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RFID in Supply Chain Environment (Part 2)

Wednesday, November 28, 2007

by Jack Tay

There is little question that RFID is fast becoming a critical component in the new world of supply chain management, especially in fast growing Asian economies. This is especially so for Asian companies that do import and export business with large Western nations such as the United States and greater Europe. However, even as RFID is necessary, it is important to determine carefully just what needs to be done, and who can help make RFID a success within the company.

When the crucial steps of an RFID implementation project have been carefully integrated, the reliability of system performance can be guaranteed. A dynamic "feedback loop" approach is essential to any ability to provide such guarantees. RFID-services vendors with the requisite experience and expertise to take this approach will have no difficulty offering a performance guarantee with the systems they implement.

Automotive manufacturing and RFID

Increasingly, Asia Pacific is fast becoming the new automotive region, given that manufacturing and labor costs are far lower than the United States and Europe. For example, region-specific models of Chevrolet are manufactured in South Korea (such as the Optra), while Volkswagen and Skoda now has shared manufacturing in China, catering specifically to the mainland Chinese market with the popular VW Passat and Skoda Octavia (and now Superb) models. Even mainstream Japanese car manufacturers are relocating some of their manufacturing of region-specific models (such as Altis and Corolla) to lower-cost locations such as Thailand.

Some manufacturers have used RFID to keep track of the most critical (and sometimes most expensive) item of a car, the engine block. RFID tagging can help reduce misplaced engines (which must be scrapped due to the sensitivity of such products). It is possible that RFID tagging can become important in keeping track of major parts within a car, including the drivetrain assembly, in the near future.

Recommended approach to implementing RFID

Before implementing RFID, it is important to conduct a feasibility analysis of the supply chain environment. Setting out to do a conceptual model, with the right definitions, you should then analyze the process within your entire supply chain (all the way to your ultimate customer and include all stakeholders).

After creating a budget with an invitation to your vendor for demonstrations and any small scale tests, you need to conduct an analysis of your sites, and then have some of your personnels to gauge the usability of the RFID system.

You should attempt to launch your RFID installation in phases, with a test or pilot site, running for perhaps a reasonable length of time, to iron out any kinks in the system. Once you are assured that it will work enterprise-wide, then roll out the system to the entire site. It is also important to re-visit every step of this process of implementation, to ensure that you can improve or tweak the system as necessary.

Outsourcing to a partner

In an ideal scenario, or at least a very small implementation, it may be possible to roll out your RFID system entirely by your in-house team. However, there may be a wisdom to outsource the implementation to a professional services partner, to reduce possible problems during implementation, and also to create accountability and reduce your own exposure to risk. Why is it so?

Researchers have advised that unless you happen to be a data integration specialist, it is entirely possible that your information architecture will break, or affect the corporate ROI.

RF is also an esoteric science whereby specialized skills may be needed to diagnose the RF environment for a site, and to install readers and testing tag performance.

And since RFID expertise is usually not in-house, it may require an outside professional to ensure a solid hardware configuration that will provide better reliability and performance. Nothing beats real world deployment experience, and so for good professional services partners, they would bring to the table real experience that can solve deployment problems, even for pilot runs. Of course, it is important to ensure that your potential partner does indeed have such real world experience, and not simply a portfolio of clients who were "sold" the RFID hardware and other third-party software.

The writer is the Regional Marketing Manager of Intermec Asia Pacific.

Send your comments and discuss.

Labels: business, china, project, rfid, scm, tag, technology, tracking