This month's column is contributed by Andrew T. Savitz, director for RFID Solutions and Industry Alliances at webMethods.
Can you identify even the smallest adjustments to organizational processes that significantly reduce your expenses or boost the top line? Are your inventory levels far too excessive? Or are stock outs occurring because you are not shipping appropriate quantities of products to your retail customers? Take advantage of the unprecedented insight enabled by RFID and optimize the way your company does business.
Over the last year, organizations worldwide have been adopting radio frequency identification (RFID) technology. Although RFID has been in use for years, acceptance of this technology has been accelerated in large part to mandates established by some of the world's largest companies, such as Wal-Mart, Target, Tesco and Metro AG, requiring their suppliers to tag items received at their distribution centers. While initially these mandates were largely confined to the retail sector, the uses of RFID span across all industries with standardization by the Department of Defense and growing adoption among companies specializing in pharmaceuticals, industrial manufacturing, aerospace and defense, automotive, travel and transportation.
Initial investments by suppliers clamoring to achieve compliance, for the most part, have entailed taking a "slap-and-ship" approach where passive RFID tags are applied to a small subset of products. Although slap-and-ship approach does minimize initial cost of ownership, RFID pilots are estimated to be in the millions of dollars by analysts at Forrester Research and Deloitte Consulting. As one would expect, these substantial investments in RFID are causing organizations to question how they can show returns, beyond those of maintaining relationships with individual customers.
Smart services are Web services that not only provide standards-based connectivity between applications but which are plugged into a company's infrastructure. They can be monitored, managed and analyzed as single components within larger organizational business processes. In the context of RFID, this means that every time a tag is read, smart services enable unprecedented levels of business insight.
Smart services are componentized "building blocks" that enable communication between hardware, operating environments, applications, legacy systems and data repositories. Based on Web services, smart services take advantage of standards-based interoperability, portability, scalability, reliability, guaranteed delivery and security, and encapsulate isolated process flows, business logic and data transformations. In such a manner, functionality and logic can be generalized and reused within the business, its processes and its departments. By adopting smart services, your company can access up-to-the-minute RFID read information and begin building robust solutions to achieve operational efficiencies never before imaginable.
Smart services span across your entire enterprise, from visibility into a single event through to the business processes associated with your extended value chain.
At the edge, smart services may lie at the bottom of the RFID food chain, connecting directly to RFID readers accessing data immediately as it is scanned. This could be tracking unfinished products as they:
- Make their way across conveyors within the manufacturing plant,
- Leave a company's warehouse and are shipped across the supply chain,
- Are in transit with third-party logistics providers,
- Are received at a customer's distribution center, and
- Are sitting in store shelves to the actual point of sale.
Embedded within your company's business processes, smart services define the mechanism in which RFID data is propagated internally to enterprise applications and legacy systems. For example, by knowing that an order is in transit to a customer, organizations can define logical groupings of smart services to automate the rest of the order management process, such as submitting an advance shipment notice (ASN) via standard business-to-business protocols such as electronic data interchange (EDI).
Value Chain Visibility
Finally, taking RFID data a step further, smart services can extend beyond the four walls of the enterprise by subscribing to RFID information at any point in the value chain - as goods flow between business partners, suppliers, third-party logistics providers and customers. One such application is a "track and trace" service, whereby products can be pinpointed with 100 percent precision as to their location. In doing so, businesses can achieve near-perfect levels of delivery accuracy, while reducing costly and excessive customer chargebacks and returns.
As components of a larger business process framework and network topology, smart services can be monitored and managed as tagged items move throughout their life cycle. In critical event exceptions, RFID information can be leveraged to determine why an event did not occur. For example, while at the surface it may seem that an order never shipped, the problem may in fact be that the warehouse management system was unable to communicate this information due to an unexpected network downtime. Had this exception not been detected, a redundant order may have been shipped or billing information may not have been invoiced in a timely manner.
Furthermore, by being able to manage RFID information with such granularity, organizations can better understand the context of data movement and infer logical next steps in item tracking. Suppose that an item is missed by an RFID reader as it moves across the shop floor. Does that mean you send someone down to locate it? Or do you wait to see if it is recognized as it makes its way to packaging? Gaining visibility with each step of the business process can enable organizations to understand when their operations are running as planned and when corrections need to be made. Organizations can pinpoint and analyze operational weaknesses -bottlenecks on the shop floor, overstocks in customer distribution centers or delays in moving product from stock rooms to store shelves - and optimize these steps to gain superior results.
Finally, taking a top-down approach and establishing key performance indicators -order accuracy, day's sales outstanding and customer retention - can help organizations detect process exceptions before they even occur. If historically you can determine that occurrences such as delayed receipt of materials to your manufacturing plant will in turn impede shipment to your own customer, why not proactively obtain materials from an alternate supplier to fulfill the order on time? Solving these types of business issues can have a critical impact to your organization's top line.
The Time is Now
The question is no longer if RFID will be adopted - but rather when. One of the biggest mistakes you can make is to invest simply to comply, as at some time a tipping point will occur where the costs no longer add up. By implementing smart services, your business can began to realize the unprecedented benefits possible with RFID data and explore the boundless opportunities made available with this technology.
As director for RFID Solutions and Industry Alliances, Andrew T. Savitz is responsible for managing all aspects of webMethods' RFID offering. Savitz has more than 10 years of experience in the software industry. webMethods is a leader in RFID solutions, selected by organizations such as the Department of Defense to integrate RFID data with their information technology systems and resources.
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