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Part 3: Change Management

Early adopters will begin deploying the Auto-ID Center’s low-cost RFID system next year. Understanding how the technology will change business processes will improve the odds of success.
Sep 23, 2002—Sept. 23, 2002 - During the Internet boom, companies selling applications that let customers and suppliers serve themselves on the Web promised huge returns on investment. Few of the customers that bought and installed those applications ever realized the dramatic savings promised. One reason: employees, customers and suppliers were reluctant to change the way they did things.

Warehouse personnel will need to be retrained
There is a dangerous perception among many that RFID is an almost magical technology. Many people believe that once tags and readers are installed, everything will happen automatically. Instead of scanning a bar code on a pallet, the forklift driver will simply drive through a portal and the RFID tag will be read automatically. Just put smart labels on individual products, and shelves will tell you automatically when stocks are running low. Unfortunately, it isn’t that simple.

The changes RFID will have on business processes are likely to be every bit as dramatic as the changes wrought by the Internet. We are addressing the issue early in this Special Report to emphasize just how critical the issue is. Most of the initial impact will be felt by frontline workers in warehouses and distribution centers and in the stockrooms of retail outlets. But eventually, RFID will change the way companies manufacture, market, and sell goods.

We can’t possibly address all aspects of the long-term changes in one article. The goal of this section of our Special Report Low-Cost RFID: The Way Forward is to highlight some of the cultural issues that are likely to come up as companies begin deploying RFID. Then, we’ll look at some of the medium-term effects on information technology, middle management and ultimately senior managers.

The goal of using RFID in a warehouse or distribution center is to increase efficiency and the accuracy of the data collected by taking people out of the loop. Ideally, an RFID system would be installed, all the old bar code scanners would be thrown away, and workers would just go about their business. The RFID tags would communicate automatically with readers, keeping track of everything that comes and goes. It may be possible to build such a system one day, but it won’t work like that initially.

The members of the Auto-ID Center that have been working on the field test and those who have deployed RFID technology from established vendors say no system is ever 100 percent accurate. That is, every tag isn’t read every time. Some redundancies can be built into the system to compensate for these shortcomings, such as adding additional antennas. But most companies will find it cheaper and more effective to have staff scan a tag manually when it is missed by, say, a portal reader.

The problem gets more complicated as you move from scanning pallets to cases and eventually individual units. As we said in Part 2 of this report, retailers will start by tracking cases and pallets. When pallets are broken down at a retail distribution center into smaller shipments to be sent to stores, workers will have to ensure that the tags on the manufacturers’ pallets coming into the DC have been properly read. Then, they will have to make sure each tag on each case has been read, and that the final pallet has been associated with the correct advance shipment notice. This may not seem like a lot of procedural change, but those who worked in warehouses a decade ago say it took three months or more to train staff to scan bar codes correctly, and people still make mistakes today.
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