Embracing RFID technology drives process improvements

Depending on who you talk to or what you read, radio frequency identification is either going to revolutionize business practices the way the Internet did, or it will simply become another information gathering technology that is routinely integrated into the manufacturing process. Either way, for manufacturers, distributors and retailers alike, the advances in RFID technology (and the conseque...

02/01/2007


Depending on who you talk to or what you read, radio frequency identification is either going to revolutionize business practices the way the Internet did, or it will simply become another information gathering technology that is routinely integrated into the manufacturing process. Either way, for manufacturers, distributors and retailers alike, the advances in RFID technology (and the consequences of these) are becoming increasingly difficult to ignore.


To some, comparisons between RFID and the Internet as an equally revolutionary tool are a bit extreme. By itself, RFID isn’t revolutionary — slapping a tag on a pallet and sending it to a distribution center isn’t going to change the supply chain. Only when RFID is used in tandem with the Internet to access and share product information does the 'revolutionary’ potential of the technology emerge.

Dramatically different than the RFID of years past, today’s technology adheres to industry standards put forth by EPCglobal ( www.epcglobalinc.org ). These standards are key factors in enabling the sharing of a significantly greater amount of information via the Internet for increased visibility and greater efficiency throughout the supply chain. In other words, the data stored on individual tags is no longer restricted to the confines of the building in which it resides.

The far-reaching implications of RFID don’t stop with information sharing; the real return on investment comes when a company uses the data to change and improve processes.

Whether or not you are an RFID believer, there’s no denying that RFID is a catalyst for dramatic change in how goods are manufactured and distributed. The question is, “are you ready to embrace RFID and its full potential?”

RFID in manufacturing

By all accounts, the adoption rate of RFID technology has exceeded expectations. Still, the adoption rate might be even better if it were not for several key inhibitors, which include the development and adoption of clearly defined standards, inferior tag reliability and readability and difficulty in achieving a return on investment.

While EPCglobal and the tag suppliers have been aggressively tackling the first two items, ROI continues to be an elusive target for many. I believe this is due largely because many manufacturers have been looking at RFID as a compliance mandate driven by a few large retailers rather than as an opportunity to embrace the technology as an enabler of process improvements.

By viewing RFID strictly as a compliance issue, manufacturers are overlooking the opportunity to tap into the wealth of information the technology delivers that can be used to make more accurate (and more profitable) business decisions. Receiving information from RFID is one thing, but using it is another. The true rewards from RFID will come, not through the technology itself, but rather from the manufacturer’s ability to filter and capitalize on the data it provides.

It’s my belief that the earlier you apply the RFID tag to an object in the production process, the greater the benefits you will be able to obtain from the information captured. Likewise, the more RFID is applied upstream from the supply chain to manufacturing operations; greater is the value that can be gained by integrating RFID technology into existing information and automation control systems.

Areas of impact in manufacturing

By applying RFID technology on the plant floor, manufacturers can seamlessly integrate the newly captured information into the existing information and control infrastructure, thereby using the RFID tag as a unique identifier and minimizing capital equipment costs and investment risk. On the plant floor, RFID will provide the greatest impact in the areas of inventory visibility, labor efficiency and tracking and genealogy: