RFID: a business case

There are a number of factors that must be looked at whenever a company is considering implementing RFID technology. It is not an off-the-shelf, one-size-fits-all product; nor is it a direct replacement for barcodes. However, RFID technology, coupled with the right solution provider, can give substantial returns on investment.

Solution providers cannot afford to just sell systems; they must understand process improvement and how RFID will benefit its client’s business, as well as its own. It is vital to ensure that whatever system is proposed integrates with the system already in place.

Case studies
A large building materials manufacturer recently faced a problem concerning how to find its valuable, bulky materials within the yards at its plant. The existing system had several drawbacks, leading to:

Shipping errors
Difficulty locating products
Consequential payments for wrong shipments
Demurrage costs being wrongly estimated
Inconsistent billing
HR and health and safety issues from stress associated with unnecessary forklift driving
No cross-checking of third-party transport company bills
Quality issues

This list is typical of the types of problems that can occur where a proper material tracking system has not been installed. With expert advice, the correct technology and changes in processes, these problems can be solved relatively painlessly. It helps if the solution provider can show the ROI of any system they intend to implement. In this case the solution proposed was a combination active and passive RFID system with an ROI conservatively estimated
at 18 months.

In another case, a vendor wanted to know more accurately when a product arrived at a customer’s premises in order to ensure that they were meeting delivery time commitments. They also wanted to use RFID with their customers to advertise to the customer an RFID product made by another part of the group. The solution involved putting RFID labels on the customer-order pallets as they left the plant, recording the time and then reading the tags as they entered the customer’s premises, transmitting the information back to their ERP system. A mobile computer system ensured that all that was required at the customer’s premises was power, making it non-invasive.

A hardware wholesaler with about 5,000 SKUs supplying over 100 retailers recently wanted to put in a materials track and trace system for reasons similar to the building-materials manufacturer case study above. However, in this case the solution provider (Picosoft) recommended a barcode-based system that was RFID-ready as the initial implementation. Combining barcodes with RFID tags enables the best of both technologies to be used
as required.

RFID vs barcodes
One common question that often arises whenever a discussion of RFID and barcodes occurs is: ‘Whatis the advantage of RFID over barcodes?’

However, the question should instead be: ‘In which environments is RFID more effective and efficient than barcodes, and vice versa?’ One answer is that RFID is more effective and efficient in unstructured and/or uncontrolled environments, while barcodes are better suited for controlled environments.

An uncontrolled environment is one where the orientation of the data carrier and/or RFID/barcode reader cannot be controlled to optimise system performance. In a controlled or structured environment, however, one has the ability to control the orientation of the data carrier and/or the reader. Usually, in a controlled environment barcode readers work just as effectively as RFID readers. Some examples of uncontrolled environments include airline baggage systems, military operations, warehouses and supply chains from the point where a product leaves a manufacturer through to a retailer’s warehouse.

With the mix and seasonal nature of products in a typical hardware warehouse or retail store, they would therefore seem prime candidates for an RFID system. However, the mix of materials used in a hardware environment (metal, plastic, wood) means that tag choice is critical. And for this there is no substitute for expert advice.

Is there a business case for RFID? The answer is yes – with the right solution provider, RFID can benefit just about every industry, from a paper clip manufacturer to a fighter aircraft producer.

Company profile
Picosoft is a provider of RFID solutions. From its origins in Ireland, the company has quickly expanded into Europe, with offices in the UK and Poland, and will soon be opening its first office in Dublin, Ohio. Picosoft's expertise ranges from Lean Sigma (master black belt level) to wireless communications technology, offering total customer solution and return on investment.

For more information, visit: www.picosoft.ie.

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