Beyond implementation: integrating RFID in the aerospace industry.
Lockheed Martin began experimenting with RFID in early 2000, in support of F-35's affordability initiative, and immediately saw the technology's potential to act as an enablers similar to bar coding. Denton Clark, Auto Identification Technology manager at Lockheed Martin's Maritime Systems & Sensors business, credits the Department of Defense initiative with helping speed up the RFID technology development process and getting the technology out of the laboratory and into the hands of industry. Although Lockheed has been using the technology since 2002 to track the movement of people in and out of their facilities, they began their first supply chain implementation in March of 2004. Since then, they have planned two major pre-implementation programs in their maritime and aeronautics sectors. According to Clark, the aeronautics pilot will be used on F/A-22 Material Operations supply chain and in the Maritime Systems and Sensors (MS2) Worldwide Enterprise Depot Operations Center (WEDOC) located in Moorestown, NJ, to track repair parts for the Aegis Navy. This pilot will use first generation technology (Gen1). The second pilot, based in Marietta, GA, will use Gen2 and will provide an opportunity to test the newest technology and develop an efficient transition between Gen1 and Gen2. "Our goal [in these pilots] is to take two steps back, from production and inventory to receiving, and process the tags as they come in," says Clark.
Despite the many RFID developments at Lockheed Martin, Clark says there are three primary objectives underlying their implementation efforts:
1. Greater velocity, or the speed at which goods are moved through the supply chain.
2. More efficient use of labor through passive data collection.
3. Cost reduction.
To achieve these objectives, Clark notes that implementation managers must take a comprehensive look at their process: "Many manufacturers have spent millions of dollars making their production lines state-of-the-art, but they haven't considered the overall structure." Although "slap-and-ship" might seem like an easy shortcut to compliance, Clark says Lockheed Martin is using the technology as an opportunity to review the entire process of a given operation. "Prior to RFID implementation we would hold a value stream mapping session. This is a 3-4 day session in which we break down each process of an operation, from receiving, to kitting and production to see how RFID fits into the existing process. This process was invaluable to us. As we began to implement RFID, we planned to transition in stages so that both the existing processes and the new RFID process run in parallel. We did this to ensure that there would be minimal disruption to the manufacturing and supply chain processes."
One of the primary challenges facing Clark's team is determining how to integrate RFID into the existing IT infrastructure without creating vulnerabilities or tracking unnecessary data. "We had a number of hurdles to overcome once implementation started. The architecture must be complementary to existing networks and not interfere with other processes, and our CIO was also concerned that the technology would bog down the network with excessive data." The latter challenge, data management, is one of the most difficult but important factors to consider during implementation. As Clark explains, "The number of RFID transactions is controllable by several techniques. There is anti-collision software to prevent data from colliding, and if there are multiple ports we can ensure data is only being read once by cycling readers on and off so they only read at specific times ... to me, the challenge has always been the data and not the equipment."
In considering RFID implementation, Lockheed Martin had to take on the challenge of selecting RFID hardware and software. When asked about this process Clark said that "initially we looked for vendors with a good track record. Next we looked for vendors who were pushing the technology to the next step. We also wanted to see how the different products performed. The first criteria, however, was that the vendor's offering had to be EPC compliant." Lockheed Martin, while purchasing from a variety of RFID technology manufactures, did not mix vendor equipment within a particular site for performance testing reasons. The intent was to prove the technology performance, not to intentionally mix vendor products that might jeopardize the test results.
So after all of the effort to implement RFID into a company as diverse as Lockheed Martin, one might ask about the return on investment. Clark says any advances Lockheed Martin makes with improvements in the supply chain serve to make their company more competitive. "Numbers are rather relative. Like getting rid of manual transactions--getting rid of touch labor. Every part of that kit, if it has 100 parts, even if it only reduces touch labor by a third, that's a significant amount."
Despite the challenges of implementing a new technology into the supply chain. Clark has high hopes for the coming year: "I wouldn't be surprised if we had relatively low read rates at first, but by next year  I expect to have 100 percent read rates, or close to it." As he oversees the maritime and aeronautics pre-implementation programs, he says that he anticipates eventual success in part because he has always had the full support of his front offices. "One of the lessons learned from this was the internal infrastructure and security considerations. RFID is about the data, not the equipment. So the introduction of the data into the corporate networks can be a challenge. Once you have the corporate culture behind you and committed to implementation, they may ask tough questions but when they get the answers they think they need, they're right there." The process can seem daunting to companies just beginning implementation, but Clark offers the following insight: "When a farmer looks at a field and someone asks him where to start plowing, he says it doesn't really matter where--the whole field needs to be plowed."
Boeing also began experimenting with RFID technology well ahead of the DoD mandate and initiated production implementations in early 2005. Steven Georgevitch, Supply Chain Manager of Boeing Integrated Defense Systems, said one of the greatest advances for Boeing has been the development of an RFID-enabled shipping label for commercial and defense sectors that will meet both ATA and DoD specifications. The development of an enterprise-wide common shipping label is indicative of Boeing's wholistic approach to RFID technology implementation. Georgevitch explains that for Boeing. "RFID is about business process re-engineering. Often people simply try to plug the technology into an existing business process, but unless the organization looks at it as an opportunity to re-engineer, they won't see huge benefits from the implementation. A company has to get into a re-engineering mindset and away from the idea that they can simply insert it somewhere in their existing supply chain."
The development of a common shipping label is in line with Boeing's objectives to have their shipping processes modified to support the DoD mandate by 2006. According to Georgevitch, there were two major factors Boeing considered in terms of modifying their shipping process to accommodate RFID technology. The first was the importance of getting ahead of the mandate and exercising Boeing's status as a prominent defense supplier to help socialize the technology across the market. The second was to derive value from the implementation process by ensuring that implementation was taking place within a larger framework. As Georgevitch notes, "it costs significantly more to accommodate one depot at a time, and it makes much more sense for us to implement this technology wholistically. If you look at a loading dock, for example, it doesn't make sense to have separate distinct processes for boxes that are right next to each other, simply because one DLA depot requires RFID and others don't. If that were to happen, the process efficiency would be extremely compromised. Instead, we try to, at a minimum, avoid additional costs and possibly even add value by implementing the technology wholistically throughout the company."
According to Georgevitch, the first step in initiating wide-scale implementation is to analyze the company's business processes and determine which processes will benefit from the technology. "Don't take the technology and try to push it into the process, instead it's important to ask 'What are the business processes that need visibility and can RFID service that need?'" In Boeing's case, Georgevitch immediately saw two such opportunities. The first was in the tracking and handling of frozen sealant used on aircraft parts as a high-velocity lubricant. The sealant has a shelf life as short as two weeks, but Boeing had no visibility and often ended up throwing away large amounts of sealant that had passed its expiration. To avoid excess waste, as well as ensure no spoiled sealant was used, Boeing began experimenting with ways to track the material using RFID technology. The second need was evident in the handling of fast moving freight. The method of receiving goods, processing inventory transactions, and tracking led to constraints in the flow of material and ultimately increased costs. RFID technology significantly benefited this process by providing visibility and tracking information rapidly and efficiently.
Even as Georgevitch saw the need for RFID technology, however, there were a number of challenges to negotiate before implementation could proceed. The first was dealing with what Georgevitch coins "executive hysteria," the instability and hype that followed early demonstrations of the technology. "It was important to Boeing to get control of what projects were worthy of implementation and determine what criteria qualified any one project for the technology." Secondly, Georgevitch notes, was the recognition that the process must be evolutionary and not instantaneous. To have strict oversight of the process, Boeing began experimenting in a controlled laboratory environment to understand what could be expected of the technology in the real world. Next, they put it into production, but in an isolated and controlled process. "We learned that you can't just pick a place and begin implementation. You pick a place and do it in isolation until it stands up to the requirements of the production environment," says Georgevitch. Lastly, an ongoing challenge is determining the right time to buy hardware. Georgevitch equates this process with the decision many people face when buying a PC. "At times, it pays to invest in the technology now, even with the knowledge that some retrofitting will have to be done to accommodate the advances of Gen2 technology. Other times, it may be better to wait until the next DFAR is released or Gen2 is mandated. Even if RFID will be good for the business process, it still may pay to wait for better timing."
Once a company has identified a timeline and is ready to invest in the technology, Georgevitch recommends taking a step back and looking at the larger picture first. "RFID is a technology looking for a home. But from our perspective, it is imperative that it be business-process oriented. If we don't see an opportunity in the business process, then the technology doesn't make sense. If we do see an opportunity, we ask, 'Can I do the same thing with a barcode or another more cost-efficient method?' Some processes are line-of-sight driven and don't have any issues with constraint, so RFID is just a cost additive." Instead, Georgevitch advises that companies take a supply chain approach and select the technology that best suits each need. "If an IT specialist or AIT manager is running the program, then their goal is generally to implement the technology. This isn't necessarily the right place to start. Instead, the business plans need to come from the supply chain managers and logisticians, not the IT guys." If he could do it over again, Georgevitch observes that he would spend even more time and dedicate greater business resources to process analysis. "If you only look at the technology and its capabilities, you only derive the benefits of RFID, and not the even greater benefits of the re-engineering process. It's similar to peeling back an onion. You have to get beyond the initial technology layers and look at what's at the core--and that's the business process."
Another aspect of the implementation is the consideration of vendor partners. For Boeing there were two major evolutions of thinking on which partners they chose. The first was based on capability. Boeing brought in 20 vendors of both tags and readers. Then Boeing conducted a study to determine which were the most capable in regard to read reliability and distance. Also under review was how often a system failed. In the second evolution, Boeing spoke with the suppliers and tried to discern viability and liability--given the dynamic market in RFID there was a concern about how long the vendor would be in business before being bought out by a larger competitor or conversely closing their doors. Boeing wanted to be sure that they'd have vendor resources to service the equipment after purchase. "When we started experimenting with the technology in Wichita a few years ago, we did a fairly significant technology review to determine who was leading in the market and what they were doing. Our initial selections were based purely on the technology's capabilities, specifically quality read distance and reliability." Now, Georgevitch says, the specifications are driving vendor selection. "In a rapidly changing market space, it's important to identify which vendors will survive the next few years and be able to ramp up and meet the requirements of Gen2 technology. Now the question is 'How capable is the company?' instead of 'How capable is the technology?'" In the end, Boeing has been pleased with the response of their partners.
An integral part of re-engineering the business process is data management, a point on which Clark and Georgevitch readily agree. "We all have a mindset that there's never too much information, but eventually you reach a saturation point and it becomes a burden instead of a value proposition. Instead, we have to find the point at which data becomes useful information, which isn't an easy decision," says Georgevitch. In addition to establishing the parameters for relevant data collection, Georgevitch also points out the effect the new technology has on architecture. "The rules change in terms of how we use information in a connected world. The traditional infrastructure is service oriented and dictates that information be highly portable, packaged, and able to move across trading partners. RFID is essentially a license plate, so derive significant value, you have to give all the other information needed to translate it and keep it alive as long as it is in the transit process. We want information moving from trading partner to trading partner, so that changes the rules and impacts the architecture."
Perhaps because of the large scope of Boeing's implementation, it is difficult for Georgevitch to articulate any specific ROI. Instead, he observes, "We know that there is value when this is implemented wholistically, and we also know that we have to support the technology now so it will be socialized throughout the Defense Department. There are instances where we can definitely articulate ROI, and others where it'll be a long horizon and depends on our customer getting value and passing it on." Looking from a broader perspective, however, Georgevitch is optimistic about the future: "My theme for the coming year is re-architecting and deriving value from information. AIT technologies fundamentally change how we look at and use information. That may be huge and frightening to a lot of people, because they have to deal not only with existing enterprise-architecture issues, but with the additional challenge of establishing connectivity between all their disparate sections. It's a huge undertaking, but it's also a huge opportunity, and that's what the community needs to recognize."
RELATED ARTICLE: WHAT IS THE STATUS OF THE ELECTRONIC PRODUCT CODE (EPC) STANDARDS? WHAT IS THE IMPACT?
The EPC standard originated from the MIT Auto ID Center, a private/academic group supported by retailers, manufacturers, and technology companies. Whereas there were initially two classes of EPC tags (Class 0 and Class1), EPCglobal is now working to establish a next-generation tag standard--UHF Generation 2.
Standardization of EPC tags is a leading factor in cost and is essential to enterprise-wide implementation. Previously, RFID components--the readers, tags, and data format--were all custom. Standardizing these components means a single product vision that is easy to adopt, translating into lower costs with increased volume. EPC is clearly the RFID standard of the future.
By Alena Amy, XIO Strategies. Inc.