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10 Things CEOs Must Know

Deploying RFID successfully is no simple matter. Here are the essential truths CEOs need to understand about the technology to establish a successful deployment strategy.
By Bob Violino
Achieving real breakthrough efficiencies may require going beyond just sharing information. Dave Donnan, a vice president at management-consulting firm A.T. Kearney, says manufacturers should consider sharing regional distribution centers with each other. “If you have information on case-level movements, do you need to have a distribution center in every region?” asks Donnan. “Can you go into collaborative warehouses with other manufacturers, so everyone can get full truckloads going from the warehouse to the retail store? This idea of pooled distribution requires a different mindset from the current ‘I own everything’ mentality.”

Success requires cultural change.
There’s been a lot of focus on RFID technology and not much focus on the people who will be affected by its deployment. The companies that achieve the greatest benefits from RFID will be the ones with employees capable of adapting to new ways of doing business. The most important thing a CEO can do to ensure the success of an RFID deployment is to drive cultural change—to champion innovation, fund retraining programs when business processes are changed and reward successful projects.

An RFID strategy must be implemented globally.
Regulations governing the use of RFID equipment operating in the UHF spectrum (868 MHz to 956 MHz) vary by region of the world and even by country. Readers that work well in the United States can’t be used in European. And tags that an apparel maker puts on goods in Asia might not be readable by equipment at the company’s U.S. and European distribution centers. Multinational companies need to develop a global strategy to ensure that the equipment they choose works in all the regions where they operate.

This issue also must be addressed by companies that import and export goods, says ePC Group’s Abell. “You need to understand the regulatory issues in [the regions you import from or export to],” he says. “If you don’t, you could wind up purchasing tags and readers that you can’t use. We’re talking about huge amounts of money that would potentially be thrown away.”

There is no formula for calculating the costs and benefits.
It would be nice if CEOs could get a hard dollar figure for the costs of an RFID system and an estimate of the benefits that will be achieved. Unfortunately, calculating the costs and benefits is a real challenge. Procter & Gamble figured out what it would need to do to comply with Wal-Mart’s RFID tagging requirements, then it reverse-engineered the RFID system to determine its hardware, software and other requirements. That enabled the company to get a handle on the near-term costs.

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