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Lessons from the RFID Update Event

Last month, IDC and Manufacturing Insights hosted the second annual RFID Update Conference in Boston. The overriding message from the speakers was that there is no substitute for experience.
Tags: Retail
Jul 14, 2005This article was originally published by RFID Update.

July 14, 2005—Last month, IDC and Manufacturing Insights, an IDC Company, hosted the second annual RFID Update Conference in Boston. Unlike last year's event, which focused on the promise of RFID, this year's event focused on how to deploy RFID and build a business case for implementing an RFID program. More than 100 attendees, representing a broad cross-section of industries including consumer products, pharmaceutical, healthcare, packaging, hi-tech and retail, gathered to learn from the experiences of our speakers and network with their peers.

The overriding message from the speakers was that there is no substitute for experience. The pilots they have been running are further along, providing a better understanding of how to deploy a scalable solution and a more realistic timetable of benefit realization. The speakers also emphasized that while the benefit case has proven hard to justify during the pilot phase, the pilots empowered them with invaluable experience, and they recommended that all attendees engage in their own pilot programs.

Richard Morrissey, director of e-business for American Power Conversion (APC) spoke to the audience about APC's RFID program, which began more than two years ago. Morrissey said, APC, a global manufacturer of power supplies and surge protection products, wasn't even sure that RFID would work for the company because of the wire, metal and battery components in its products. He discussed the many issues that APC faced during the testing of antennas, tags and readers including the placement of the RFID tag so that it could be read. Working with its integration partner IBM, APC designed an effective solution and has built a portable RFID set-up that is being used at its Rhode Island plant. In concluding his presentation, Morrissey stated that while the "physics" of any implementation need to be solved, they were indeed solvable. According to Morrissey, the real challenge of an RFID solution, which ultimately provides true value, is the transformation of new data into usable information that will impact a company’s decision making. The massive reams of data produced by RFID initiatives must be transformed into actionable information before business benefits can be achieved.

With regard to the business case, it has been well documented that there is minimal ROI derived from compliance-driven RFID projects. To avoid investing in another round (or two) of throwaway "slap & ship" solutions, Bob Parker, vice president of research, Manufacturing Insights, recommended that companies treat their RFID business cases as a living document. He suggested that they consider adopting an options thinking IT investment strategy rather than a traditional ROI strategy. Parker explained that managing RFID programs with an options thinking strategy requires an organization to identify its RFID opportunities (“options”) and make an initial investment (akin to purchasing a call option) in a scalable RFID platform. With a focus on the potential value of the identified options, this strategy defies typical throwaway solutions and focuses on long-term business goals and benefits. The options strategy provides management the flexibility to "exercise its option" on a given project or projects, just as a call (or put) option is exercised on a stock.

Steve Georgevitch, supply chain manger for Boeing, spoke about the deployment options that his company has evaluated beyond compliance with the Department of Defense mandate, including asset management and work in process manufacturing. His comments echoed those of both Morrissey and Parker, saying that, Boeing was past the concerns of solving the "physics" issues and was instead focused on the transformation of business processes to justify the investment in an enterprise RFID platform moving forward.

In addition to the presentations throughout the day, lunchtime roundtable discussions provided time for the attendees to network and discuss common issues. The lunchtime discussions, similar to the morning presentations, focused on two major topics: the ongoing frustrations of meeting the expectations of customer mandates and the lessons learned of how to capture and use the data RFID provides to make better supply chain decisions. In spite of their frustrations, attendees were passionate about the progress they have made, and CPG companies sharing their insights with their counterparts in pharmaceutical and aerospace made for an invaluable discussion.

As the planning for next year's event begins, Manufacturing Insights looks forward to the value another year of experience will bring to the RFID marketplace. In all probability, the theme of the 2006 event will not focus on the value of pilots but on the value of collaboration and integration, as well as the new opportunities emerging for RF technology in areas such as sensor networks.
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