What You Don’t Know Can Hurt You

By Mark Roberti

One reason more companies aren't adopting RFID as quickly as possible is that they have no idea just how inefficient they really are.

"If radio frequency identification is so great, why isn't everyone using it?"

That's a question I get asked more often than I'd like to admit—and there are many ways to answer it. One big reason is simply that executives are reluctant to invest in new technologies, having been burned in the past. Another is that RFID does so much that it's often difficult for businesses to get a good understanding of exactly where the benefits are today.

But as I listened to the presenters last week at our RFID in Health Care 2009 Boston event and the MIT Enterprise Forum's workshop, I realized the biggest reason companies aren't aggressively adopting radio frequency identification is simply that they don't know how inefficient they really are and, thus, how much the technology can help them.

Two presenters—Ray Lowe, Providence Health Care Systems' director of ministry support/IS operations, and Kim Carter, UMASS Memorial Medical Center's director of cardiovascular diagnostics and interventional services—said they were once opposed to deploying an RFID system. Both became believers when they saw the results.

When Lowe was first approached about installing an RFID system, he told attendees, his main concerns were that it not come out of the IT budget, and that it not add more devices to the network. But once the system was deployed, he became a believer, because it reduced the amount of time employees spent searching for equipment by an hour and a half per shift, and also reduced shrinkage, improved asset utilization and helped reduce the operating room turnaround time by approximately 50 percent.

"I didn't want [the RFID system]," said Carter, who manages purchases for UMASS, "but now I couldn't live without it. If I were offered a job and they didn't have RFID and didn't plan to get it, I wouldn't take the job."

Carter gave numerous examples of how the system—which enables her to be far more efficient than ever before—has saved the hospital a lot of money. In one case, a nurse asked her to order additional catheters of a specific type. Carter looked in the database and found that there were ten in stock. The nurse said she checked the entire cath lab, however, and that they weren't here. Carter checked the RFID system and found they were in another room. "There are two lessons I learned from this," she said. "One is that RFID works, and the second is that we can't have things in the wrong location."

In another case, a doctor wanted to purchase an expensive piece of medical equipment that she had been renting on an as-needed basis. She conducted an analysis of the RFID data, and found they were only doing five procedures per month. She told the doctor that she could not justify $300,000 for something they would use so infrequently, and told attendees, "Without RFID, I would have had to buy it, and then I would have had to explain to my boss why I spent $300,000 for something we were using only five times a month."

Other presenters talked about the many benefits they achieved. Chris Petter, the University of Kentucky Medical Center's director of materials management, said he reduced his annual spending on equipment rental from more than $400,000 in 2008 to approximately $48,000 in 2009. I would bet that if an RFID vendor had predicted the facility would be able to reduce its spending on rentals by 88 percent, he and his boss would have said, "No way."

And these kinds of stories are not limited to health care. When Wal-Mart began tracking promotional items, the retailer was surprised to learn that in some cases, it was getting promotional items out on the floor only half of the time. And when one paper company began tracking paper rolls in a warehouse, it found that 60 percent of the time, forklift drivers rode around with nothing on the forklift. Ironically, a systems integrator who worked on the project told me that the manager of the facility had said there was no need to track the forklift trucks because the drivers were trained to take the optimal route from pickup to drop-off points.

I sometimes get frustrated because people are reluctant to change the way they do things, or to see RFID's benefits. But I realized this week that the real issue is that they don't understand just how inefficient they are, because they currently have no way to measure many activities. Additionally, they haven't had the opportunity, as I have had, to speak to hundreds of executives at companies that have deployed RFID and achieved far greater efficiencies than they imagined.

RFID Journal will continue to present news stories and case studies of real-life deployments, explaining factually and accurately what RFID can do for companies. It's nice to hear from people like Kim Carter and Ray Lowe, who doubted the technology's value and now are utterly convinced of its benefits. It reassures me that what we at RFID Journal are doing is valuable to companies.

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.