When the Going Gets Tough…

…the tough become smarter and leaner, by investing in a corporate infrastructure that can deliver lasting benefits.
Published: November 3, 2008

In his New York Times column last week, David Brooks called for more government spending on the country’s infrastructure (see A National Mobility Project). It was one of the most intelligent suggestions I’ve read since the financial meltdown began. Brooks’ argument is that major highway and other infrastructure projects create jobs and put money in the hands of folks struggling to pay their mortgages, and that they help companies in the long term since they need that infrastructure to conduct business. (Brooks also points out that Americans spend 3.5 billion—with a “b”—hours in traffic each year, so better roads, bridges and rail commuter lines could improve lives as well.)

Companies can’t afford deficit spending on infrastructure the way the U.S. federal government can, but they would be wise to focus on infrastructure and laying the groundwork for increased productivity when this recession is over and the global economy begins growing once more. Firms should invest now in new energy technologies that could cut fuel costs, and they should consider radio frequency identification to take cost out of many aspects of their operations.

Can RFID help you reduce costs? Absolutely. When we conducted a post-event survey of folks who attended RFID Journal LIVE! 2008, 78 percent said they came away from the conference with new ideas for how the technology could help their companies cut costs or boost sales. And more than two-thirds of the respondents indicated they discovered solutions on the exhibit hall for solving business problems.

I wouldn’t expect businesses to invest huge sums in RFID projects that will pay off five years from now. But companies can employ RFID for proven applications—tool tracking, asset tracking, warehouse management or anti-theft (in the supply chain), for instance—to achieve a return on investment within a year. We’ll focus on these during a seminar in Canada in December, and at RFID Journal LIVE! 2009, to be held April 27-29, 2009, in Orlando at the Walt Disney World Swan and Dolphin Hotel.

But companies shouldn’t deploy RFID simply as a quick fix to cut costs in the near term. They should examine it as an infrastructure they are putting in place to reduce costs in the long term. What you don’t want to do is deploy a system for tracking tools, then find out it won’t work on your reusable parts bins. You want one system that can cover as many applications as possible.

Of course, no RFID system will do everything. The thing to do is to consider all of the potential applications across your enterprise, and determine which type of system each would require. This is precisely the approach Airbus has taken as it seeks to squeeze every inefficiency out of its operations.

Here are some questions to ask yourself as you choose the right infrastructure:

• What assets, tools, products or objects would I like to track better?

• What information about the location and status of people, tools, machines, containers and so forth could I use to cut costs if I were able to collect that information cost-effectively?

• How large are the assets, tools, containers or other objects to be tracked—and how valuable are they?

• To what level of accuracy do I need to know the location of each asset?

• Can a tag be attached permanently?

• Over what distances do I need to track these objects?

• Which applications would deliver the greatest return in the short run?

Items to be tracked will likely fall into different categories fairly easily. You will likely need an active system to track large, high-value assets over long distances, as well as a passive system to track smaller, low-value assets and products over shorter distances. You might decide an ultra-wideband (UWB) system will work for almost all large assets, while a passive high-frequency system might be best for your smaller assets. Or you might decide a standards-based active system is the most suitable, along with an ultrahigh-frequency (UHF) system for lower-value objects.

Whatever infrastructure approach you take, look for the applications that will drive the most value today. It could be reducing employee theft of high-value assets, or tracking tools that must be available to assembly-line workers. As you deploy the first application, think about how to build out the infrastructure to enable additional applications. And keep this in mind at all times: The first application built on an infrastructure is expensive, but applications can be added at very little cost. The savings become greater and greater over time, which means that when the economy eventually turns around, those who have deployed effective RFID systems will be leaner, more responsive and better able to compete.

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 or click here.