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Using RFID to Manage Work-in-Process Is Companies' Top Objective

In a survey by the Aberdeen Group, 57 percent of respondents said the need to manage WIP is the top driver for RFID adoption, while 41 percent cited managing raw materials.
By Beth Bacheldor
In addition, organizations must measure performance both from a business-process and a technological perspective. They also must have vendors or third-party integrators work with the most appropriate employees, such as business managers, to select the best RFID technology for the job; and develop awareness and sensitivity among company executives and line-of-business managers about the usage and advantages of monitoring work-in-process in real time.

Aberdeen categorizes the various respondents, Klein says, to educate companies about best practices. "In the case of emerging technologies, most haven't adopted the technology yet. We want to provide a roadmap, a guideline and some examples of companies that are doing what others are thinking about doing, and doing it very well, so others don't have to make mistakes."

Among the best-in-class companies (which represented 20 percent of the respondents), all reported being able to reduce the incidence of process failure by at least 20 percent through the use of RFID. What's more, all said they were able to improve process throughput by at least 10 percent.

According to Klein, the ways in which companies have used RFID to reduce failures vary, depending on the specific business process and industry. In some cases, for instance, the firms have leveraged RFID to ensure they've set up their production machinery correctly, to avoid costly mistakes. Others have cut packaging errors by making sure boxes have the right products in them before shipping them out. "This is how exceptions are reduced," he says. "And for throughput improvements, many of the same concepts apply."

A large majority (81 percent) of the best-in-class companies reported that RFID has saved them at least 15 percent in labor used to manage work-in-process. Nonetheless, even best-in-class organizations are still struggling to find a return on investment (ROI) in RFID. Only a few respondents indicated their companies had already attained a positive ROI from their deployments, with just 43 percent of the best-in-class firms able to estimate the time it would take to achieve a positive ROI. Furthermore, only 27 percent of industry-average companies, and 9 percent of laggards, could estimate the time to attaining a positive ROI. One half of the respondents were characterized as industry average, 30 percent as laggards.

Several factors make it difficult to achieve and measure an ROI. Most significantly, Klein notes, it can take a long time to integrate RFID with enterprise systems, which is critical to maximizing the payback from an RFID deployment. "It is not something that you can do all at once, in a single project," he says, "so the duration of the overall project is often beyond the horizon for the IT department." Additionally, it is often difficult to quantify the improvements RFID makes, and many companies do not have any pre-RFID benchmarks against which they can measure their returns. "All they can do," Klein says, "is guess."

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