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RFID Demands a Measured Response

As RFID adoption grows, we'll need new metrics to understand and fully realize the technology's benefits.
By Oliver Hedgepeth
One search for metrics is to examine the use of RFID at the intersection of its technology, the analysis of RFID functions and its actual application. But how?

The first step, based on RAND's Assumption-Based Planning (ABP) method for analyzing strategic operational military plans, is to examine a metric's assumptions. One assumption is that inventory levels will still be counted on the current monthly or weekly basis. Will this remain the metric and unit you use when you have second-by-second visibility of 120,000 retail items in one store—and more than 5,000 retail stores?

The second step is to identify the vulnerabilities of those assumptions, while the third is to identify any warning signs signaling that the assumption or one of its vulnerabilities is becoming invalid. Some version of ABP has proven to work in areas of great uncertainty, such as going to war, drilling for oil or developing a global supply chain.

In a warehouse, you might employ a worker using a hand-held bar code scanner to search for bar codes on multiple boxes stacked on a pallet. If each box had an RFID tag on it, then an RFID interrogator placed above the dock door could search your entire inventory and update the records accordingly. Your employee's time would be saved; the accuracy of the data would be preserved; and shipping dates would be more accurate. Now, your employee could move on to some other operational function.

We already have a controversy over what seems like simple metrics when processing products as they move in and out of a warehouse or a distribution center. We have differences of definition over such simple terms as "shipping date." The units of this metric are the day, month and year, and, sometimes, the time—but determining when and where this event takes place is still not performed in a standard way in the logistics industry.

The process of analyzing where to place a reader might create new metrics. If the reader is on a dock door, on a forklift, in a handheld or on a wearable attachment, does that mean we will have new metrics? Certainly, it would be possible to have new metrics for tracking goods as they move through a distribution center.

One new idea for using RFID technology for the milk industry comes from Matanuska Maid Dairy in Anchorage, Alaska. Joe VanTreeck, the company's president and CEO, says he would like to have RFID tags identify temperature problems in order to prevent premature spoilage, thereby becoming a tattletale for temperature abuse. Similar ideas are emerging all across industry and the military. One possible metrics decision may involve how often that tattletale wakes up and checks the milk supply. Should this occur daily? Hourly? And, who receives this data—the consumer, the retail store's manager or the milk company?

Metrics—whether quantitative, such as the monthly inventory count of tires, or qualitative, such as customer confidence—arise with the emergence of a new technology. Without questioning metrics, however, business-decision makers' expectations of RFID's benefits may lead to new problems instead of to new opportunities for improving visibility into our complex, global supply chain network.

Oliver Hedgepeth is the chairman of the logistics department at the University of Alaska Anchorage (UAA). He was also the first director of the Artificial Intelligence Center for Army Logistics.

USER COMMENTS

Chris Kapsambelis 2006-04-14 03:35:12 PM
RFID Hype Professor Hedgepeth joins a long list of academics predicting great advancements of Supply Chain capabilities based on a misunderstanding of RFID. RFID, in the Supply Chain, is by necessity limited to UHF passive technology. This technology has been shown to be incapable of providing Six Sigma accuracy in reading groups of items. Items must be read one at a time (Singulation). While UHF Passive RFID may be marginally better than Barcode in reading items on a conveyor belt at high speed, it will not result in the continuous interrogation of the item throughout its life in the Supply Chain as originally envisioned. The ability to track an item is not attributable to RFID, but to the EPC numbering system. The EPC numbering system can be used equally well with barcode, and it is currently being used to backup RFID for case goods. As for being able to count items faster with RFID, this capability was envisioned as a byproduct of group reading. Since every item has a unique serial number, a group read can be sorted and filtered into an accurate count of the group. But group reading is not accurate and Singulation must be employed. With Singulation, RFID is no faster than Barcode. To achieve what the professor predicts requires the use of Active RFID. Active RFID is not practical for item level tagging.

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