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State of the DOD-AIT union: XIO Strategies' survey assesses the adoption of technology in the DOD supply chain.

As can be seen during the course of any industry conference, executives, program directors, and logistics managers continually explore new frontiers of Automatic Identification Technology (AIT)--assessing the latest tools to improve their asset visibility and operational efficiency and to cut costs. There is no "silver bullet," but a better understanding of how AIT is being deployed within the DOD supply chain will help them to better position their organization to build upon the lessons learned and prepare for further process improvement.

In late 2007, XIO Strategies (XIO) conducted an AIT-oriented survey across the DOD and supplier community to determine the prevalence, deployment needs, and future spending priorities in the supply chain arena. AIT refers to a suite of enabling technologies used by the DOD, commercial enterprises, and other organizations to facilitate streamlined data processes through electronic data capture. Some of these technologies, like barcodes, have been around for 30 years or more; others, such as passive RFID, are relatively new. For this survey, XIO defined AIT to include:

* Active RFID (aRFID)

* Contact Memory Buttons (CMB)

* Item Unique Identification (IUID/UID)

* Optical Memory Cards (OMC)

* Passive RFID (pRFID)

* Smart Cards

Each has been defined by DOD as being either a primary or supporting AIT in the DOD supply chain. Traditional linear barcodes are well established and the survey did not include them in order to highlight newer technologies.

SURVEY DEMOGRAPHICS

Once results were tallied, 42% of the survey respondents were from within the DOD or its direct contractor or supplier organizations, with an additional 29% from related Manufacturing or Transportation/Logistics industries. Remaining respondents generally identified themselves as Systems Integrators or Consultants. Additionally, 77% are currently in executive-or management-level positions, and more than half were from organizations with more than 2500 employees.

In order to structure the questions and the resulting data, XIO divided the supply chain into the following distinct operational nodes or functions: Receiving, Manufacturing/Production, Inventory Management, Shipping/Transportation, Customer Delivery, Retail, and Maintenance/Repair.

AIT MEDIA IN USE

Respondents were first asked to identify which of the technologies were currently in use in their organizational supply chain (See Figure 1). IUID, pRFID, and aRFID were the most often used AIT media in this survey; XIO believes this is due, at least in part, to the following factors:

* RFID and IUID mandates requiring RFID tags on shipments and IUID Data Matrix barcodes on serially managed assets.

* Dissemination of newer contracts with DFARS clauses requiring pRFID and IUID marking.

Further, no single technology is being used by more than half of the respondents, and 37% selected "No AIT."

Taking a closer look at AIT adoption in the supply chain, XIO found that more than half of the respondents (63%) have deployed some form of AIT. Of those that have, 60% have adopted more than one. This may be due to:

* Current technology data constraints, eg, the current EPC pRFID construct does not yet adequately address the data requirements of IUID.

* Some technologies, eg, the Data Matrix barcode (IUID) and the Contact Memory Button, are more "ruggedized" and therefore better suited to permanent identification of an asset.

* Organizations have not generally assessed the supply chain holistically from an AIT perspective, but rather addressed specific problems with specific technologies.

* Those organizations that have completed an AIT implementation may be better prepared to adopt other types of AIT to further improve supply chain processes.

[FIGURE 1 OMITTED]

THIRD PARTY VENDOR SERVICES

XIO next sought to identify how organizations proceed with their deployments, by assessing the use of 3rd party vendor services. The majority that used third party vendors for AIT implementation had chosen providers for their hardware, software, and data integration services, as well as training support (See Figure 2). Fifteen percent of respondents have not used a 3rd party vendor, possibly associated with large companies that have in-house services or small companies that have not begun adoption.

Coupled with the follow-on question, which identified the top two factors guiding vendor selection as Technical Expertise and Implementation Experience, it is clear vendors with a proven technical ability to manage or support AIT deployment have a marketing advantage. And, with Cost ranking as the fourth selection criteria, organizations are indicating their preference for experienced providers that can get the job done at a reasonable value.

[FIGURE 3 OMITTED]

AIT SPENDING PRIORITIES

In order to demonstrate market needs and priorities, respondents were asked to indicate how their AIT budget will be allocated in the coming year. For those placing a Major or Moderate priority on AIT-related spending over the next year, the top three business areas expected to receive priority were Staff/User Training, Infrastructure, and Business Planning.

These priorities align with the earlier findings that identified the resource capabilities that organizations are seeking in potential 3rd party vendors and points to potential qualifiers and discriminators in vendor selection.

To further clarify spending priorities, respondents were asked to rank their priorities against the previously defined points in the supply chain (See Figure 3). For those respondents making a Major or Moderate investment over the next year, the top three spending priorities are in Customer Delivery, Shipping/Transportation, and Maintenance/Repair.

Data indicate that Customer Delivery will be one of the next supply chain processes examined for business process improvements and AIT insertion. It also suggests that the high usage areas of Shipping/Transportation and Maintenance/Repair will continue to be a high priority by either sustaining or expanding current projects.

CONCLUSIONS

Automatic Identification Technology has and will continue to make its mark on targeted areas of the DOD supply chain, particularly those that have been mandated. However, no one technology will solve all challenges, and AIT should be aligned to fit the affected processes. As AIT capabilities continue to mature and as organizations continue to explore possibilities, the impact of AIT will be even more significant. XIO believes there are several initiatives that can improve the probability of successful deployment, including:

Leveraging the benefits of lessons learned, both from within the organization and from the outside community. An increasing pool of knowledge and talent can only serve to benefit those deploying AIT in the DOD supply chain.

Embracing the benefits of a formalized change management program. Change Management is a structured approach to address the "human side" of organizational transformation. By proactively managing changes in technology, process, or business objectives that affect staff behavior, organizations will be better prepared to deploy AIT, and will meet with greater success.

Incorporating a relevant training program into the deployment plan to ensure staff is ready to maximize the benefits from AIT. By underestimating the importance of this crucial step, organizations may undermine their own programs, and reduce or negate the ROI from these strategic initiatives.

James Clark is Chief Operating Officer of XIO Strategies. XIO works with clients to support AIT initiatives, lead operational assessments, develop improvement plans, support technology deployment, conduct research

and training, and manage communications programs during periods of change.

by James Clark, COO, XIO Strategies
Hardware Services 23%
Software Services 18%
No 3rd Party Services 15%
Data/System Integration 12%
Training Services 12%
Project Management 10%
Maintenance Services 10%

Figure 2: Verdor Services Used in Deployment

Note: Table made from pie chart.
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Title Annotation:Department of Defense, Automatic Identification Technology,
Author:Clark, James
Publication:Defense Transportation Journal
Geographic Code:1USA
Date:Apr 1, 2008
Words:1200
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