SUPPLY CHAIN OVERVIEW
1.1 PARADIGM SHIFT IN PRODUCT TRACEABILITY
1.1.2 Tracking Problems
Several years ago, it was not at all uncommon to encounter problems of tracking certain items as they physically moved from one point to another in the supply chain. Some got lost, stolen, or misplaced during the transport.
Others did not originally get shipped out due to a back order, an order cancellation, or a failure to pass quality inspection. Some got damaged or spoiled during their transport to final destinations. Others were found improperly configured or packaged or to have missing parts or inadequate
6 RFID in the Supply Chain: A Guide to Selection and Implementation
data sensitivity labels when they arrived at a distribution center. A portion of the items lacked the required instructions on handling hazardous items or assembling nonhazardous parts in a complex unified whole. Some were subject to transportation constraints.
Sometimes the items got backlogged, backordered, recalled, or bull- whipped. Items that were cannibalized, discontinued, or returned were not properly recorded in the system. Excess, idle, and duplicate items piled up in the warehouse. Cases of counterfeited items went to security people but were not recorded in any RFID systems, as there were no reporting stan- dards. Items were delivered too late when the customer ordered a similar item from another source that arrived more quickly. Then there were vapor items that did not exist at all. Problems of tracking over-shipped, under- shipped, user-dissatisfied, and wrong items occur almost on a daily basis.
Solving tracking problems without RFID technology requires a great deal of human intervention for one primary reason. Humans are needed to track down manually the information that cannot be added to the bar-coded labels. These labels are limited to product and manufacturer information.
It is not possible at all to add new information to the labels, as the labels are printed once. On the other hand, RFID tags that can be read and written many times can track every movement, such as arrival, reshipment, and departure times at certain locations and on specified dates, and changes in environmental conditions, depending on the circuitry of the tags. The data can be changed as the RFID technology allows new information to be added to EPC in existing tags. The amount of data a tag can read depends on the memory size in the tag, the reading range, and the frequency range for it.
The human intervention needed to resolve tracking problems depends on the complexity of the interfaces among the Enterprise Application Integration (EAI), SCM, SRM, virtualized databases, legacy systems, wrap- systems, and various middle technologies. It is labor intensive to analyze a huge base of information about and in the files and databases, collect a portion of the needed data in a standard format, and analyze data in logging files, just to find out if items have been lost, damaged, or delivered, for example.
It is not possible to track physical movement of items in real-time without RFID technology. There is no way for the bar-coded labels to check with the databases in real-time if the items are delivered in terms of size, weight, kind, type, and other attributes and to send online alerts to the executives on possible order and shipment discrepancy.
If the information could not be found in any system, the alternative is for humans to place phone calls with key people, arrange meetings, or attend conferences locally or nationwide to get viewpoints from other stakeholders in the supply chain on resolving tracking problems. Papers acknowledging the receipt or delivery of items are not always available
Supply Chain Overview 7
when there is no guideline to set the standards for recording and reporting the arrival and shipment of items, cases, and pallets.
The gaps in information are enormous in the RFID-less interconnected supply chains that now operate in the marketplace. Tracking the physical movements cannot keep up with the speed of getting the items to the market in response to the ever-increasing demand for supplies, especially on the national and global levels and with the speed of rapidly moving troops in the battlefields.
So how are some companies using the RFID technology to tackle prob- lems encountered in pre-RFID days? Let’s take a look at how Procter &
Gamble in Spain used RFID technology to solve the problems with physical movements of items in a limited space. In 2001, the company experienced bottlenecks at the loading dock where forklift drivers would run of room on the dock for stacking pallets to be shipped. To make room, pallets were moved twice or production stopped for the loading dock to be cleared. To save time, the company moved the pallets to the trucks from the dock.
However, these pallets were sometimes sent to the customers by mistake when they were supposed to reload back to the dock from the trucks. To increase throughput and eliminate costly mistakes, International Paper developed an RFID-based system to identify the pallets. This has allowed the plant to shift to direct loading, increase the speed of loading, and reduce the number of forklift truck drivers needed.
Although RFID technology better controls inventory loss and discrep- ancy though real-time visual asset tracking of the items, from item packaging in the chain to a customer’s purchase of the items and sometimes beyond the point of sale, it does not account for tracking problems beyond the control of the supply chains, such as a supermarket clerk who, for instance, ordered wrong RFID products and did not properly record their status in an online database. The tags contain a whole lot of data, including how long they have not been used for a specified period of time. To counter these problems, the enterprise systems should consider updating supply information systems or integrating them with other EAI systems.
Yet tracking problems with RFID technology are far fewer than those without RFID technology. Solving problems with tracking RFID-tagged items can be done in real-time requiring less human intervention. More important are how humans interface with the RFID technology infrastruc- ture and associated back-end systems and how humans can report inventory loss and discrepancy.
Also important are RFID Web services providing integration among heterogeneous systems (internal and external) and business-to-business communications, as long as Simple Object Access Protocol (SOAP) is fully interoperable between systems. With RFID Web services, a customer or even a supplier can synchronize data between SAP, PeopleSoft, Oracle,
8 RFID in the Supply Chain: A Guide to Selection and Implementation
Computer Associates, Baan, IBM, Microsoft, a CICS application, and a homegrown COBOL legacy system and the back-end systems for the RFID infrastructure.
To get the benefits of RFID technology, the organization must consider the people—the managers and the workers—behind the technology. This is particularly true for the technology’s impact on organizational behavior, business processes, and ultimately consumer perception of the way the enterprise solves tracking problems and operates its SCM from one end to another.
To protect their image, large enterprises have striven to find better, more cost-effective, and more efficient ways of selecting and implementing RFID technology in supply chains. The enterprises must find ways to incorporate RFID into existing IT and logistics infrastructure without adversely affecting business processes at the enterprise level. Should they find it is necessary to change business processes to implement RFID technology, they must develop initiatives on organizational change management in the entire SCM life cycle, so people can accept the changes while maintaining high work productivity levels..
In September 2004, International Paper signed an agreement with Globe Ranger’s iMotion Edgeware platform for RFID supply chain solutions. The company has recognized the importance of optimizing business processes using process and workflow management to deliver user-defined business rules for immediate visibility and exception alerts of the items being trans- formed and moved from one point to another in the supply chain. Inter- national Paper is number one in its industry for the second year.
Companies that offer Web services products include big names: IBM, Microsoft, Sun Microsystems, and Hewlett-Packard. All have incorporated Web services capabilities into their development tools and server software.
Microsoft has incorporated XML into its .NET architecture. IBM offers Emerging Technologies Toolkit for Web Services and Autonomic Computing. It works with IBM WebSphere SDK for Web Services, WebSphere Application Service AE or AEs, or Apache Tomcat 4.06. HP Openview includes Web services management capabilities such as capturing Web services transactions and actively manages Web services over WSDL/SOAP. Sun offers the Java Web Services Developer Pack.
Shoppers will be able to point their scanner-equipped cell phones at a product and learn about its features from a RFID Web service on the manufacturer’s Web site while they are in the store. Shopping will no longer involve long tedious lines at the check-out counter because items are scanned and billed to shoppers’ preselected personal accounts as they leave the store. And smart shelves will tell manufacturers when to restock items so that consumers will always have access to the things they want to buy.
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