Smart thinking means smart business

Manufacturers should be thinking now about how RFID (radio frequency identification) and associated systems and technologies could improve their businesses, comfortable in the knowledge that early adopters have done the technology proving work, discovered the problems and their solutions – and that, in the scheme of things, they're relatively trivial. So says Geoff Barraclough, marketing director with BT Auto-ID Services. He's also one that suggests companies inject some urgency into their thinking, not just because of the mandates from the big retailers and defence agencies, but because of RFID's potential to assist in the all-important move towards adaptive, demand-driven, minimum stock, collaborative supply chains. He makes the point that, while improved forecasting and web-based supply chain systems will remain key, they also require visibility: "and RFID is one potentially very powerful way of getting precisely that." There are some assumptions. Like the belief that emerging standards, both technical and those around data synchronisation (a central register of global RFID codes), as well as middleware, will permit RFID data exchange and recognition within multi-site organisations and throughout supplier networks, including logistics providers and customers. They will have to, but we're not there yet, which is partly why, for example, supply chain implementations in Europe to date have been 'closed loop', not open. His frustration, however, is that people are too hung up on the technology for their own good. "The hardware camp has muddied the waters. Early adopters concerned themselves with the tags, chips, ASIC design. And all that was necessary, but the hardware industry has over-complicated things: they've been doing industry a great disservice by making RFID sound a lot more difficult than it is." Barraclough agrees that tags and hardware need tuning to individual applications, but makes the very good point that while that requires skilled people, they're not expensive. "They're not SAP consultants; they're radio engineers and they get tag problems fixed in days or a week." And he refers to the high profile Woolworths case of RFID tagging dollies at its Swindon distribution centre – an interesting mix of RFID on the transport dollies with barcodes on the tote boxes, all of which enabled automatic auditing of trailer loading. The issues there were complicated by retro-fitting tags: "It wasn't that big a deal in the scheme of things, and as industry moves forward, we'll worry less and less about retro-fitting anyway." Auto-tracking Point made, and yes if we're to profit early, businesses do need to rethink processes in light of what's now possible. "The thinking needs to be around 'if I can generate an ASN [advanced shipping note] automatically, based on what I know went through the door rather than what ERP says should have gone through the door, what's that worth to me?'," he says. "The most important thing today is you've got to look at the business case for complete, accurate, near real time supply chain data – knowing where things are and their status and getting that automatically. "For example, we're working on a project in the construction industry, with RFID tags being attached to plant to prove that it's arrived on site because it's gone past a reader at the site gate. It means the company concerned will be able to start billing with certainty, and without the risk that the customer will complain, because they can prove receipt. You could do that today with hand-held devices, paper, signatures – but it doesn't happen. This is automatic and it does happen." What he and others like him really want is to get us all thinking about how RFID – not necessarily alone, but with existing and more modern back office systems – could solve 'broken business processes'. Which is fine – except it's chicken and egg. If we don't see we've got problems – this is just the way business is done – we're not going to come looking for solutions. For others, however, the numbers don't work."One of the problems," concedes Barrraclough, "is that a lot of the value, at least in EPC RFID, comes from collaboration, and while that's intellectually attractive, it's difficult from a practical point of view. For example, one of the factoids from the Auto ID Centre is that two thirds of the cost of RFID is borne by manufacturers, while one third is borne by the retailers. But retailers get two thirds of the benefit, and manufacturers just one third." So until we reach the five-cent tag – at which point the technology moves into the realms of barcode replacement, and the issue goes away – the business case for manufacturers looking only at their supply chains can be difficult. However, he reckons that although the highest profile adoption of RFID so far has been in closed loop, reusable transport packaging (where the cost of a tag is negligible over the lifetime of the packaging) that could soon change, particularly in pharmaceuticals and aerospace. "Think about the benefit of knowing about materials in a supply chain, not just at the SKU (stock keeping unit) level, but at the item level," he suggests. Those in the throes of the data synchronisation debate now refer to these as GTINs (global trade item numbers), or SGTINs (serialised GTINs). "Serialisation is a very big issue for pharmaceuticals and aerospace, and although there are ways of doing the data capture now, they're typically cumbersome and expensive." It's not just that items in pharmaceuticals and aerospace are high value – although they are. It's the fact that the industry needs to verify provenance, history and so on for a range of technical, commercial and regulatory reasons. Food for thought. And so is thinking beyond the supply network to more internal plant and factory issues. Michael Haley, applications consultant with BP, says there are several interesting applications of RFID that will extend current thinking. He talks, for example, about maintenance and uptime at refineries, chemical plants and rigs. "On a refinery, we'd like to make operators walk-arounds more efficient. If you have intelligent instruments and tagged equipment, they can communicate with operators' handheld devices. You can also get a live audit trail of where the operator is and you can link that to the back office system. Then if the system shows there's maintenance that needs to be done as he's walking past a pump, it can tell him. All that greatly increases efficiency and the reliability of the plant. We're engaged in a lot of that now." We're getting technical, of course, but what would you need to make that viable? "You'd need a wireless LAN infrastructure," he says, "and you can't take that as a given, and nor is it easy. You also need to be able to detect that the operator is near the tag or the equipment: maybe the operator has a tag with him, or his handheld is equipped with GPRS." What about the plant or factory equipment itself? "That's where the fun and games start. Do you need active or passive tags, and what type? We haven't got that far yet. Ideally, if the equipment knows when it was last inspected and what work was recorded, then you don't need much back end processing. But the maintenance system still needs to know what's been done. So then you need to know, has the operator got 100% coverage with the wireless LAN?" Could save $2 billion Back to the cost/benefits, and how does BP measure those? "We know that if we can improve availability of process plant by just 1%, that's equivalent to building one whole new refinery, which is $2bn. That is very significant… We have done some of this manually, and it does result in big improvements: just getting people to work in a different way and do it consistently. New procedures work for a while, but then people start to slip… We need a system that makes it easier for operators to do what needs to be done, and do it more efficiently – when they happen to be at the physical location." What's particularly interesting about these ideas is that they are transferable. Says Haley: "I started in the automotive industry, with Ford. You know, a lot of work done depends on the experience of the operator or technician there at the time. We could improve on that. Just knowing he's looking at the right equipment, by seeing a picture of it downloaded to his device, and then a manual – that could make a very big difference." Some of what Haley suggests can already be done without RFID. "But RFID means you've got more local intelligence. It means you can link to an asset audit trail automatically. And it goes much further than that: when a pump or a motor needs to go offsite [for repair], for example, if you've got an RFID tag you automatically know you're putting the right equipment back in the right place. You can do that now with procedures, but this is automatic." Of course, it makes no sense to divorce the technology and business thinking: knowledge of what's possible, the limits, costs, effort and system implications are essential to doing the numbers. But opening our minds to what could transform aspects of our businesses and operations if we knew where products, assets and resources were, and their dynamic status, and we could 'talk' to them, is how to get moving.