RFID BUSINESS PROCESSES
5.7 RFID BUSINESS PROCESSES STRATEGY
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The historical data, however, can change over the years. Certain data needed in one year would be no longer needed in the following year. Some data that are considered predictive may also be used in the enterprise system business processes layer. This means the two outermost layers may overlap each other. The predictive layer may expand and the enterprise layer may become less or vice versa depending on the predicted emerging technolo- gies, metric tools used, and projected RFID investments and ROIs.
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chain facilities, networks, and applications. This indicates IBM has been using the Adaptive Multi-Layer Business Process Model with layers tailored to their business process components.
5.7.2 Heinz RFID Strategy
Now let’s take a look at Heinz that did not know which vendors to use or which direction to take in implementing RFID. The first step the com- pany undertook to develop a RFID strategy was to hire the IBM Business Consulting Services to determine how to use the technology in the most effective manner to keep the retailers happy. Heinz wanted to make sure its RFID strategy would be in line with the changing market trends while maximizing its potential ROIs.
In response, IBM recommended 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 conditions and conducted a RFID pilot using the application from Heinz.
IBM used various models to compare alternative costs and benefits of each scenario over a period of ten years. Not only ROI was calculated; IBM used other financial tools to compare the costs and benefits of outfitting plants and warehouses with RFID technology and determining the best loading/unloading dock throughputs.
5.7.3 Canus RFID Strategy
Canus, a maker of goat’s milk, has successfully implemented its RFID strat- egy. It has met Wal-Mart’s tagging requirements ahead of schedule by focusing on inventory management, customer relations, and technology innovations. The RFID technology Canus is using temperature monitors of its products in real-time to keep the products from spoiling while in transit due to a sudden breakdown in the vehicle’s thermostat circuitry or the vehicle’s mechanics that affect the circuitry. The deployment uses UHF readers and tags from Alien Technology.
Adjustments had to be made to software and hardware. For instance, the speed of tags affected the quality of input reads into the computers. It found that reading tags at one-second intervals was the optimal speed.
Anything lower 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 make the adjustments to get the RFID readers and the computer to talk to each other happily. This shows how the company used
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an innovative approach to create business processes without breaking the IT budget while realizing ROIs in later years.
In another instance, the Canus docking door allowed only three anten- nas to be set up. It found the third antenna did have enough reading area in order to work properly. One solution was 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.
By making the adjustments to the third antenna and adding the fourth antenna, the company was able to further refine business processes. It did not use outside help to make a business case, develop a strategy, and a roadmap. It knew what to do when it implemented a pilot study. The company also shows it has unknowingly applied Adaptive Multi-Layer Busi- ness Processes model for RFID implementation. The company sends feed- back to a prior layer before proceeding to the next higher one with the Adaptive Multi-Layer Business Process Model. It reached its maturity level when it moved the pilot study to a full scale production.
5.7.4 International Paper RFID Strategy
In September 2004, International Paper initiated an RFID strategy when it signed an agreement with Globe Ranger’s iMotion Edgeware platform for RFID supply chain solutions. The company recognized the importance of optimizing business processes using process and workflow management to deliver user- defined business rules for immediate visibility and exception alerts (display and audio). The customers will take advantage of the RFID technology to trigger reorders automatically when they move a roll of paper onto their own equipment to produce cartons or items with the RFID reading area.
iMotion can correlate RFID data with business processes to create events that can be acted upon by the information systems when the events encounter exceptions. When an event is triggered, it may indicate that a business process needs to be improved. This means business processes can be changed and adapted by sending feedback to the prior steps in RFID implementation according to the Adaptive Multi-Layer Business Process Model.
One advantage of using iMotion’s RFID Visual Device Emulator is that you can simulate how the readers, antenna fields, and tags would behave in the real world. If there is a problem with any of them, adjustments can be made right on the screen, including the tag reading speed.
5.7.5 Kayser-Roth RFID Strategy
Unlike other suppliers who were mandated to implement RFID technology, Kayser-Roth Corp., the maker of legwear and apparel volunteered to meet
146 RFID in the Supply Chain: A Guide to Selection and Implementation
Wal-Mart’s compliance deadline by January 2005. It was not one of Wal-Mart’s 100 largest suppliers. Kayser-Roth wanted to meet the larger retailer’s requirements and ship cases and pallets to it from an RFID-enabled distri- bution center. It contacted IBM to help to set up the first pilot, and select vendors for the project to improve business processes. As IBM’s offering aimed at much larger companies, it adapted its offering and scaled down its prices for the mid-market. Kayser-Roth was the first one to receive mid- market offering from IBM and took advantage of the IBM test center in Gaithersburg, MD.
Like IBM, the company groups business processes into four components:
SCP, SCE, inventory merchandise management, and customer experience but on a smaller scale. It pulls data from the RFID infrastructure by the way of data and process integration into these business processes. The data from the infrastructure is operated on, aggregated, and filtered through process integration into the four components of business processes within the Adaptive Multi-Layer Business Processes Model.
5.7.6 Philips Semiconductors RFID Strategy
Philips Semiconductors engaged IBM Business Consulting Services to begin a trial project in November 2003 to monitor its own chip making, including the manufacture of RFID tags. The project included choosing vendors, reengineering more than 1000 business processes, and the building of custom components, plus training and project management. After a period of ten months, the implementation of the RFID technology was successful.
The implementation included the integration of the IBM RFID Middleware software with legacy warehouse or order management software.
IBM and Philips tagged wafer cases and carton packages with RFID chips at Phillips’ manufacturing site in Taiwan and its distribution center in Hong Kong. IBM fully implemented RFID in its East Fishkill plant, where more than 600 business processes were reengineered and driven by RFID.
Philips also has implemented RFID technology at other manufacturing facil- ities and distribution centers in Asia Pacific, Europe, and the United States.
Let’s take a closer look at how IBM has helped Philips in implementing the RFID technology in each of the plants. First, it divides each project into five stages:
Assess
Plan and design Pilot
Implement Run
In the Assess stage, the project begins with the assessment of a business case, RFID feasibility study, and the roadmap of how RFID execution is.
Then the project proceeds to the next stage of planning and designing an RFID technology infrastructure. This involves setting up a site survey, designing custom RFID components, choosing vendors, reengineering busi- ness processes, and improving new ones.
Then the project moves to the Pilot stage. Here, the requirements are defined; the pilot is built, tested, and monitored. The results are analyzed for further refinements, improvements, and reengineering if necessary.
When the project comes to the Implementation stage, the process has been transformed, the applications have been integrated, and pr oject implementation has been tested with the support for training. Change management is part of the Implementation stage to ensure that the people at Philips will accept the changes and implement them smoothly. When the project reaches the Run stage, it will maintain and provide on-site services for the RFID infrastructure.
The example of a business case that Philips along with IBM developed for the Assess stage does not apply to all companies, as each company offers products different from other companies on which the RFID tags are to be placed. Here is a checklist that IBM recommends in assessing the technology:
1. What technology is currently in use?
2. What is the current level of automation?
3. What are the minimal benefits of moving to RFID?
4. Is the current technology able to handle large volume of real-time data that RFID readers generate?
5. What are the costs of product relative to cost of RFID technology?
6. Will RFID technology realize ROI eventually?
7. Will the company be able to use investments for internal inventory management for future external supply chain applications as the industry adopts RFID?
8. How effective are the current business processes? How much do they need to be reengineered to be more effective in operating the RFID infrastructure?
9. Who should be the outsourcers of the supply chain? And how many?
10. How many steps are involved in manufacturing the product? How are the products handled and stored? How complex are the manu- facturing, handling, and storage requirements?
Now, let’s take a look at why it is very important to choose the right vendors for the RFID implementation project. Here is the checklist.
1. Improve customer service to enhance supply chain visibility and reduce cycle time.
2. Increase working efficiency in SCE, for example, to scan entire car- tons without slowing down operations, and to reduce the incidents of repackaging.
3. Manage better space utilization in real-time to better manage stock and locations.
4. Confirm value of RFID technology.
5. Ensure success of pilot to support customers’ plans to integrate RFID in their supply chain management processes.
There are other reasons as well, tangible and intangible.
5.7.7 Intel RFID Strategy
Intel has taken a different approach from Phillips. It set up the Intel RFID Technology Center in Germany as a showcase for suppliers on integrating SAP NetWeaver components with ERP applications on Intel architectures using Savant Server. As explained in a previous chapter the Savant archi- tecture allows Savant Servers to be placed in allocations where information is needed to be captured. It includes a middleware component that mon- itors and receives the inbound information flow from all active and passive RFID devices. One variation of Savant-compatible middleware solutions is, for example, Oracle Edge Server and SAP components that can filter out redundant and erroneous data a Savant server receives before sending it to ERP applications.
The Intel RFID Technology Center Server Architecture can be quite complex. It starts with the core of RFID-Integration consisting of a Savant server running a SAP GUI that connects via a dial-up to a gateway of RFID readers on one end and to an Intel hub via TCP/IP on the other end. This hub also connects with servers running SAP CRM and other SAP applications and components and including an Intel RFID Technol- ogy Center with SAP router behind a firewall. At the other end of this firewall are notebooks and PDAs with RFID readers. The server that runs SAP R/3 is connected via a hub to a database server that is activated when needed.
Intel has presented a business case RFID on using SAP Netweaver connected to a mySAP ERP system. It starts with SAP CRM application creating a service order upon request for one from a mobile device, such as a laptop or PDA. The order is then checked for availability from an RFID inventory database. SAP NetWeaver transfers purchase orders for spare parts to mobile users.
If a supplier needs to integrate additional sensors such as temperature or air pressure sensors (e.g., checking temperature of packaged chicken parts while in transit), it should consider a sensor-based architecture such as offered by Oracle’s Sensor Based Service Architecture (SBSA). With this architecture, it is possible to add RFID and other sensors without making changes to current applications.
5.7.8 Unilever RFID Strategy
Unilever has found the shape and size of the product can affect the optimal location for tags on cases and pallets. It has placed 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 experience 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.
5.7.9 Major Clothier Retailer RFID Strategy
In the first major field test of RFID for consumer item-level tracking, a major clothing retailer according to Texas Instruments showed how EPC-compli- ant RFID tags produced 99.9 percent inventory tracking accuracy in tests in distribution centers and boosted in-stock sales significantly compared with stores in the area not using RFID.
RFID readers were wired into shelves to alert store staff when any item became out of stock on the shelf so it could be replenished immediately.
Other foreseeable benefits of RFID business processes include assisting POS operations by allowing mass scanning at check-out and instantly processing returns, loss prevention, and loyalty discounts.
5.7.10 Marks and Spencer RFID Strategy
Marks and Spencer, one of Europe’s largest retailers, decided to move from bar codes to reusable RFID smart labels to improve business processes. The company pioneered a very large RFID supply deployment with 3.5 million tags using EPC-compliant TI-RFid™ technology. Fifty chilled food suppliers have been linked to more than 350 stores across the United Kingdom. This way, the company can move perishable refrigerated foods more quickly and accurately through the supply from dispatch and sorting to pick-up and distribution, reading food trays, dollies, and roll cages much faster at each point in the supply chain.