RFID BUSINESS PROCESSES
5.1 IMPLEMENTATION APPROACHES
Implementation approaches can be broadly divided into one-dimensional, two-dimensional, and multidimensional, each of which affects business processes of supply chains in some ways. Each group can have variants to suit organizational needs for improving business processes of RFID imple- mentation at the site, package, and network levels.
One scenario for the one-dimensional approach is a customer that relies on suppliers who have no other customers to sell and who have implemented RFID technology in their entire supply chain and distribute the tagged cases and pallets to a limited number of distribution centers. A scenario for the two- dimensional approach is the supplier who deals with one or more customers who mandate RFID implementation in various maturity phases and another customer who does not until a later time. A scenario for the multidimensional approach is a supplier selling their products to multi-customers and getting supplies from other suppliers to complete the business processes of the RFID infrastructure of emerging technologies at the pallet, case, and item levels.
Not all suppliers who provided equipment to the requesting supplier have RFID infrastructure in place completely or partially, or will reach the item level due to the nature of products to be packaged.
Whatever the approach is used, and whatever the complexity of the supplier–customer relationship is, the RFID implementation is seen as a better way of tracking and increasing the visibility of items throughout the supply chains, and improving business processes not otherwise possible with bar-coding technology. Some benefits include:
RFID Business Processes 123 Real-time recovery of mis-shipped items or items that got separated
from shipment while in transit
Reallocation of personnel within the operation of supply chain Elimination of lost sales opportunities due to massive recalls of items
that have not been RFID-tagged
Prevention of theft allowing for faster handling of the items: loading and distributing from a supply chain and replenishing popular items at a retailer’s store
Automated real-time alerts for all exceptions via mobile devices and faster response with corrective actions wirelessly or wired
Better traceability when errors occur in tagging RFID labels to the items, cases, and pallets
RFID implementation requires integration with servers, storage devices, and EAI applications: between units within an organization, and between an originating enterprise and external partners. It also requires on the part of the executives to select carefully which implementation approach to use particularly when they receive mandates from different customers, each requiring different RFID infrastructure whether customers offer RFID equipment or not.
Even though the first mandates do not mean the RFID technology has matured, so much of the success of emerging technological implementa- tions hinges on undertaking the appropriate business process reengineering work. Business processes will become more sophisticated and complex as technology implementations evolve.
Let’s take a look at dual shipping faces of some suppliers as a way of starting the RFID implementation and at two sides of the mandates of providing the suppliers with RFID equipment and requiring the suppliers to provide their own equipment.
5.1.1 Dual Shipping Faces
In response to initial mandates from customers, some suppliers suc- ceeded in RFID implementation and others did not. Some of those who succeeded may have dual shipping faces of their supply chain. One portion of the cases and pallets are to be shipped with RFID tags to large retailers that mandated RFID implementation, and the other portion of the cases and pallets with bar codes are to be shipped to other customers that did not issue the mandates but may do so at a futur e date. Those suppliers with a dual shipping face will eventually extend incrementally the RFID implementation to the remaining cases and pallets to derive benefits and competitive advantage of RFID for all of the shipping com- ponents of the supply chain.
124 RFID in the Supply Chain: A Guide to Selection and Implementation
5.1.2 Two Sides of the Mandates
It would have been far more beneficial if the larger retailers that mandated RFID implementation provided their largest suppliers with RFID equipment, so there would be a greater number of suppliers succeeding in RFID imple- mentation. The British retailer Marks and Spencer just did that, as compared to Wal-Mart and others that issued the mandate that its 100 suppliers provide their own RFID equipment. Marks and Spencer equipped its 200 biggest suppliers with RFID equipment after convincing them that the benefits of implementing the RFID technology would exceed the costs of doing so [1].
What this means is that the suppliers are more receptive to implementing RFID technology when they are provided with equipment than when they are not.
The kinds of equipment the suppliers get depends on the size and type of business the customer is engaged in and also depends on whether the benefits can exceed the costs of RFID implementation. It is very important that customers also provide the suppliers with RFID experts, business pro- cess analysts, and software integrators to assist in implementation and to resolve any technical issues that may arise during pilot studies.
The suppliers who received the mandates and did not initially succeed in implementation lacked time to develop the checklist, and thus did not have much choice in selecting and testing the RFID technology. Under these circumstances, they were forced to adopt a “tag and ship” approach to RFID tagging to keep large retailers happy at the expense of automated business processes and ROIs that they could realize in later years.
These suppliers were in a hurry to implement the RFID technology without regard for improving business processes in a product’s life cycle, from parts assembly to case or pallet delivery. Many of the processes were still done by humans rather than the systems that can automatically track the flow of business processes more efficiently. This means the approach to business processes these suppliers were using in implementing RFID was based on the tag and ship approach rather than the automatic tracking system approach to achieve efficiency and productivity gains in the entire supply chain.
5.1.3 RFID Implementation Checklist
You need to develop a checklist of questions for which you and your staff can provide answers to help you better plan for an RFID implementation.
So, you would be in better shape, for instance, to deal with a retailer that mandates you provide your own equipment and another retailer that pro- vides you with the equipment. The checklist should focus on the impact of the implementation of RFID infrastructure on your enterprisewide organi- zation. You can determine from the answers what business processes need to be improved in order for the implementation to succeed.
Here is a sample checklist that you could use as a guideline.
RFID Business Processes 125
1. What the size and elements of RFID infrastructure are
2. How SCM, ERP, and other EAI applications should integrate with the RFID infrastructure
3. What the means of connecting the EAI applications with the RFID infrastructure are
4. What RFID middleware should be used to accomplish the integration 5. What RFID middleware vendor types should be considered: integra-
tion specialist or major platforms 6. How much stock-outs can be reduced
7. How much administrative errors can be reduced 8. How much the costs of direct labor can be reduced
9. How much higher the sales would be by increasing product avail- ability
10. How much loading time and faster check-out at the distribution center can be reduced
11. How much the costs can be reduced by eliminating or reducing cycle counts
12. How better planning can be accomplished
13. In what ways thefts can be prevented by using RFID 14. How exception management can be accomplished
Other factors in your checklist that you should include are:
1. How long the organization has been in business
2. How complex manufacturing, supply chain, and distribution are 3. How effective change management is
4. What the leadership style is. Examples include participative manage- ment and online collaboration
5. How effective internal controls to comply with various regulations are
6. What skills the RFID personnel should have 7. What training the RFID personnel should have 8. How much the RFID training would be 9. How a data model should be developed
10. How mature the organization is in implementing RFID technology Expand your checklist as needed so you can adequately plan for improvement to business processes to be brought about by RFID technol- ogy. Consider both intangible and tangible benefits. Avoid the temptation to jump directly to reengineering business processes without adequate preparation. To do so will result in longer decision cycles and imple- mentation time, solving the wrong problem, doing over the work, poor risk mitigation, and longer return on investments [3]. Because the RFID
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.