The Biggest Risk When Deploying an RFID System

Aug 06, 2012I received an interesting e-mail from a reader last week that said, "There's no question that real-time inventory/replenishment would be of great benefit to retail. I'd be interested in knowing more about the constraints and risks of implementing an RFID system."

There are risks in deploying any new technology. With radio frequency identification, I think you need to distinguish between a point solution that solves a specific problem, and an enterprise-wide approach in which RFID is deployed as infrastructure to capture a large volume of new information and address a variety of operational issues.

With a point solution, the risks tend to be related to technology. Some companies choose the wrong technology for a specific problem, possibly due to bad advice from an inexperienced systems integrator. Other firms choose the correct technology, but for one reason or another, it does not work at their facility (not every company performs a proper site survey before deploying). If a business gets everything right, and the RFID system solves the particular problem it was hoping to address, there are usually no other issues—unless the system can't be expanded to additional applications.

But this is not true of enterprise-wide deployments. With such deployments, you face the same issues involved in choosing the right technology, conducting a proper site survey and managing the system's expansion to other applications—but far and away, the greatest risk in a large-scale deployment is change management.

There are companies that have chosen the correct technology, gotten the site survey right and deployed RFID successfully, but still failed to achieve the desired benefits—because they failed to manage change.

First, you must manage change with your partners. Enterprise-wide deployments usually mean you want to track parts, raw materials, subassemblies, inventory or other key aspects of your business, from the moment you receive those items. That means working with suppliers to tag parts, containers or shipments. We've seen a number of shipwrecks on these shoals. The best companies manage change by educating suppliers about the benefits they will achieve, and by working with them collaboratively, rather than just forcing partners to tag goods.

Once suppliers are on board with tagging goods, manufacturers and retailers need to address internal changes. In most cases, that means more than swapping out someone's bar-code scanner with a handheld RFID reader. It means educating people about how the technology is different from bar codes, and explaining why the company wants to employ RFID, as well as how the data will be used. So, for example, if a retailer deploys the technology within a store, but fails to explain the importance of tagging items that might arrive without transponders (either because a certain supplier is not tagging, or because tags have fallen off during transit), then a percentage of the inventory will not be tracked, and visibility will be lost—along with some of the benefits of using RFID.

Even more important, employees must be retrained to take advantage of the data that radio frequency identification provides. In some cases, retailers have conducted pilots in which they have performed inventory counts, but workers did not replenish goods in a timely way. The results of the pilot, predictably, were not as good as expected.

With a point solution, change is usually easier to manage. The problem is clear, and the change required tends to be obvious and focused on one particular area.

But RFID at the enterprise level is a big deal, and involves a great deal of change. It does not involve anything that should disrupt a company's operations, but everyone at the firm must be educated about how things will be done differently. What's more, someone needs to be focused on driving change throughout the organization, and on making sure that all employees are doing what needs to be done to leverage RFID data. Those who don't understand these risks could see their RFID projects ultimately fail.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.