Broadening Context for RFID Investment

By Admin

In this guest column from Manufacturing Insights, analyst Bob Ferrari writes that the longer-term viability of RFID is best found as an enabling technology that can be deployed within broader supply chain business processes.


This article was originally published by RFID Update.

September 2, 2005—In previous opinion pieces within RFID Update, Manufacturing Insights has advised manufacturing-based companies to view their RFID investments in a broader context. Many early adopter companies have discovered and continue to communicate that RFID cannot exist or be economically justified as just a compliance exercise to satisfy key customer mandates for visibility in real-time shipping (“slap and ship”) or receiving processes. The longer-term viability of RFID is best found as an enabling technology that can be deployed within broader supply chain business processes that require time sensitive decisions, supported by information representing the physical state of supply chain objects. Therefore, we suggest that RFID is not the ultimate end goal; rather, the deployment of appropriate sensory networks is.

Simplistically, a sensory network helps to bridge the physical and digital aspects of a particular process. It consists of various technologies that can address means to provide pervasive, scalable or time-sensitive access to data representing physical objects or events. More advanced technology, such as RFID, allows both IT and business groups to extend sensory network capability to facilitate more intelligent and time-sensitive decisions within a supply chain business process that could involve multiple handoff or exchange points.

The broadest business context for deployment of sensory networks exists in opportunities spanning the overall manufacturing or logistics value chain. The building and sustaining of more agile, more business-efficient supply chain process capabilities may require:

  • The ability to more quickly align, synchronize and balance supply with actual customer demand. Time sensitivity of decisions may involve the ability to either predict or automatically replenish inventory based on actual demand at specific consumption points.
  • Network-wide value-chain collaboration processes involving key customers, suppliers or other partners, with aligned and visible process control.
  • The ability to sense and respond to sudden or unanticipated demand, supply, execution or unexpected events that occur throughout a product or service value chain.
  • Decision support mechanisms that meet the need for agility, responsiveness, and overall process control and efficiency – especially where process control is a complicated quandary. What about lean, point-of-consumption or unstructured decision-control processes being enabled by RFID technology?
  • Timely response and proactive compliance with regulatory, safety, traceability or national security requirements.

Business cases and project plans for sensory networks should reflect this broader framework perspective. A sensory network can leverage any of these key process capabilities, and RFID in particular has the long-term potential to dramatically impact the latter three. Technology options for the sensory network include RFID, bar codes, wireless terminal, EDI and other appropriate technologies, depending on business- and cost-efficiency requirements.

Many companies view and are demonstrating RFID as a transformational technology strategy enabling more responsive sensory networks. Beyond just receiving and shipping, processes directed at time-sensitive inventory replenishment, sensing of actual customer consumption, tracking and security, verification of quality, production control or smart transport containers are all in various stages of transformation, and more importantly, ROI-justified implementation. In many manufacturing product- and service-related industry settings (e.g. automotive, aerospace, consumer products, defense, hi-tech electronics, logistics and transportation) the potential for future sensory networks delivering justified value is boundless. RFID is just one important and promising aspect of this potential. As RFID tag, reader and infrastructure costs improve, and industry and IP standards rationalize to realities of the market, RFID will find its justification within these broader business contexts.

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