Time to plan for RFID is now

Time to plan for RFID is now

Unless you've been in a cave the last two years, you've heard about radio-frequency identification technology and how it will solve all of the supply-chain industry's problems. The hype of RFID by technology manufacturers, consultants and information technology suppliers is inescapable. Everywhere you turn, there is a conference or an educational course that supposedly is too important to miss.

Most of these conferences provide information on RFID technology and its promise, but that's about all. The feedback from many technology vendors and consulting firms is that RFID is like dealing with excess body weight. Many people need to lose weight, the new diet promises many benefits, and a lot of people are talking about it, but very few people have committed to it. With the exception of few multinational retailers, the Defense Department and their tier-one suppliers, most companies adopted a wait-and-see attitude with RFID.

Some of this attitude reflects human nature's normal resistance to change. But in this case, the cautious approach is not without foundation. The technology is new, the cost is high, and despite the efforts of EPC Global, there is still a glaring lack of global standards.

The situation reminds me of the Internet in 1990s, when many companies started to consider the Internet as a way to reach out to business customers and consumers. The attitudes of businesses on how to handle such a new technology affected their eventual competitive positions a few years later. Companies that reinvented themselves and thought "out of the box" benefited greatly. Those who tried to follow did not. The lessons learned from the Internet boom and bust is that companies must do their homework before embarking in a new direction. Taking a "wait-and-see" attitude without moving forward at all may cause a company to lose market share or go out of business altogether.

The reality of RFID technology is that it is here to stay, and your company must move forward and, at the right time, implement the most suitable solution. Selecting the right technology and optimum time for implementation will result in huge business advantages for those willing to be visionaries.

In preparing for RFID, some critical preparation work is required - for example, identifying parts of your operations that can benefit from implementing RFID technology, and formation of a core team that encompasses all departments of a company. The success of an RFID project will depend primarily on these people. Choose them carefully and empower them to think freely while developing a full understanding of the depth and breadth of your operations. RFID implementation may have multiple purposes such as improving operational efficiency, reduction of cargo-handling labor, better inventory management and improving customer service. Each department can work on quantifying the benefits from implementing such technology.

If you have not already done so, implement an activity-based costing model that will help in dividing the total cost of business processes into their components while remembering which activities can be improved by implementing RFID. You also need to determine the geographical scope of the implementation. This scope and the type of products you ship will determine the type of tag and frequencies needed.

Another key source of expense in any successful RFID implementation is the internal information-technology capability of your company and your business partners. If you have been tracking, say, 10,000 products, and you want to track these products at item levels, your company's computer system will face an exponential increase in demand. That may require additional investment in computing capacity, as well as changes to databases and programs. Quantifying the increase in IT resources you will need is critical to gaining RFID's promised benefits.

Finally, to determine the best time for moving forward with RFID projects, you must check out the competition. Gains from using RFID as a competitive advantage will be of high value - until the competition catches up with you. You have to stay ahead.

Starting now to prepare for RFID will ensure that your organization will not be left behind, or forced to play catch-up with the competition. And regardless of how soon you plan to implement RFID, the planning won't be wasted. Just consider it part of your ongoing business-improvement plan.

Capt. Emad Samwel is president and chief executive of ClearTrans Technologies. He can be reached at (905) 884-8272, or via e-mail at esamwel@cleartrans.com.