Realism leads to benefits

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The call to companies to jump onto the RFID bandwagon is having a dual impact on the forward march of this powerful technology. For those companies with high expectations and short attention spans, the results from initial trials have not been as dramatic as they had been led to believe were achievable. However, for those who recognise that RFID is not easy and takes both time and resources, early trials are demonstrating that the journey is more than worth while. Retailers, suppliers, IT vendors and other business partners, both in the US and Europe are working closely together and with industry bodies such as EPCglobal, to get the job done. There is also a growing spirit of realism attached to RFID pilots which is allowing partners to tease out greater than anticipated benefits, and the emergence of platforms that will enable much more ambitious projects to be put in place for the future. These pilots are throwing up a wealth of best practice from which the whole industry can benefit – retailers, suppliers and their customers.

Notably, these benefits are end-to-end track and trace of products from suppliers through the supply chain to the end consumer; fraud prevention; refunds and returns management; recycling and safe disposal. All of which throws up valuable data that will enable key retail and CPG processes to be further improved, notably, production planning, efficient transport, replenishment, new product introductions. These produce further benefits such as higher sales through better on-shelf availability and more efficient use of in the supply chain.

Typical results from EPCglobal so far talk of a 10-15% increase in productivity in depot receiving, stock locating and new product introductions; 17% labour reduction; 11-18% reduction in theft; and a 9-14% reduction in out-of-stocks. Benefits of this calibre and size more than justify the time and effort involved. And when RFID is a true end-to-end system with total interconnection across the whole supply chain. The areas that companies need to work on are primarily structural, which can be a challenge where multiple networks are in operation with limited or no connection between them. Using a converged IP network, which is non-proprietary, interoperable and uses open standards, means that RFID can then be integrated without upgrading remote applications such as forklifts or handheld terminals.

As firms move towards RFID and adopt other technologies such as IP telephony on the way, network capacity and scalability become issues as the volume, range and complexity of data increases dramatically. The network will have to operate more intelligently by filtering a huge amount of non-essential RFID data as close to the source as possible so that it is invisible to applications and will not overwhelm the system. It will also have to handle more reading devices, as tracking and tracing applications are deployed all along the supply chain.

Existing networks can be tuned to handle pilot or closed-loop RFID deployments but companies will want to know that the network infrastructure they have now can be developed over time without the need for expensive replacement that will add excessively to the cost of subsequent roll outs. Firms can minimise their total cost of ownership by selecting networks that provide this interoperability in a converged network that supports voice, video, and data as well as RFID traffic.

Fortunately, much of the requisite infrastructure to implement pilots already exists, particularly in highly networked businesses. The goal now is for pilot partners to set realistic goals, fix deadlines and measure results. Trials must have clear objectives, identified costs and demand on resources, and expected minimum benefits. The partners must also work closely with standards bodies, such as EPCglobal, and adhere to initiatives such as the Global Commerce Initiative to ensure that what is put in place today, will form the firm foundation for later roll-outs.

Kaan Terzioglu works for Cisco Systems.
Tel: 020 8824 1000.

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