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Agents Key to RFID Supply Chains

BiosGroup's intelligent software agents could play an important role in supply chains by responding automatically to information coming from RFID tags and readers.
Jul 08, 2002—July 8, 2002 - A lot of companies talk about the importance of real-time data. But up-to-the-minute information is useless unless you can act on it immediately. Despite what most software vendors say, very few products on the market allow companies to react instantly to sudden spikes in demand or a delayed shipment from a key supplier. But that’s about to change.
Sapphire demo

BiosGroup, a Santa Fe-based consulting and software development company, has been working for the past year with SAP of Germany to develop an inventory early warning agent. The system, which is already being piloted by SAP customers, studies patterns and learns to anticipate when a store might run out of a certain item. It then provides a list of possible options to remedy the situation.

SAP demonstrated the system at SAP’s Sapphire user conference in Orlando in early (see SAP Demos Supply Chain of Tomorrow). The demo featured half a dozen 200-ml bottles of Jack Daniel’s sitting on a small smart shelf. When the shelf recorded more purchases than the consumption plan had forecast, the smart agent signaled SAP’s Advanced Planner & Optimizer, which could arrange for more Jack Daniel’s to be sent from a distribution center, or even a nearby store.

"The Sapphire demonstration was a little simplistic," says Brian Potter, who spearheaded BiosGroup’s development work for SAP. "The real capability of the agents is based on getting information over time. They begin to learn based on historical information."

The agents use decision trees, cluster analysis and other techniques pioneered by early artificial intelligence systems and widely adopted by data mining and business intelligence software. An agent might, for instance, assign a particular weighting to a supplier’s likelihood of delivering on time. If the supplier is late more often than the agent expects, the weighting is lowered. Agents can continue to adjust so that they can forecast events, allowing retailers and suppliers to avoid problems, instead of just reacting to them.

SAP began looking at agent technology around the same time it was encouraged by Procter & Gamble to join the Auto-ID Center. RFID technology perfectly complements agent technology because agents are only as good as the data they are acting on, and RFID systems can provide far more accurate information than anything currently available. For instance, when unloading a truck with dozens of different items from P&G, a retailer might not scan every bar code. But the tags would automatically be read when the items are transported through a doorway at the back of the store.

BiosGroup sees a world in which agent technology is distributed throughout the supply chain and reacts instantly to information coming from RFID tags and other systems in stores, distribution centers, and factories. An agent running on a PC in a store might, for instance, communicate with an agent running in a supplier’s distribution center. The store agent might examine data from RFID readers on shelves and at the checkout counter and forecasts that the store will run out of Coca-Cola in two days. The DC might not be able to send more Coke right away, so the two agents might negotiate the most suitable time of delivery and price for both parties.

"You clearly need more agile software to react quickly to data you are collecting in real time," says Fred Seibel, BiosGroup’s VP for supply chain technologies. "Intelligent agents are intended to bring that agility to the environment. They really complement the availability of real-time data from RFID tags."
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