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RFID Research Supports Real-World Experimentation

Simulation can be a good tool for modeling the effects of known potential RFID process changes, but real-world experimentation may uncover additional benefits and changes.
By Kurt Hozak
The comparison of the Tobyhanna processes and the corresponding simulation scenarios provides further evidence that simply implementing RFID without enacting process changes may not be sufficient to demonstrate large benefits. Research that I conducted with David A. Collier (see RFID as an Enabler of Improved Manufacturing Performance) showed that if RFID is simply used as a bar-code replacement without actually taking advantage of it to enable new or improved processes, the technology might offer little benefit. I later noted in follow-up research conducted with James A. Hill (see The Material Handling Trade-Off When Lot Splitting With RFID in a Job Shop) that because additional investments may be required to support those other changes, "managers should therefore not think of RFID as an investment to be implemented in isolation... but as a technology investment that both enables and requires new operating policies and capabilities to support overall strategic objectives." Congruent with those research findings, and with Roberti's suggestion to think of RFID as infrastructure, the NPS research team asserted that "...RFID technology should be conceptualized and modeled as part of an 'innovation bundle' rather than as a standalone technology adoption."

Although the NPS researchers noted the difficulty in fully capturing RFID's holistic benefits, simulation offers several advantages compared with other methods of modeling the RFID "innovation bundle." Simulation has long been regarded as a relatively flexible and powerful tool to help users understand complex relationships that can not be easily reduced to equations. Simulation's ability to visually model processes can help analysts more quickly develop models that are richer than spreadsheet-based ROI calculators, and managers may have more confidence in the results if they can see the source of the numbers from the simulation. By contrast, parameter estimates or output in spreadsheets may be more difficult to accept if one is unable to see justification or evidence for their values as clearly as with simulated processes.

In summary, companies may need to make a variety of process changes in order to achieve significant benefits from RFID, similar to other infrastructure investments. When used appropriately, simulation can be a good tool for modeling the effects of known potential RFID process changes—but real-world experimentation may uncover additional valuable process changes unforeseen, or previously believed to be relatively unimportant. Even if the process changes are known, incorporating them all into traditional ROI models may be difficult, which may lead to underestimating RFID's cumulative benefits. The NPS professors should be commended for producing research offering such practical relevance.

Kurt Hozak is an assistant professor of operations management at Coastal Carolina University's E. Craig Wall Sr. College of Business Administration, and a technology and operations management consultant.

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