Actualidad -- Mayo 24, 2006
BOOK REVIEW: MAKING THE MOST OF RFID
To answer these questions, Charles Poirier, a partner in CSC's Consulting Group, and Duncan McCollum, a principal in CSC's Supply Chain Practice, have written RFID Strategic Implementation and ROI: A Practical Roadmap to Success. In the book, the authors demystify RFID issues and present a roadmap for implementation by manufacturers, distributors, retailers and suppliers.
Understanding RFID
RFID has suffered from dubious information that singles out privacy issues and says there is little return on investment, Poirier claims. "This misinformation leads people to resist the technology when it has little to do with privacy and more to do with saving costs, improving cycle times and accurately matching supply with demand," he says. "Companies also tend to believe RFID is only for complying with large, demanding customers, such as Wal-Mart and the U.S. Department of Defense (DoD), when there is a real payback for almost all firms in terms of lower handling costs, better yields and shorter lead times."
The book points out two principal benefits of RFID driving its adoption in the marketplace. The first is a reduction in supply chain costs, especially labor. Retailers are looking to "reduce the need for checking and stocking personnel [and] eliminate out-of-stock conditions." The DoD is implementing a system that would track and direct $80 billion or more in supplies all over the world. Its goal was to avoid the cost of obsolescence, prevent redundant ordering and avoid unnecessary transportation. Moreover, the DoD wanted to ensure the reallocation of supplies not used by the mission they were sent to support. According to the book, "The DoD did not want another situation like that which followed Desert Storm, when a huge cache of supplies was no longer needed in that theater and seemed to disappear."
The second motivating benefit of RFID is security. The book reads, "The effects of 9/11 are just one more force behind the need for greater security and protection from terrorism. When the desired asset security solutions are combined with the need for reductions in shrinkage, combating counterfeiting, and better safety, this area becomes a prime driver behind RFID." RFID is already a key security feature at ports of entry into the United States, and future applications could virtually eliminate theft and counterfeit products. The pharmaceutical industry is pursuing RFID to eliminate fake drugs, ensure the right drugs end up in the hands of consumers, and facilitate product recalls and traceability. In fact, consumers are the ultimate beneficiaries of RFID in the forms of better security and lower prices, which occur as retailers pass on some of their savings.
The book describes RFID technology, details its potential applications and challenges, and illustrates how to set up a pilot system and perform a cost-benefit analysis. Through case studies and interviews, it taps the thinking of business leaders and shows how market forces should be evaluated and incorporated into a strategic implementation plan.
RFID was developed during World War II to help British anti-aircraft defenses distinguish returning allied bombers from attacking enemy bombers. Today, it is mostly used to trace products from production to consumption. It consists of an RFID tag, a microchip attached to an antenna, and an RFID reader that tracks the signal from the tag, and software that sorts data sent by thousands or millions of tags as the goods to which they are attached move through the supply chain.
Practical RFID advice
Poirier and McCollum warn against unrealistic expectations of RFID capabilities and price. Such hype leads to implementation errors, missed deadlines, cost overruns and disappointment. The book points out that the most common mistake people make in applying RFID is not developing an adequate business case. Companies often start on too large a scale and focus on the physics of implementation before considering the full impact on business processes and the total cost of execution. "Companies should build the business case first, create an internal cross-functional team with a clear project manager, and keep their projects small and manageable," says McCollum.
Poirier recommends carefully planned pilot tests to match RFID components with specific needs and prove the validity of the system. "The best way to avoid mistakes is to plan a test with the expertise of a company like CSC, and to include some of your supply chain partners," says Poirier.
About the authors
Duncan McCollum, a principal in CSC's Supply Chain Practice, has considerable experience in consulting, including the evaluation and implementation of RFID technology to meet the mandates Wal-Mart and the DoD set for their suppliers. Charles Poirier, a partner in CSC's Consulting Group, is a best-selling author and recognized authority on supply chain management, e-business techniques and the collaborative use of technology around the world. He has written 11 business books, and his twelfth, The Wall Street Diet: Making Your Business Lean and Healthy, is due out in May 2006.
Related Information:
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