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Part 4: The Importance of Vision

Implementing a successful RFID system will take more than money – it will require vision. Savvy companies will develop a long-term strategy that they can implement step by step.
Oct 07, 2002—Oct. 7, 2002 - In the previous section of this Special Report, we talked about the importance of managing the cultural changes that RFID will bring. Change management starts at the top, and it starts with a vision.

Management has to communicate a plan
There are two basic ways to implement an RFID system. One is to take a problem – the inability to keep track of certain assets – and assess how much it would cost to use RFID to solve that problem. Then, you calculate the return on investment. If the ROI looks good, you run a pilot, and if the pilot is successful, you deploy the system. That's the way most companies do it today. And that's the way most companies will do it even when there are an open standards. But they will get only a fraction of the potential benefits.

To get the full benefits of this powerful technology, companies will have to think strategically. They will have to fundamentally reshape their supply chains. Instead of manufacturers pushing product to retailers through the distribution centers, retailers will provide near-real-time data on consumer demand and pull product from manufacturing. For that to happen companies need to change the way they are organized and the way they run their operations.

Today, most companies run their supply chains from the top down. Software systems are designed to gather information and give senior managers the ability to make forecasts and develop plans to meet demand. It will be a major mind-shift getting generals at the top to delegate authority to field commanders in stores, warehouses and distribution centers so they can respond to conditions on the battlefield. And it will require changes in IT systems that we will explain in a later section of this report.

In order to make this fundamental shift, we believe that it is critical for CEOs and top executives to envision what their operations would look like if they could identify every asset they own and every product they make, move or sell. Then, they need to begin transforming their company's culture and moving step by step towards that vision.

The biggest challenge we see is getting CEOs to understanding that RFID is the future. In 1994, most CEOs had never heard of the Internet. As late as 1997, many were still scoffing at the notion that the Web would be important to their business. And in 1999 and 2000, they were wasting millions on Internet technologies because they feared they would be left behind.

In five to ten years, RFID will be as pervasive in business as the Internet is today. That's because RFID is the only automatic data collection technology that is truly automatic. It provides accurate, real-time data without human intervention. It can have a huge impact on many areas of a business. And while it clearly has limitations today – cost being just one – those limitations are being addressed.
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