RFID BUSINESS PROCESSES
5.2 BUSINESS PROCESS REENGINEERING
126 RFID in the Supply Chain: A Guide to Selection and Implementation
technology continues to evolve, you need to be flexible in reengineering business processes. As enterprise-level business processes consist of pro- cesses on a smaller scale, you need to be able to send feedback from higher- level processes to the lower level, so that the business processes as a whole will continue to improve.
RFID Business Processes 127
of tags to the liquid portion of each product inside the pallet and case will experience more interference from the liquid than the tags placed farther away from the offending material. Packaging reengineering has been used to reduce the amount of interference by finding optimal location of tags on cases and pallets.
We now give two instances of site business process reengineering (Procter
& Gamble and Canus), two instances of package business process reengi- neering (Unilever and Heinz), and network business process reengineering (Gillette and Canus).
5.2.1 Procter & Gamble: Dock Loading Throughput
Let’s take a look at how Procter & Gamble (P&G) in Spain implemented RFID technology to increase dock loading throughput as a way of reengineering and improving site business processes. The problem was that in 2001, P&G, a supplier for Wal-Mart (and others as well) experienced bottlenecks at the loading dock. The forklift drivers ran out of space on the dock for stacking pallets to be shipped. To solve the problem, the workers and drivers made room on the loading dock by stopping production so they could clear the dock.
Because stopping the production often resulted in a waste of time and productivity, the company decided to move twice the pallets. First, the workers moved the pallets to the trucks from the dock, and then reloaded them onto the same dock. The drawback of this solution was that the drivers sometimes became confused and sent these pallets to the customers by mistake instead of reloading them onto the dock from the trucks. The labels had the wrong information, not appropriately marked, or fell off. Productivity and profits declined. Business processes were chaotic and prone to human errors.
To increase throughput and eliminate costly mistakes, P&G developed an RFID-based system to identify the pallets as they are loaded on the dock.
This has allowed the plant to shift loading, increase the speed of loading, and to reduce the number of forklift truck drivers needed. As a result the loading time was reduced by as much as 40 percent by eliminating unnec- essary or erroneous loading. This led to reduction in labor and process times in handling everyday tasks of loading pallets onto and from the dock.
This allowed for better utilization of personnel for loading and unloading operations. Business processes improved.
With more efficient truck and yard management, P&G no longer afforded the costly mistakes of loading the pallets that were sent elsewhere when the workers were supposed to reload them on the dock. Other benefits of the RFID technology are that it immediately sends alerts on extraordinary con- ditions and that reduction of threat results in fewer insurance claims and fewer out-of-stock situations. All these have contributed to the efficiency gains realized through reengineering of existing business processes by eliminating those processes that were not necessary and by enhancing those
128 RFID in the Supply Chain: A Guide to Selection and Implementation
processes that were needed. By reengineering and automating site business processes, P&G succeeded in RFID implementation.
Now that the docking throughput problem has been solved, P&G went further in increasing product visibility into the store sales floor and back- room via software developed by TIBCO and IBM that have engineered separate Inventory Management applications at a live demonstration at the EPCglobal U.S. Conference 2004. These applications were used to query a retailer’s EPC IS to gain product visibility through the supply chain. EPC IS interfaces are Web services that come with encryption and other security measures to protect trading partners.
It is obvious that P&G has benefited from real-time recovery of items that almost went to the wrong customer. Personnel that were found to be in the
“excess” category after the RFID implementation were reallocated to other areas of the supply chain. P&G has gained sales opportunities that were lost during mis-shipments, slow responses to exceptions, and massive recalls that were not necessary when limited real-time recalls would be sufficient. Pre- vention of theft allowed for faster handling of the items. Loading and distrib- uting items, cases, and pallets from a supply chain were done more efficiently.
5.2.2 Canus: Changing Antenna’s Orientation
The Canus docking door allowed only three antennas to be set up. It found the third antenna did have enough reading area in order to work properly.
One solution was to employ site business process reengineering to make adjustments to this antenna. The company changed its orientation and position to provide a greater reading area for the antenna. A fourth antenna has been added to ensure that a tag can be read regardless of its location on the pallet.
5.2.3 Unilever: Changing Tag Placement
Unilever has found the shape and size of the product can affect the optimal location for tags on cases and pallets. It has employed package business process reengineering to place the tags at the top third of the case of dishwashing liquid bottles that taper at the top. This tapering feature of these bottles allows air space at the top of the cases where tags can expe- rience less interference as it is known that tags do not work very well in close proximity to liquids. This has improved business processes of tagging the RFID labels to the product, reducing the incidents of readers not working properly with the tags and picking up the wrong data from the tags due to frequency interference from the liquids.
5.2.4 Heinz: Adapting Tag Requirements
Heinz hired the IBM Business Consulting Services to determine how to use the technology in the most effective manner to keep the retailers happy.
RFID Business Processes 129
Heinz wanted to make sure its RFID strategy would be in line with the changing market trends while maximizing its potential ROIs. IBM recom- mended to Heinz top of the line vendors and the way RFID infrastructure should be built in the entire supply chain, not just a portion of the supply chain. Due to contents of many cans and packages, IBM experimented with different label placements on the product in various environmental condi- tions and conducted a RFID pilot using the application from Heinz to reengineer package business processes.
5.2.5 Gillette Scenario: Misplaced Case
Sometime in 2005, Gillette merged into the family P&G. Both are considered leaders on RFID and global data synchronization. Before the merger Wal-Mart accounted for about 15 percent of sales from P&G. The merger resulted in sales to Wal-Mart for another 15 percent. The merger also raised the issues of merging the automated business processes as P&G and Gillette individually have different sets of automated business processes. Although this is not much of an issue at the present time, it could be later on as RFID technology becomes more sophisticated in changing the way the items are identified, packaged, and distributed to achieve productivity and operational efficiency gains.
Now let’s take a look at Gillette’s premerger demonstration of how it could solve the problem of a misplaced case by redirecting it to the correct dock door for reshipping to the warehouse that ordered the case. The demonstration took place in late September 2004 at the Baltimore Conven- tion Center where the EPCglobal U.S. Conference was held.
Gillette started the demonstration by linking the RFID network to a reader at the convention where the conference was held. The scenario showed how a tagged case of Gillette Venus razor blades got separated from the shipment it was part of, and how the company quickly solved the problem in real-time and business processes.
First it used EPCglobal Network to identify the misplaced case. Second, it showed how a Discovery Workstation responded to a query and displayed the information about the case that the case needs to be reassociated with the purchase order given that the location specified in the query matches a shop-to-location recorded in the manufacturer’s enterprise system. The manufacturer may also return other information such as an expiration date and other business processes. Third, a Gillette warehouse employee used the information to reorder and redirect the case to the correct Gillette dock door for correct shipping. To provide authentication services, Gillette’s Discovery Workstation used the EPCglobal Network Object Name Service (ONS) offered by Verisign.
A misplaced case is not the only possibility of how EPCglobal network can be used to identify it for reshipping. Other possibilities include using the network to identify items that have been sitting idle in a warehouse
130 RFID in the Supply Chain: A Guide to Selection and Implementation
because a customer did not get a notification that they have arrived. In pre- EPCglobal network days, these excess items could not be easily returned to the supplier for redistribution to other customers that needed them. This would not happen with the RFID infrastructure in place. The Discovery Workstation would send an alert in real-time when the items in the ware- house were not distributed within a certain timeframe or when the items were shipped to the wrong warehouse. Instead of the items piling up, eventually crowding the warehouse like sardines, only a few RFID-tagged items would be returned to the supplier for reshipping, thus saving the supplier lost time, lost sales, and lost profits.
Now what if the EPC number has not been properly recorded in the manufacturer’s EPC repository? The response would indicate the item has been stolen, counterfeited, or got lost during the transit. For each response, it recommends what actions to take based on some predefined set of business processes. The actions to take depend who the requester is.
For this reason, it is important to verify the EPC has been properly recorded at periodic times in case a cyber-attacker finds a way to change the EPC number wirelessly. It is also important to encrypt the EPC number.
This must be done at an authorized location and time and by an individual or group with proper credentials.
Let’s suppose the item has been mis-shipped and it is not possible to reassociate with the purchase even if the EPC number has been properly recorded in the manufacturer’s EPC repository. If the requester is a customer (e.g., retailer or warehouse manager) for which the pallet is intended and the manufacturer’s enterprise system matches the ship-to-location in its record with the location specified in the customer’s query, the Discovery Workstation will deliver a response for product reassociation with the purchase order. On the other hand, if the location specified in the query does not correspond to a product distribution area linked to the shop-to-location in the manufacturer’s enterprise system, the Discovery Workstation will respond with a “gray market”
condition and actions to take based on a set of predefined business processes.
If the product is sent to the wrong customer, that the other intended customer who requested a response to the query, the requestor gets a response to take a suggested appropriate action, such as returning the product. The response might contain additional useful information, such as name, contact information, and account number.
Another possible use of the Discovery Workstation is to track certain batches of items that need to be recalled after the manufacturing firm discovers a flaw in one of the raw materials and determines that this would create a potential health hazard [2]. Using the Discovery Workstation, the manufacturer can establish which production batches were affected by the flawed material. Upon discovery, the system generates a report of the affected items and the cases containing the affected items that need to be recalled.
RFID Business Processes 131
The manufacturer checks the reported items or cases against the existing inventories on hand.
If the inventoried items match those items in the report, the manufacturer eliminates them. Then, the manufacturer continues to use the Discovery Workstation to check with the transportation department to determine how many of the remaining items were shipped to distributors, wholesalers, and retailers. For each item or for each case containing the affected items, a logistical path is established. From this, the manufacturer contacts each recipient and recalls the items or cases one by one.
This selective approach is far better than the old approach of recalling all items and all cases containing items, both affected and unaffected, from all recipients who bought the items within a given timeframe. The selective approach also increases the amount of ROIs than would have been possible with the old approach.
5.2.6 Canus: Adjusting Computer Speed
Canus discovered the speed of tags affected the quality of input reads into the computers in a pilot study. The company found that reading tags at one-second intervals was the optimal speed. Anything lower, less than one second, slowed down the computer. The computer could not keep up with the lightning speed of the readers. To get the computer to read below one second, the company would have to buy a more expensive computer with faster CPU and disk speeds. For the pilot study, it felt it could use network business processes to reengineer the adjustments to get the RFID readers and the computer to talk to each other happily. This shows how the com- pany used an innovative approach to create business processes without breaking the IT budget while realizing ROIs in later years.
5.2.7 Software Checklist
Replenishing items at the customer’s store can be done in real-time without having the customer check manually what is needed to be replenished.
Real-time alerts for all exceptions are sent to mobile devices for faster corrective actions. When errors occur, the items or packages can be better traced in less time for less cost than with human’s manual tracing. Suppliers want to reduce out-of-stocks, unsalable products, product loss due to theft, and the costs of management used to move and monitor inventory. Sup- pliers want early return of investment through applications from Wal-Mart, P&G, IBM, Sun, TIBCO, Verisign, and others.
Let’s take a look at the applications from TIBCO and IBM to help you meet the challenge of asking questions in a checklist. You can use the checklist to compare like applications from other vendors in addition to
132 RFID in the Supply Chain: A Guide to Selection and Implementation
IBM and TIBCO and determine which ones offer the flexibility to perform a range of functions and turn information in real-time, to achieve the most improvements in business processes and get earlier return of investments.
Table 5.1 is a suggested checklist along with response examples.
Other questions you want to ask are related to what kind of process flow you need to accomplish a series of tasks both on the screen and behind it.
1. How do you want the initial query screen to appear?
2. How do you want locations and products to be listed?
3. How do you want a manager to select a location?
4. How do you want the application to use EPCGobal to return information about the customer?
5. Do you want the application to automatically specify target quantities based on a predetermined criterion?
6. Does the application allow you to determine what level the inventory should be maintained at specific locations?
7. What types of target quantities of the application can you specify at distribution center, store backroom, store sales floor, and even real- time shelves?
8. Does the application allow you enter custom types of target quantities?
Other questions you should consider in the checklist include:
1. To what extent will the application allow you to tailor the way the information appears on the screen?
2. How well and how fast can the application look up the appropriate EPC information?
3. How well can the application perform with a complex set of queries?
4. What databases are to be used with the application?
5. Does the application provide you with query templates?
6. Can you enter own query specifications?