| May
18, 2004 |
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Dan Gilmore
Editor-in-Chief |
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As the first
few of the Wal-Mart 100+ start to ship EPC-tagged goods,
obviously the rest of the world is preparing for when
it's their turn to meet these and other RFID mandates.
As we've noted
before in this column, the good news is that there is
in fact some history and experience that can be helpful
here, particularly from the first wave of "serialized
identification" of pallets and cartons - the "Quick
Response" related requirements that first emerged in
the early 1990s for UCC-128 labeling and advanced ship
notice communications. RFID mandates are directly descended
from this first wave.
I happened to be personally very involved
in that wave as part of a technology vendor. From that
experience, plus recent discussions with a number of
companies beginning RFID tagging programs and many of
the RFID technology providers, SCDigest has put together
a new report on the Keys to RFID Compliance Success.
You can download the report by clicking
here.
The full report,
for which the research was in part sponsored by HighJump
Software (www.highjumpsoftware.com),
provides a lot more detail, but below we summarize ten
keys to compliance success. Some of them are well-understood
principles for any new technology initiative (though
often it's good to have some reminders), while others
are more specific to these RFID mandates.
| 1. |
Fully Understand and Maintain
Customer Compliance Requirements: Sounds
obvious, but with many mandates on the horizon make
sure you build a central repository of requirements,
looking for differences and commonalities, even
if it's just a spreadsheet. Assign someone to own
this repository. |
| 2. |
Map Current Delivery and Operating Flows:
"As is" process mapping is always key,
but many companies are finding they don't currently
well understand all the different delivery paths
that exist within their operations even just to
Wal-Mart. |
| 3. |
Overlay Current Systems that Support Existing
Flows: Understand all the systems that
will be impacted or will require add-on capabilities
to meet the requirements. |
| 4. |
Start with Simple Distribution Center-Based
Scenarios: The reality is almost no company
will initially have enough volume to do tagging
in production, where it will be least expensive.
Variations on "slap and ship" will rule for a while.
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| 5. |
Determine Your Stance on Validation:
This is a significantly overlooked and misunderstood
issue. Do you want to - or need to - validate each
tagged carton as part of the shipping process? It
can cause many problems while often adding little
value. |
| 6. |
Build a Multi-Phased Master Plan that
Includes Tagging in Manufacturing : While
plans (and therefore underlying technology) must
be flexible, companies should still construct a
multi-phased plan that considered migration from
compliance with a single Wal-Mart DC to additional
delivery paths, customers requiring compliance,
and increased volumes. What is the tipping
point where tagging in manufacturing makes sense? The master
plan will also include at least a tentative
schedule for when use of RFID for internal benefit
may make sense. |
| 7. |
Define New Technology Requirements :
Identify the hardware (tags and readers) and software
and integration requirements based on the above.
For most companies in the short to mid-term, this
will include "bolt-on" compliance applications.
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| 8. |
Review Plans With Trading Partners:
Don't, of course, just read the requirements docs
and start shipping. RFID only works if your plans
sync with trading partners' needs, so dialog with
all of them. |
| 9. |
Train and Communicate: Communicate
the requirements and your company's approach broadly
across the organization. Invest significantly in
training to ensure operators and supervisors understand
what is required - and don't overlook the continual
entry of new operators. |
| 10. |
Implement and Measure: You must
develop measurements that define project "success,"
both in terms of meeting requirements and deadlines,
ultimately avoiding penalties, and frankly setting
cost targets for getting the job done. |
I wish it was
just as easy as remembering these key principles. Of
course, this is going to be hard (and expensive), with
many turns and forks in the road, but you may find this
report of some help in your efforts.
I'd be interested
in discussing your plans or questions with any of our
readers, which include thousands of Wal-Mart suppliers.
Just let me know through the feedback link directly
below.
What do you think the keys are to RFID compliance success?
Are the above principles a good guide? What's missing?
Let
us know your thoughts. |
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Traffic
congestion is an increasing issue for transportation
and delivery functions. The Transportation Institute
at Texas A&M recently completed a study that
identified the top five most congested urban area
highways. Can you name these top five cities?
Answer below |
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Reader
feedback from the topics in SupplyChainDigest
is growing every week! Keep the comments coming!
If you would like to keep your identity or company
anonymous, please let us know in your response.
We
had feedback across a wide range of issues last
week, including our feedback of the week from
Ann Zacher of Grainger on our piece two weeks
ago on global trade logistics, who says it's about
time corporations started to understand the importance
and complexity of global logistics. We also had
a few interesting letters on our question last
week about "Is it time for supply chain transformation?"
as well as other topics, including one writer
who thinks our comments on "supply chain transformation"
were too biased towards software as the solution
(we're not, but it's a fair criticism given the
way the piece played out).
For
more complete comments from readers, click
here.
Keep
the dialog going! Give us your thoughts on this
week's Supply Chain topics at:
feedback@scdigest.com.
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View
full article>>
AMR
Research this week announced a new tool that is designed
to help companies evaluate and select systems integrators
to help with RFID projects.
There
is no question that most large systems integrators,
as well as a number of more boutique companies, are
putting substantial resources and frankly "Y2K" type
hopes in terms of consulting and services potential.
In
a report accompanying the service announcement, AMR
notes: "O ur research indicates that there is an emerging
group of Service Providers (SPs) with the requisite
technology, systems integration, and domain expertise
to help. Relying on the right SP speeds time-to-compliance
and keeps Radio Frequency Identification (RFID) initiatives
focused."
There frankly is a bit of a battleground emerging around
how much RFID infrastructure needs to be put into
place now for RFID compliance. Some large systems integrators argue
companies should deploy substantial foundational
tools (large scale reader network management, substantial
systems integration, large EPC data stores, etc.) now
to prepare for widespread RFID adoption
and eventually using the technology for internal
benefit. Others (including some RFID application
vendors) think some of this is overblown and
just slowing down the compliance process.
The
truth, as usual, is "it depends." What we continue to
see at SCDigest is that RFID plans are substantially
influenced by what vendor (systems integrator, hardware
provider, software provider) seems to have the lead
seat at the influence table.
The
report provides rankings for 13 RFID integrators: Accenture,
Atos Origin, BearingPoint, BT Syntegra, Capgemini, Clarkston,
Deloitte, Entegreat, HP, IBM Global Services, Infosys,
Intelligroup, and Unisys. They are evaluated in terms
of characteristics such as domain expertise, financial
strength, referenceability, and a few other factors.
The
report recommends:
•
Look beyond Wal-Mart expertise: other customers, internal
use.
•
Carefully assess how your plans for RFID line up with
the integrator's capabilities: basically same idea from
a slightly different viewpoint.
•
Evaluate the individuals with whom you will be working
with: always true with consultants - it's really the
people on your team that matter.
The
summary of the report and evaluation tool can be found
at the link above. More info is of course available
from AMR. It's a good start. Think it would have been
enhanced by including some of the more "boutique" firms
with strong RFID practices, such as ESYNC, Xterprise,
and others.
Do
most customers need BIG help from RFID integrators?
Is the direction of companies in RFID overly influenced
by which outside vendors have the most influence? Let
us know your thoughts.
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With
environmental concern growing over what to do with obsolete
computers and other electronics, UPS last week announced
a new service for collecting and recycling or refurbishing
old PCs and other electronics for manufacturers of the
equipment and large corporate users. This follows on
the heels of some major OEMs (Dell, HP) announcing their
own recycling programs.
Logistics
professionals should keep tabs on what is going on here.
There is already legislation in place across the EU
that mandates recycling and tracking of PCs through
end of life. While it may take a few more years to get
here, you can bet it's coming - an industry association
estimates that there are 500 million pieces of computer-related
equipment in the U.S. that will become obsolete in the
next five years (assume this includes printers, monitors,
keyboards, etc.). That's a lot of stuff to pile into
landfills just in sheer mass, and there are additional
environmental concerns about some of the materials.
Given
the mixed bag of equipment every large company has,
it is likely that most of the work will be taken on
by third parties like UPS and not the OEMs.
One
question will be who owns some of these "reverse logistics"
processes - will it be the logistics organization, or
someone in IT or asset management? Probably some of
both, but logistics managers should demonstrate some
leadership and keep tabs with developments here.
Do
you expect to see rapid growth in requirements to recycle/track
the end of life of more and more products like PCs?
Should logistics professionals be on the forefront,
or is this an IT/corporate asset management/environmental
office issue? Let us know your thoughts.
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View
full article>>
Are
company executives finally starting to get supply chain?
The Wirthlin Group recently surveyed a large number
of executives attending a recent Harvard Business School
conference (at the behest of UPS), and found a very
high percentage saw a top corporate goal/challenge was
synchronizing the supply chain across their own operations
and those of suppliers and customers.
The
good news is that by a wide margin, corporate execs
said that the "next frontier" of supply chain was improved
synchronization across the entire supply chain, from
supplier to customer, and that optimizing individual
functions would not be enough to be a market leader.
The
bad news: most were not too bullish on where their companies
were right now in terms of that journey. A majority
of the executives (57%) indicated that right now, their
"corporate strategy and operating plans are not
very integrated." Only 2% said they were "very
integrated" today.
The
surveyed executives said their biggest supply chain
problems were:
•
Accurately forecasting demand
•
Blurred lines of responsibility
•
Incomplete information about inventory levels
They
identified the biggest corporate challenges related
to those problems were "internal silos" (38%);
"technology" (28%), and "collaboration with
suppliers and partners" (25%).
Well,
after a decade of supply chain management, maybe we
are finally starting to get it. It of course has to
start at the top, and this survey indicates some positive
evidence in that regard. I think most telling is the
"blurred lines of responsibility comment - are we not
moving inevitably towards a centralized or unified supply
chain function as a "best practice" for more and more
organizations?
Are
executives getting supply chain yet (you may comment
for anonymous attribution, as always.)? Is there any
clear understanding of what a "synchronized" supply
chain is? Let us know your thoughts.
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Global
logistics processes and technology need to catch up
to the systems we have domestically. Integration between
sourcing and logistics is still skeletal at best. While
I agree that International Logisticians are in for quite
a ride, we can't wait!
Finally,
something is happening. Finally, others in the organization
understand our role and importance, even if they still
don't know what we do. Ten to fifteen years ago the
organization couldn't understand why I could not guarantee
delivery of a marine container within a 45-minute window
to the Big 3 auto makers. Now there is some understanding
of the complexity and unpredictability. The requirement
may still be the same but the solution now allows for
the variables of the global supply chain.
Give
me the tension of dealing with new systems and change
over the frustration of ignorance of global logistics
any day!
Amy
Zacher
Grainger
Global Sourcing
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The
simple answer is yes. However, there must first
be some very major changes in the perceived definition
of "transformational supply chain strategy".
This phrase does not mean "new software that will
magically solve all of our problems"! Your
comments are typical of the bias towards the latter,
more popular definition, with a strong orientation toward
"SC Strategy = IT Investment". SC strategy
design that begins with an IT solution then evolves
into network design, is the proverbial "tail wagging
the dog" scenario. Woolworth achieving 14
DOH and 97% store service is unimpressive. CRP/VMI
applications ten years ago utilizing EDI data transfers
and Forecasting/DRP software on PC's achieved 15 DOH
and 99% store service...this is progress??
It
is time for Transformational supply
chain strategic thinking...just keep the software vendors
out of the kitchen until the menu is done. IT
is a productivity enabler, and needs to be brought
into the strategic planning process at the appropriate
time.
Dave
Sandoval
B.U.S.
Systems, Inc.
Trying
to incorporate a "World-Class" supply chain
transformation all at once is like trying to eat the
elephant in one bite. The plan has to be all encompassing
to make certain the individual initiatives can be integrated
into a cohesive supply chain organization, however,
the tactical plan has to have a more surgical implementation.
The first step may not be the one that returns the most
immediate ROI but rather the one that allows the other
steps to take place. As long as there is a master plan
in place the direction and investment decisions can
be made intelligently.
Herb
Minor
ScottTech,
LLC
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No,
I am not surprised they have taken this bold step seriously.
I do not understand why others are not on-board with
this. It is the way of the future, the downsides seem
minimal to me, and why not support it?
E.Quist,
P.Eng. |
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Keep
going with Supply Chain Digest. Even though I am involved
with manufacturing logistics, the retail supply chain
articles are interesting. It is valuable to get a broader
perspective on the industry than you get from only looking
at inbound component parts.
Al
Carr
John
Deere |
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We
are a family owned warehouse operation in Houston, Texas.
It is the first time in over 45 years we have seen our
business go down. It is hard to believe that people
pay high price rent on these new warehouses that have
been built in the past few years.
Our
service rates are now half what they where two years
ago. It seems to me that many companies would be better
off going to a public warehouse.
Gene
Mann
GMI
Mann Warehouses, Inc
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| Q. |
Traffic
congestion is an increasing issue for transportation
and delivery functions. The Transportation Institute
at Texas A&M recently completed a study that
identified the top five most congested urban area
highways. Can you name these top five cities?
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| A. |
In
order: Los Angeles, Washington DC, San Francisco,
Miami and Chicago. (Miami surprised us a little).
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| © Copyright 2004, SupplyChainDigest. All rights reserved. |
