July 2005 | How-To | Ten Tips

Getting ROI from RFID

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With so many companies providing RFID systems, and so many expensive choices, how do you buy smart? Here are 10 tips on selecting an RFID system that provides a return on investment, according to a customer survey by Waltham, Mass.-based OAT Systems Inc., an RFID software and services provider.

1. Get educated. Learn best practices from early adopters. Attend industry events and EPCglobal standards meetings where leading companies openly share their RFID implementation experiences.

2. Build a cross-functional RFID implementation team. Include key members from your sales and marketing and supply chain groups to help identify the business processes that can benefit from RFID.

3. Develop a long-term RFID strategy. You need a solid understanding of RFID's long-term benefits to design the appropriate first steps. Define an ROI pathway that maps out both near-term opportunities to drive benefit, and long-term opportunities to build competitive advantage across the value chain.

4. Select the right SKUs for the initial program. Using the ROI pathway as a guide, select SKUs that will accelerate payback from RFID deployment. Don't select SKUs based solely on RF characteristics or the ease of integrating tagging stations into existing processes.

5. Capture business context. Create an Electronic Product Code manifest linking key business information to RFID data elements. This builds the business context to support the applications that will drive benefit.

6. Create an enterprise-wide view of goods movement and inventory. Integrate trading partners with internal RFID data to create a 'single version of the truth' for all goods moving through the supply chain. ROI depends on your ability to re-create goods movement in the physical world from a noisy, incomplete, error-laden RFID data set captured at many points across the supply chain.

7. Collaborate with partners in the value chain. Share RFID data with trading partners and develop active communication to identify opportunities for jointly driving efficiencies across the value chain—for example, automating shipment verification among trading partners.

8. Share RFID data with internal teams. Provide internal teams with access to enterprise-level RFID data. Long-term success of an RFID rollout requires carefully prioritizing opportunities to modify business processes to drive benefit. This requires insight from internal stakeholders across the business.

9. Avoid custom development. Every business needs to tailor RFID-centric systems to fit its products, business processes, and facilities. Custom development is expensive and difficult to support, and increases long-term total cost of ownership (TCO). Minimizing TCO requires the ability to configure scenarios within a supported platform.

10. Integrate RFID with existing systems. In the long term, enterprise applications such as ERP and CRM will capitalize on the inventory visibility and goods movement that RFID provides. Devise a strategy for integrating the RFID data management platform with existing enterprise systems.

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