RFID: To enhance Supply Chain Visibility

Week #6 reading focuses on the IT in Supply Chain Management. Also, in last week the RFID technology grabbed my attention. Supply chain management has never been more challenging today where companies have to be proactive and constantly develop plans to eliminate disruptions from their supply chain. The success of an organization lies in fulfilling customer demand regardless of the situation. This has pose great challenge in front of companies to keep up the demand in variable conditions and survive in the competitive market. However, the strategic application of RFID technology to business problems and leveraging its data has the potential to optimize critical processes, enhance business intelligence, and improve collaboration across industries.

RFID is a Radio Frequency Identification Method used for automatic identification. The RFID environment consists of four elements: RFID chips that contain portable memory and are attached to objects; RFID readers that read the chips; RFID middle-ware that coordinates many RFID readers; and Applications that uses RFID data and are needed to perform functions such as tracking inventory and placing orders. When an RFID tag passes through the field of the RFID reader, it detects the activation signal. That "wakes up" the RFID chip, and it transmits the information on its microchip to be picked up by the reader. RFID has wide applications: Scanning more than one object at a time; tracking shipment and inventory management of parts, devices and containers; Tracing products and help reduce cost of production failures; Metadata Management and Label Management to improve the overall efficiency of the supply chain process.

In 2001, the Airbus Company, the biggest aircraft manufacturer in Europe, spearheaded the "Sup@irworld" program to enhance their delivery punctuality, quality management as well as to reduce their inventories for better buying process coordination. Air bus introduced RFID-technology to increase their overall supply chain transparency and visibility to improve general reactivity. Air bus’s roll out with of RFID had three phases; First phase of supply chain logistics and distribution, which focuses on tracking supplies and reusable shipping containers through supply chain to warehouse and assembly facilities; second phase focuses on Airbus’s global transport, manufacturing and assembly operations such as tracking aircraft parts across manufacturing facilities, automating work order confirmation; Third phase extends RFID into in-service and support operations. Thus, RFID enabled Airbus to gain Visibility, Process benefits and Business benefits.

RFID is proven to be one of the best technologies, which can be used the supply chain management. However, the initial setup cost is too high to incorporate it in any industry along with establishing justifiable ROI. Changing to RFID infrastructure includes not only the tags, but also the learning curve, labor costs, software and systems integration costs, process redesign and organizational impacts. Several experts say that RFID is a costly solution that still lacks standardization. It can be very challenging to manage multiple readers and hardware, especially across many facilities. Environmental factor is also major issue. So it is still a question whether RFID would dominate SCM area? I think, what is needed is the initiation of the learning process to determine how the technology can bring about business improvements and how a reasonable ROI can be achieved with RFID

References:

1. http://www.tegoinc.com/pdfs/news/airbuscasestudy0310.pdf
2. http://www.vilant.com/wp-content/themes/vilant2013/img/SupplyChain-banner.jpg
3. http://www.isb.edu/isbinsight/Insight_June07/ISBInsight_June2007.pdf
4. http://www.iasms.in/pdf/nationalseminar.pdf
5. Radio Frequency Identification by Austin Rutkowski, Naomi Shaw, Jenelle Meeker, and Maggie Kwong