Feb 01, 2010It seems to me that even though more people "get" radio frequency identification, very few appreciate just how important this technology really is. Many people, including some who run RFID technology companies, see it as merely a way to track tools, wheelchairs or other assets. It can do that, of course—and deliver some compelling near-term benefits in the process—but RFID has the potential to deliver far greater benefits. Businesses that take an enterprise approach to RFID will be able to manage all of the things they can't manage well today, within a unified infrastructure so all systems work together to solve myriad problems.
Which things? Think about it. Companies are very good at managing employees who sit in front of a computer most of the day, or who are connected to back-end enterprise resource planning (ERP) applications via remote connections. And they are very good at managing machines that churn out products. But when you examine an enterprise, you realize the ability to manage stops at the edge of the Internet—whether at a computer terminal, handheld computer in the field or machine on the line. That means firms are not so good at managing things that are not in a fixed location, or connected to a corporate IT infrastructure via the Internet. Simply put, RFID enables companies to manage all of those other aspects—parts, raw materials, work in process, inventory, returnable containers, tools, rental equipment, vehicles, workers and much more.
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Most people don't see RFID in terms of an enterprise-wide infrastructure, but the reality is that very few individuals envisioned the computer infrastructure companies have today (or are trying to get to, in the case of some firms). The information revolution began with big mainframes and then evolved, spreading down through the enterprise—first with dumb terminals, then minicomputers and then PCs—to help companies better manage marketing, sales, accounting and, of course, production.
The result was that by 1990, businesses had technology stovepipes. Folks in finance could share data with each other, but not with anyone else in their organization. Sales managers could get a wealth of information on the activity of their teams, but that information was not available to production planners or the finance department. Companies such as SAP created ERP systems to offer managers the ability to share data across an enterprise—and to provide senior management with visibility into what was happening in every department.
ERP systems were notoriously difficult to deploy, but they essentially worked. Today, in large and small companies alike, employees in all departments are able to share information. As a result, productivity is far higher than it was before this process of managing across the enterprise was possible.
An enterprise-wide approach will lead to an integrated system. You will probably require a passive system and an active system to track everything that moves, but both will feed data into a single back end, enabling the information to be used by your ERP system. This approach will lead to reduced capital expenditure, lower total cost of ownership and greater efficiencies. Why? Because it's more cost-efficient to purchase 5,000 readers of one type than 1,000 of five different types. You won't spend as much to maintain one system as five, and you'll be able to build out an infrastructure that covers the entire enterprise and leads to greater savings.
Airbus is one of the few companies that gets this. Carlo Nizam, the aircraft manufacturer's head of value chain visibility and RFID, will discuss how to take a strategic approach to the technology at RFID Journal LIVE! 2010, to be held on Apr. 14-16 at the Orange County Convention Center, in Orlando, Fla. Airbus is building an enterprise visibility solution piece by piece, and each new RFID application delivers short-term benefits. But each system also fits within an enterprise infrastructure that will enable a company to use RFID to achieve real-time automated visibility across all of its business and production operations.
I've heard some people say RFID is just one technology, and that there are a lot of other technologies from which companies can benefit, such as 2-D bar codes, GPS, infrared, sensors and ultrasound. That is true, and those technologies will play a role, but RFID is an enabling technology—as broad and powerful as the Internet—and the next phase of IT evolution. (If it's a wireless sensor, it's almost certainly RFID, because there's no point in sensing something if you don't know to which object or location the information relates.)
The past 25 years have been about managing better by collecting data on the activity of people and fixed assets. I believe that over the next quarter-century, companies will become as good at managing assets—and I use that term in its broadest sense—in motion. If RFID Journal can help people grasp all that the technology can do for their business and actually achieve such benefits, then I will retire some day a very happy man.
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.
