December 2005 | Commentary | Supply Chain Technology

Identifying Products: It's Not Just About RFID

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Not all issues surrounding proper identification of products involve RFID. Companies must address some core challenges to reap the maximum benefits of product identification and visibility.

In this age of RFID research, development, hype, good works, pilots, case studies, claims, ever-evolving standards, and the force of the big gorillas—super-retailer Wal-Mart and the Department of Defense—it's hard to accept that identifying products and pallets is not solely an RFID issue.

In fact, there is little immediate opportunity for any return on investment from RFID, according to AMR Research's recent study, although the analyst firm does suggest the continued need for large-scale pilots.

AMR's report has not discouraged the believers. Believers are believers; ask anyone who has seen a UFO. The fact that you can see what they cannot is labeled as your failure.

RFID Explorers

I do not wish to demean those companies—Alien Technology, Symbol Technologies, Intermec, Zebra, and Savi, to name but a few—that are making great contributions to RFID technology and application.

And RFID vendors that are implementing initial installations should receive another medal in addition to those already awarded by Wal-Mart. These companies are the explorers.

The issues involving successfully identifying parts, products, packages, cases, crates, and pallets are not just RFID-, supply chain- or logistics-centric. They are core problems that companies must address to increase the contribution successful supply chain management can make to their business.

These challenges include:

Global trade security issues. Like a Kansas tornado, security issues loom ominously and grow bigger rather than smaller. No one wants to pass on parts or products—or the boxes they come in—not knowing what they contain.

Knowing what the boxes contain, and having visibility to them, is no easy task. It starts with reliable suppliers—manufacturers, shippers, wholesalers. Cultivating reliable suppliers involves trust and a high degree of collaborating about processes. It also means sharing information.

Visibility continues through applying some form of security technology—seals, for instance, or identification technology such as bar codes. At this level, costs can easily escalate. Companies have to use their best judgement when deciding on the level of security they need.

The ideal solution is a set of customized and nested technologies that manufacturers, shippers, and other parties can issue automatically, as needed.

These technologies might fall within the part-to-pallet panorama: bar codes and RFID at various functional levels; then networks of sensors and monitors; finally security systems that require a level of radiological scanning. As companies build these technology nests, their costs surely will rise. But their sense of security will increase as well.

When it comes to supply chain security, we don't need more seals; we need more clear thinking. We need a perspective of the entire supply chain—not just a box, a container, or its transportation "experience" on trucks, planes, or railroads. Business Intelligence software may become critical for this job.

Insurance issues. Your company's insurance files should have a sign hanging over them saying, "Remember Katrina, Rita, and all other storms."

If you can't find your shipments, or the information related to the shipments, you have a problem. A supply chain depends upon knowing the location of both. Catastrophes take away one or the other, or both.

New Orleans did not only suffer infrastructure and human damage. It suffered loss of goods, and the records of those goods. Paper records were particularly vulnerable. How can you fill out insurance forms if you can't provide evidence of either the goods or the paper trail—contracts, specifications, orders, sales, taxes—associated with the goods? Reverse paper trail searches may not do the job.

Compliance and customs issues. As trade between companies and nations increases, and tightened security becomes incumbent upon those nations, tax and fiscal responsibility become paramount factors. That's why finding a good broker becomes essential to good business.

Global customs organizations demand strict compliance with complex security regulations, and these are not about to go away, in fact, their complexity will most likely be compounded.

Tracking your freight worldwide is more crucial than ever. If you can't track it, you no longer own it, yet you may be held responsible for it. A trusted customs broker, 3PL, or other freight intermediary can help keep you on track.

Identifying Your Needs

In this increasingly complex, digital world, identifying and tracking products as they move through the global supply chain is of paramount importance. Successful product identification and visibility depends on these factors:

  • Identifying products starting from the original source. Your products should be identified at the factory, or at least before they leave the product originator's area of control—its warehouse or distribution center, for example.
  • Collaboration among partners. Suppliers, third-party logistics providers, shippers, customs and other government agencies, as well as distributors, wholesalers, and retailers have to move toward sharing data from secured databases. They also should agree on the conditions and specifications of transactions. Sharing data can be a competitive weapon.
  • Accepting international standards. This is particularly true for China. We may have all the standards we want, but if this huge and ever-growing trading 'partner' does not play ball, the game is specious. epcGlobal standards are a good case in point. The world is too complex to sustain standards that we don't live up to, and extend in rational and democratic ways.
  • Turning supply chain visibility and identification into profit. Visibility and identification must translate into return on investment and return on assets. In some instances, companies can accomplish this simply by increasing inventory turns, although 'simply' may be the wrong word.
  • Absorbing the up-front cost of technologies such as RFID. It may be that companies have to bear these costs despite the lack of quick return on investment.

It is human nature to live from enthusiasm to enthusiasm. At the moment, RFID is the biggest enthusiasm. RFID technology, properly applied, may make enormous inroads on the issues and needs surrounding identification and visibility.

And if not RFID, what? Has anyone come up with a new enthusiasm yet?

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