Toward mobile problem-solving

Not too long ago, RFID was a rising star: the technology that promised to transform traditional supply chains into super efficient networks in which products were never lost and customers never had to hear the words, "That item is out of stock."

Today, it seems the star that was RFID is approaching burnout, while technology advances such as service-oriented architecture and mobile computing are garnering more attention.

But RFID still has many proponents, and they contend this technology is quietly proving to be a valuable, versatile tool for boosting supply chain productivity.

"We are still very much in a discovery phase with RFID," says Greg Aimi of Boston-based AMR Research. "It's still such a new technology that as you start to use it, you discover ways of deploying it that you didn't consider initially."

It's not surprising that manufacturers are accidentally discovering new ways of using RFID, since many of them initially adopted the technology solely to satisfy a requirement imposed by an important customer.

Neither is it surprising that the earliest RFID adopters, such as Wal-Mart's largest suppliers, seem to exhibit the most interest in wringing additional value from the RFID infrastructures they now have in place.

"Now these companies are saying, 'If we had more stores, or more retailers with more stores [using RFID], we could actually spread this value throughout the entire supply chain,'" Aimi says.

At the same time, the early adopters are looking for ways to leverage RFID investments to generate internal efficiencies—and many RFID vendors are lining up to help them.

Helping manufacturers and third-party logistics providers that are required to use RFID generate more ROI from their investments "is a key part of our strategy," says Michael Smith, RFID business development manager for LXE, a mobile computing solutions supplier.

The company's RFID focus is on delivering forklift-mounted readers for warehouses and distribution centers. With its products, LXE believes its customers can squeeze costs out of activities in these areas and gain internal efficiencies.

"If you can use RFID on a forklift to read product labels automatically, you take the responsibility for collecting data away from warehouse workers, and allow them to concentrate on moving products," says Smith. "That's what you're really paying them for."

Smith adds that vehicle-mounted mobile readers such as the ones LXE sells offer a number of benefits over fixed readers.

"Fixed readers are a viable play where you have a natural choke point, where all products go in and out," he says. "Initially a lot of people thought dock doors were that natural choke point."

But simply focusing on dock doors, he points out, can limit the effectiveness of an RFID implementation. Forklift-mounted readers can aid in many activities that occur inside the dock doors, such as picking, replenishment, and put-away operations.

"Various industry studies have shown that 40 percent to 50 percent of the costs of a warehouse or distribution center are in picking," Smith says. "The dock door is not the place to have your RFID reader."

Symbol Technologies, which recently launched its own forklift-mounted RFID reader solution, also believes in the importance of mobile readers.

"The industrywide vision articulated more than a year ago was to install fixed readers throughout the facility," says Justin Hotard, director of product management for Symbol's RFID group. "Now we are seeing a shift to mobile readers ... products that are flexible and can be used for a variety of applications."

According to Hotard, mobile readers are ideal not only for warehouse operations, but in manufacturing settings as well. "Especially in cases of heavy manufacturing, mobile readers are attractive because they are inherently more durable," he says.

Mobile readers also are less likely to impact a manufacturer's existing processes.

"If I can do something with a mobile reader that already fits into material-handling equipment—or because it has a small form factor and thereby fits into some existing production equipment—it's a much easier investment case" than having to buy new equipment to accommodate the use of RFID, explains Hotard.

Flexibility also is part of the growing attraction to mobile RFID readers as companies begin to look at RFID as a way to solve very specific business problems.

"It has become much more of a focused discussion," Hotard says of the new attitude about RFID. "I have a specific problem that I want RFID to solve. Can it solve it better than other technology options, and does it pay for itself in that application? If it does, I'll invest."

This approach, combined with lower prices for RFID technology, is in fact leading to greater adoption of the technology by companies that are not even required to use it.

One such company is Crown Equipment, a New Bremen, Ohio-based manufacturer of material handling equipment such as electric forklifts, pallet trucks, and narrow-aisle turret trucks.

Crown first considered implementing RFID when it was looking for a better way to control MRO supplies and tools used during manufacturing operations.

"We constantly needed staff to hand out items out to workers," recalls Brenda Hughes, an equipment buyer and supervisor. "That was not cost-effective. We needed to put these items out on the floor [where workers could access them without assistance]."

But that particular setup meant there would be no control over who was taking what supplies and when—and there would be no way of effectively managing supply costs.

After examining its options, Crown installed the CribMaster Accu-Port from a vendor called WinWare to manage the dispensing of supplies. The Accu-Port resembles the large metal detectors stationed at airport security checkpoints. It's equipped with RFID readers, and typically is stationed in front of the entrance to a company's tool crib. When a worker enters the Accu-Port, an RFID reader scans a tag embedded in an employee's badge. When the worker picks up supplies and walks back through the port, the reader scans both the badge and tags affixed to the supplies being taken—giving Crown a full record of what is being used.

Since adding two of the portals to its operations last June, Crown is saving $250 to $300 a day compared to its previous system. In fact, the system has proven so effective that the manufacturer plans on putting portals in all five of its sites.

Even though RFID is demonstrating value, AMR's Aimi doesn't expect the technology to see widespread use at least until the end of the decade. But he points to several factors that will entice manufacturers to adopt RFID, even if they do so slowly.

The biggest impetus for broader use of RFID, says Aimi, will come from channel masters that will continue pushing suppliers to use the technology. While Wal-Mart has been the most prominent champion of RFID, other large companies—e.g., Boeing, Airbus, Target, and Tesco—are promoting its use as well.

The organization whose RFID mandate is likely to impact the largest number of companies in the near future is the U.S. Department of Defense (DoD), which will require use of RFID applications by an estimated 45,000 to 60,000 companies in its supplier base.

Cotty England is CTO of Odyssey RFID, a services provider specializing in DoD requirements. England believes it will be some time before many DoD suppliers begin blending RFID into their internal operations because most of them currently view the use of RFID as "just another thing they have to do to conduct business with the government."

As time passes, however, England expects many DoD suppliers to start seeking ways of increasing the return on their RFID investment.

"These folks have an immediate problem," England says. "They have to [implement RFID]. But what will happen over time, as RFID is integrated within their facilities, there will come a day—and it may not even be far in the future—where we can start to look at opportunities to use RFID for something more than fulfilling the DoD mandates."

Of course, mandates aren't they only factors pushing greater use of RFID. Aimi says new technology advancements also are driving growth, pointing to the combined use of RFID and sensors as an example.

One company working in this area is enterprise software vendor Oracle. According to Peggy Chen, Oracle's director of product marketing for RFID and sensor-based services, while the company has been offering services that enable the collection of data from sensors for a long time, it only began combining its sensor-based services with RFID data-collection capabilities a few years ago.

Chen believes integrating RFID data with information pulled from devices such as temperature and location sensors can be far more powerful than using RFID technology by itself.

"Wouldn't it be great if we could bring all this data in together—that is, all of the RFID and sensor information pertaining to a particular product and everywhere that it moves—and not just the RFID tag that is denoting its identity, but as it passes through a building knowing its actual location, knowing the temperature, and the condition it's in?" Chen asks. "So really being able to track the status and condition of the object, we can get a much better understanding of our entire operation."

Oracle isn't alone in its quest to further RFID's capabilities. Other vendors are focusing on improving infrastructure components, such as RFID tags.

RFID tags come in two flavors: ultrahigh-frequency (UHF); and high-frequency (HF). While both have their pros and cons, what they had in common—at least until recently—was the fact that they could only store a limited amount of information.

That's changing, says Matt Ream, senior director of RFID for Zebra Technologies, a supplier of bar-code, RFID, and specialty printing solutions.

"Some of the HF tags that we deal with can store up to 8 kilobytes of data," explains Ream. "So if you have an application where you value keeping the data with the product or the item you're trying to track, it makes a lot of sense."

While rapidly changing RFID technology can offer a number of new benefits, there is a downside.

"The breadth of technology for RFID is unbelievable," says Yashpaul Dogra, VP of product management and marketing for InSync Software. InSync's RFID solution focuses on helping organizations collect and manage RFID data.

According to Dogra, as RFID technology continues to evolve, companies may be wary of implementing a solution for fear of adopting the wrong type of technology.

"It's good in a way, but it does have its challenges," concludes Dogra.