Achieving Transformational Benefits With RFID

Companies need to think about radio frequency identification as more than just a technology for tracking lost tools or parts bins.
Published: June 3, 2019

Last week, I explained why I believe radio frequency technology is as transformational as computers and the Internet have been (see RFID Is as Important as Computers). Unfortunately, many companies view RFID as simply a technology for tracking tools, parts bins or work-in-process (WIP). It certainly can do these tasks, but looking at the technology so narrowly would be akin to using your firm’s computers only for writing reports or maintaining accounting ledgers.

RFID has the potential to do so much more. So how should companies think it? They should view RFID as a transformational technology that can be deployed as part of their infrastructure—that is, part of every department—in order to enhance their strategic advantage.

If, for example, you are a low-cost producer in your industry, you should look at RFID as infrastructure that can be deployed across your supply chain, production facilities, offices and so on, in ways that take cost out of the system and enhance your ability to compete on price. If your company is a high-end retailer that competes on its ability to serve and impress customers at your stores, then you should look at ways to use RFID throughout your organization to deliver the highest-quality service and the greatest customer experience.

I don’t advocate going out and deploying RFID everywhere all at once. In sessions I give on strategy at our annual RFID Journal LIVE! conference and exhibition, I always encourage companies to have a vision for what their firm will be like when RFID is used everywhere (like computers and the Internet are). However, I advise them to deploy it in stages, with each project delivering a measurable return on investment or strategic benefit.

To do this, companies need to educate senior managers about RFID and what it can do. Going to events and hearing how other companies in your industry are employing the technology is important. Reading up on advances in RFID, as well as case studies, is critical. Visiting university RFID labs is valuable. And being part of the community and sharing your ideas can lead to unexpected revelations about how to use RFID in new and innovative ways that can improve your company’s market position and bottom line.

Once management understands RFID’s potential, create a cross-functional team that can develop a vision for how the technology can be used to enhance your company’s strategic advantage. For example, your vision might be, “We are going to use RFID to deliver just-in-time to our manufacturing customers and increase our value to them.”

That would require you to track work-in-process, finished inventory and eventually deliveries at and to your facilities, so that you know where parts or raw materials are located in near-real time. You might start with tracking WIP and give your customers visibility into the production of goods bound for their facilities. You might follow that with tracking finished inventory and auditing every shipment via RFID to ensure there are never any shipping errors that might negatively impact your customers. Once these projects are complete, you might require your suppliers to tag shipments and send you an advance shipping notice so that you have visibility into what is arriving at your facility and can deal with misshipments or delays before they affect your customers.

This infrastructure might be expanded to track parts, subassemblies, tools, manuals and other items at your factory. Eventually, you might use RFID in your offices to track laptops, file folders and other items to enhance productivity. In this way, you are leveraging RFID in a way that is truly transformational. You are becoming a truly digital company, and the data collected can be analyzed to achieve unexpected benefits. Eventually, AI will help you perfect your production processes and achieve true coordination with supply chain partners.

This is where we are going. The companies that figure it out first will have an advantage over those that are slow to pick up on the benefits of RFID and how it works with other technologies.

Mark Roberti is the founder and editor of RFID Journal.