The goal of RFID implementation should be placed in the context of how an overall sensory network platform can better support the needs for fast, comprehensive, and accurate intelligence related to the physical state of the supply chain. Manufacturing enterprises should identify which physical sensing processes are the most appropriate to automate, which technology is the most applicable, and what measurable business benefits can be achieved upon implementation.
As for RFID, over the next two to three years, the industry standards for automatic identification and product information transfer will mature. Generation2 standards and the decreasing cost of individual tags will facilitate the ROI thresholds required to justify RFID as a transformational enabler of accurate, timely supply chain business intelligence. But RFID can and should be used alongside other traditional sensing technologies. Taking a sensory network platform view that includes all the available and/or appropriate technologies to enable more responsive and accurate supply chain business intelligence is a path to meaningful ROI.
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