September 2009 | Commentary | Supply Chain Perspectives

The Costly Art of Tracking

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On Aug. 4, 2009, Astronaut Heidimarie Stefanyshyn-Piper's $100,000 NASA tool bag dropped out of its heavenly orbit and into the Pacific Ocean. The 30-pound bag, filled with grease guns, trash bags, and a scraper tool, was detected not from a locating signal in the bag, but by sight. Clearly, Boeing's contract with NASA does not provide for an RFID-based tracking system that helps locate tools in a work or liftoff area.

In another instance, the recently "lost" Arctic Sea—a merchant vessel cargo ship that was reported as missing between late July and mid-August 2009—has been found, but details surrounding its two-week disappearance are sketchy. The ship, which was headed for Algeria, emitted its last automatic tracking system signal on July 30. But an automatic tracking system is only useful when operating. The Russian Navy searched for the vessel while reporting that it was attacked twice by pirates who may have been seeking ransom for the crew.

Isn't it odd that we can spot a two-foot by two-foot bag dropping from space, but take more than two weeks to find a ship hundreds of feet long in the Atlantic Ocean?

Not all supply chain tracking is as esoteric as these two examples. But using RFID to track activity within the supply chain can be sticky.

Any examination of the use of RFID in the supply chain reveals those two once-dominant specters: The U.S. Department of Defense (DoD) and Walmart. Their mandates, we assume, have been efforts to better track and inventory a wealth of goods from a multitude of suppliers at a host of distribution centers and warehouses.

The DoD claims good results from its RFID mandates with large, "prime rib" contractors, all of whom are, for the most part, delivering expensive products or materials. These suppliers appear to be able to afford the cost.

Walmart, on the other hand, appears to have succeeded with large customers such as Procter & Gamble, but failed with a large share of small suppliers who can't cough up the necessary investment to provide both active and passive RFID tags, along with all the software, planning, execution, and maintenance such an effort requires.

To add confusion to mystification, Walmart has developed another mandate: the requirement that the products it sells display their carbon content. More than 100,000 Walmart suppliers, most of whom are still playing catch-up on RFID, now have to start accounting for carbon.

Such eco-labeling might well be a good thing. But the cost of creating and maintaining such a comprehensive system becomes an essential factor in its success. That cost also will vary depending on the type of product—a pair of jeans is nowhere as complex in carbon accounting as a high-definition, wide-screen TV. It remains to be seen if there's a synergy between RFID compliance and carbon compliance.

THE PRICE OF VISIBILITY

According to a recent survey by IBM, supply chain visibility was the top concern of 400 executives in 25 countries. Despite that concern, however, the majority of executives said they would not make visibility high priority for one simple reason: the cost of the data.

Having 300,000 facts or 30 million facts as part of a tracking process is almost like having no information at all. To process and understand volumes of data is not only time-consuming, it demands highly intelligent analysis. Not to mention the cost, which will be like a deer fly persistently biting your neck.

That bad? Probably worse.

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