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Process Controls for the Supply Chain

RFID could bring to supply chains a level of automation and control similar to what process control devices brought to manufacturing decades ago.
By Mark Roberti
Jul 18, 2005A couple of weeks ago, I interviewed Steve Rehling, director of IT and head of RFID systems at Procter & Gamble (P&G), for a story that will be in the September/October issue of RFID Journal magazine. Steve mentioned that different retailers are likely to achieve different benefits from radio frequency identification because they manage their warehouses and supply chains differently. I asked him if RFID is likely to change that. Will RFID lead companies to adopt similar best practices, I posed? His answer was intriguing.

"Yes, [RFID] could create one way of managing warehouses," he told me. "We believe that introducing RFID at a conceptual level has similarities to the control systems introduced in manufacturing environments 20 or 30 years ago." He added that 20 years ago, manufacturers each had their own way of doing things, but the introduction of process control systems changed that. Steve said it's "startling" to see how similar manufacturing operations are today: "The same dynamic could occur with RFID in supply chains."

This gets to the heart of why I've been a big advocate of RFID technologies all along. I understand that it's a burden on manufacturers to have to put an expensive RFID tag or label on a case of shampoo today. I understand there is little return on investment in the short term. But companies that learn to use RFID effectively in their internal operations will introduce a level of control over their supply chains that was previously unimaginable.

Twenty years from now, RFID mandates will be long forgotten and companies will wonder what they did before there was RFID, just as today few people remember the complaints about K-Mart and Wal-Mart requiring suppliers to use bar codes. In my mind, a manufacturer's attitude toward RFID adoption is based on whether the company is looking two years out or 20. P&G and Gillette have both had a long-term view of RFID for many years. After all, it was these two forward-thinking manufacturers, along with the Uniform Code Council and EAN International, that put up the initial funding for the Auto-ID Center (now known as the Auto-ID Labs).

When manufacturers began installing process control equipment in their manufacturing operations a couple of decades ago, they dealt with many of the issues that companies looking at RFID are dealing with today. The equipment costs were high. Some of the technology didn't work perfectly in the beginning, and changing business processes was a struggle. But manufacturers persevered because they understood they needed to gain more control over their operations. And they are far more efficient as a result. I recently toured an IBM silicon fabrication facility, and the entire facility can be run with a few dozen people.

The challenge for companies is to have a long-term vision of where RFID can take them, while achieving short-term benefits. The latter is made more difficult by the need to comply with mandates, but many of the leaders are meeting those requirements and finding internal efficiencies. There's no reason why your company can't do the same.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.
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Brack Stanford 2005-07-27 04:59:51 PM
Process Controls for the Supply Chain Comparing the bar code technology and RFID technology is a great misunderstanding. Problems with RFID are not the same nature as with entering bar codes in the past. Despite of high costs, malfunctions of devices and changes in business processes, bar code guarantee its’ promise, i.e. it really identifies a product connected with it. In the case of RFID we have radio frequency but we don’t have identification. Thus the Author truly writes just after the title „RFID could bring …” instead of „RFID brings …”. It is because of a kind of belief that it could, but there is not a scientific certainty that it does. Some problems are as follows: (1) What does identify a RFID tag when its signal doesn’t reach a reader, and how could it be checked if it happen ? (2) How could it be assured that when a reader doesn’t catch any signal a package is not filled with many RFID-ed items ? So before solving such the problems, there are only illusions that the same dynamics that was with bar codes would occur with RFID.

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