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RFID has been a mainstay in popular imagination for some time now. With the
Department of Defense rolling out a very successful and large implementation
followed by Wal–Mart's expression of faith in the same, RFID got all the
press and CIO attention that it needed. But when it comes to on the ground RFID
implementation, a large number of organizations are still grappling with issues
and are hoping that some day they will bump into the wise caterpillar smoking
his hookah just like Alice did in the rabbit hole.
All the trends emerging out of the RFID triumphs and tribulations have a
common thread. And that is that technology is not very far from being
mainstream. And it's not long before Kevin Kelly's prophecy of 1997 that
every manufactured item will have a flake of silicon in it, comes true. Meta
Group/Gartner estimates that by 2008, 30% of all manufactured goods will have
RFID tags attached to them, and with a growing trend, to over 80% by the end of
2013. Its common knowledge now that the benefits are multi dimensional and sum
of all these advantages far outweighs the seemingly large initial investment.
But the real world challenges are far from tackled. And, therefore, the
technology is far from being mainstream. In a recent interview to a global
business magazine, Rob Carter, CIO, FedEx, said, “RFID might be a
three-fifteen technology.” This was a take on Bill Gates' definition of a
“two-ten technology.” That is, for the first two years, hype reigns,
followed by disappointment, until the day ten years later when people realize
the technology has become embedded in daily life.
There are many a slip between the cup and the lip and looking at them through
the eyes of a large apparel manufacturer makes it easy to understand that the
old principles still apply.
The Challenge
Let's call this apparel company AppCo, which is a large apparel
manufacturer and owner of several brands of clothing lines for men, women and
children across the casual and formal wear segment. Apart from ownership of the
brand and related marketing, the company also operates several distribution
centers. These centers act as the hubs that feed the retail chains through their
hub and spoke model.
AppCo did not want the RFID implementation to be just a one off roll out, but
to bring into its supply chain the efficiencies that were theoretically thought
to be possible, namely, efficient inventory management and control, lowered
levels of stock and fewer stock out situations coupled with simplified
warehousing processes.
 The Solution
AppCo's vision of driving RFID implementation was long term, therefore,
the company opted for the obvious long-term planning approach and ensured a
provision of flexibility to deal with possible inorganic growth opportunities.
As the first step in the long journey, AppCo created an in-house
cross-functional team of experts to study the alternative technology solutions
and providers available in the market. This was undertaken through a mix of
secondary information and calling for vendors to directly educate the team on
their solutions. The team looked at a host of issues other than the technology
and the solutions. These ranged from testing the preparedness of distribution
centers for implementation, identifying the product line that would be among the
first to be tagged and tested.
The next step that followed was by far the most extensive and tedious. It
involved mapping the processes at all its distribution centers for all its
brands across all clothing lines. This was done with a two-pronged objective.
One was to ensure that the final solution roll out would be applicable for one
and all and the second was to ensure that AppCo could retrofit the available
tags, readers and the middleware to create a best in class solution.
The
Learning
The situation in the AppCo case
has been overly simplified to send home a few very critical points |
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| It
is imperative for a company to discern the value of the technology with
respect to the business challenges, and companies should be aware of both
the advantages and the pitfalls associated with any technology. The hype
associated with a technology often blinds decision makers to the pitfalls
and only amplifies the associated benefits. And the only way to understand
all of this is education. AppCo's cross-functional team was a step in
this direction.
2 | Establish
a proof of concept. Real on the ground roll out can be replicated only on
the ground. The proof of concept not only builds organization wide
confidence but also allows for future rollouts to continue through minimal
changes to the existing system.
3 | Spend
as much time and energy as possible to ensure that the RFID network is
highly reliable. AppCo entered into an extensive process mapping exercise
to ensure the best tags, the best readers and all the associated software
and hardware were best in breed.
4
| Look beyond technology.
AppCo looked at the preparedness of distribution centers for
implementation. In translation it means consider the business processes
and also the physical layout of the location. This will help address
issues like selecting most appropriate place for the readers for ease of
inventory movement. |
It was at this juncture that AppCo also considered hiring an implementation
consultant. The consultant suggested the roll out in phases. In the first phase
two brands across one distribution center were RFIDed. Once AppCo smoothened the
issues at its test distribution center, the entire center went the tag way. The
success of the first distribution center was quickly replicated across all the
others. By rolling out the implementation in a staggered manner over a
pre-defined timeline, AppCo lowered the cost of implementation at the last
center by as much as 20%. Added to this was the cost saving that accrued to
AppCo through its ability to predict tag consumption over the long-term. Thus,
by utilizing a volume contract on tags, AppCo was able to save significantly by
simply purchasing tags at the time of consumption. In effect, AppCo created an
optimal inventory level for tags as well.
Mohit Chhabra
maildqindia@cybermedia.co.in Page(s) 1
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