It’s hard to know exactly where we are at in terms of use of RFID in the supply chain.
There’s lots of RFID action generally going on, but many of them for unusual types of applications, not ones that would really be considered core supply chain processes (manufacturing, distribution and logistics).
Supply Chain Digest Says... |
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| Today, most RFID deployments fall under scenario 1. A growing number could be categorized as being in scenario 2 |
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Do a search on RFID news stories this week, and you will find stories on a major construction company testing use of RFID and an aerial drone with a reader to track the inventory of materials in an outdoor yard (supply chain-ish but a little obscure); baggage tracking tests using RFID at London’s Heathrow airport; use of RFID to somehow manage the key duplication process; etc.
Warehouse Management System (WMS) providers say there is almost know activity in using RFID in distribution centers, as least in the US. Reports indicate there may be a little more activity with RFID in DCs in Europe.
Whether item-level RFID is really gaining traction depends on your point of view. There is activity, but outside of Macy's the progress is very slow.
Why is this the situation? In short, because for RFID to penetrate more strongly into the supply chain, it must show more advantages than the bar code technology that has enabled supply chains for decades.
Which leads us to again dust off a simple model SCDigest editor Dan Gilmore developed more than 15 years ago for thinking about the role of RFID in supply chain applications:
1. Basic Bar Code Replacement: In these scenarios, RFID will operate really just like an "electronic bar code." Individual bar code scans are simply replaced with an RFID read. There are many examples where this type of application makes perfect sense and can deliver significant benefits. Example applications include pallet identification (e.g., in receiving or shipping), reading cartons on a conveyor system, pallet putaway, reading work-in-process totes, etc.
The advantage of RFID over bar codes in these scenarios usually relate to improved efficiency from eliminating hand scans by operators, or eliminating problems with bar code read rates, as is often found in high speed carton sortation systems.
The "basic bar code replacement" applications are the easiest to implement because the fundamental business process is the same, and the underlying business software application can often remain exactly, not caring (or knowing) whether the source of the identifier was a bar code or RFID tag.
Using RFID as a basic bar code replacement is the most common form of RFID adoption in supply chain.
2. Enhanced Business Process: In these cases, the basic business process remains the same, but the unique advantages of RFID begin to be more leveraged. For example, RFID might be used to simultaneously read all of the cartons on a pallet as it passes through a portal, or read all of the serial numbers virtually at once as a pallet of goods leaves a production cell.
In these scenarios, the fundamental process remains the same, but is enhanced to drive even greater productivity. A pallet of bar coded goods cannot be read all at once, and if bar codes on some cartons are not accessible, could not even be read manually after the pallet is built.
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 These types of scenarios usually do require some changes to the underlying software, which is unlikely to be developed to handle these types of simultaneous inputs, and to react to errors or misreads.
3. Designing of New Business Processes: In these applications, which are mostly still being envisioned, the underlying business process is fundamentally altered. One good example might be a RFID network in a distribution center that continually monitors all inventory in near real-time. That application isn’t yet found in distribution, but is moving ahead – slowly – at some retailers.
In that scenario, traditional beliefs and processes around traditional physical inventories and cycle counting are completely turned on their heads. That means significant work in designing "as is" and "to be" processes, getting substantially more input and buy-in from multiple parties than the first two scenarios, likely significant changes to underlying software or even adoption of new applications, substantial piloting and testing, etc.
Today, most RFID deployments fall under scenario 1. A growing number could be categorized as being in scenario 2. Most scenario 3 applications are still on the drawing boards - and those are the ones that might be categorized as "disruptive."
But categorizing potential RFID-based applications as falling into which scenario can help companies understand the likely impact on potential return (lowest to highest) and system software work (also lowest to highest).
Do you find this RFID model useful? What would you add? Let us know your thoughts at the Feedback section below.
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