Boosting Profits in a Sluggish Economy
RFID can help companies make more money when sales are growing slowly, by squeezing inefficiencies out of their operations.
May 24, 2010—You're the CEO of a large manufacturing company. You've outsourced production to a low-cost country, such as China. You've deployed an enterprise resource planning (ERP) system enabling everyone in your firm to share information more effectively. You've cut payroll to the bone. Sales remain sluggish due to global economic conditions. How do you boost profits?
Easy—you attack inefficiencies you haven't yet touched. There aren't any, you say? I'll bet there are. Perhaps you have reusable containers that end up missing and have to be replaced. Or it could that be you have tools being underutilized. Maybe inventory goes missing, or is in the wrong place, and later has to be written off because you can't sell it. Or perhaps there are delays on your manufacturing line, because parts weren't where they needed to be.
The reason is pretty simple: Information technology is what enables companies to analyze data and manage it effectively, but IT systems reach only to a PC on a desktop, a handheld computer in the field, or a machine on the line. Everything beyond these devices—parts, raw materials, work in process, inventory, returnable containers, tools, rental equipment, vehicles, workers and much more—are beyond the reach of today's IT systems and are, thus, virtually invisible. And if you can't see it, you can't manage it.
The savviest companies see RFID not as a cost of doing business with a partner, but as an extension of their IT infrastructure—a way to gain visibility into the location and status of all mobile things they are currently unable to manage. The benefits can be significant. Northrop Grumman, for instance, deployed a real-time locating system (RTLS) to track the tools it rents to build fighter aircraft. The company saved enough on the rental cost of one tool used to build advanced fighter aircraft to pay for the entire RFID system.
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