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University Researchers Say RFID's Worth Is Proven When Deployed Enterprise-wide
An academic group reports that companies deploying RFID across an entire supply chain or business enterprise realize substantial gains, though a "wall of silence" keeps them from sharing their success stories.
The researchers also found that for 15 of the 55 deployments, RFID had an effect on management processes. All 15, Visich says, were in the informational phase, meaning they were using data for analytical purposes, such as for planning the movement of promotional displays at the appropriate time, based on advertising.
The study also found that while most companies had installed RFID systems only to address a specific activity, such as tagging cartons destined for RFID-enabled retailers like Wal-Mart, such limited-scale deployments yielded little benefit. Business consulting firm Bain & Company's 2005 and 2007 Management Tool surveys, quoted in the study, found that users of RFID ranked the technology as one of their least favorable management tools when they used it in piece-meal efforts (such as the slap-and-ship application of RFID tags), while those with transformational deployments ranked RFID as one of their most effective tools.
With the transformation effect, the Bryant study found that RFID can benefit a company across a wide variety of functions, including increasing sales and improving retail promotions coordination, reconciliation, decision-making effectiveness and quality, resource usage and production control. However, Visich says, the transformational stage requires that firms use innovation and supply chain redesign to achieve a competitive advantage. Once users reach that stage, Reyes predicts, RFID technology will "revolutionize supply chain dynamics."
Companies seeking to utilize RFID for a specific function—such as inventory control—need to think about how the technology can be used across their entire operation, Visich says. They also need to consider how RFID may impact other processes, he notes, such as speeding one process while creating a logjam elsewhere.
"Implementation is still in the early stages," Li states. "Many companies are simply looking at it as an added cost," she says, to accomplish such things as meeting a Wal-Mart mandate. "Because they are implementing it for a single entity, not across the whole supply chain, they are not seeing the whole benefit." Most deployments begin with a single entity, Visich notes, but companies need to have the bigger picture in mind if they hope to eventually see benefits. "Vendors should not make a business case for RFID to improve one process," he says. "It's not going to look like a favorable investment. RFID can be deployed across multiple processes."
One obstacle for businesses in realizing RFID's potential, Li says, is the inability to use the large volume of data that comes from RFID hardware. Vendors would serve their customers well by providing the proper tools for analyzing the information. Too many vendors, she says, offer limited solutions, such as only hardware, software or integration, but not end-to-end solutions. "Vendors may say, 'I will help you meet the mandate,'" she says, "while they should be helping [clients] develop a better application to use the technology to its full potential."
The "wall of silence," Visich says—created when businesses refuse to make public any information regarding their RFID deployments—will continue to be another obstacle to RFID technology usage. Those utilizing the technology most successfully are the ones least likely to share their results, he says. "When you reach the transformational level, it's a competitive advantage," he explains. "I don't know how you get companies to share their information." Reyes adds: "It would be helpful if companies would talk about the lessons learned," especially in health care, in which RFID deployments are numerous but little information is shared among different organizations.
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