Companies cannot afford to ignore radio frequency identification (RFID) in the supply chain. This doesn't mean that every logistics operation should aggressively pursue RFID applications. Like any emerging technology, there is a proper point in time for an organization to adopt the new tool. If you're at that point, here's a plan on how to proceed to the next step.
Build an RFID knowledge base. RFID is not a 'plug-and-play' technology. The first step in moving ahead with RFID is to develop a firm grasp of its components, benefits, challenges and applications. Since the technology is still evolving, this will be an on-going process. The trade and industry media, solution providers, industry organizations and EPCglobal (www.epcglobalinc.org) are good support sources.
Maintain a strategic outlook. Enterprises need to account for RFID in their strategic supply chain planning process. This doesn't mean that every organization needs to have a formal RFID plan. However, any logistics operation should assess RFID's potential impact on its strategic and tactical plans.
Understand that RFID is not just another form of bar coding. Any organization that only seeks to employ RFID in the same manner as bar codes risks missing out on the real benefits that the technology can generate. RFID should be implemented in conjunction with process redesign that leverages the technology's benefits and fully addresses its challenges. Be prepared to look at everything from packaging to facility layout because it can directly affect the success of an RFID rollout.
Recognize that bar codes and RFID will coexist. Perhaps RFID will eventually replace bar codes as the primary identifier in supply chain systems, but it is much more likely that RFID and bar codes will coexist for many years — if not indefinitely. An operation may use RFID for pallet and case movements, but still rely on bar codes for item transactions. A distributor receiving RFID tagged product from larger vendors may still be processing bar coded shipments from smaller suppliers. This dual approach will entail additional processing, hardware and software cost for years to come.
Make the proper investment in the design process. Implementing RFID is not a pure technology project. Because RFID has so many operational, product and systems touch points, it is essential that all impacted areas have representation on the design team. Give careful consideration to project scope so that each potential touch point is adequately addressed. Take the time and effort to thoroughly delineate each prospective benefit and challenge.
Have realistic expectations. RFID is still an evolving technology. In many ways it is still rough around the edges when it comes to supply chain applications. Any logistics operation contemplating an RFID project should be realistic in their assessment of the potential benefits, costs and difficulties. While this may seem obvious, it may not be so easy to follow as momentum for the technology grows. Any operation undertaking an RFID project should be prepared for many challenges.
Look not just at today, but toward tomorrow. RFID is a long-term investment proposition that should be evaluated in the context of the entire supply chain. Wal-Mart and other RFID leaders are not pushing into this new frontier because they simply want to implement flow-through receiving. They see many potential solutions that are not currently viable. They believe that the technology will continue to mature and cost dynamics improve in part because they are pushing the leading edge. Many early adopters do not see any real gain on their initial steps. They are positioning for far greater returns further down the road.
Be prepared to contend with more information. RFID and the EPC Network can provide an abundance of information down to the item level in near real time. While all this information will greatly enhance supply chain visibility and collaboration, it does present significant information systems challenges. Many supply chain operations are already awash with information. RFID promises to grow this data reservoir into an ocean. This growth will stress existing system infrastructures.
