THE BUSINESS CASE FOR RFID.
Steve Halliday of the trade association AIM offers some thoughts on what radio frequency identification can do for the supply chain.
Q: Radio frequency identification has been around for some time now. Yet, it seems that there's a whole lot more talk about what RFID could do than what it's actually doing.
At this point, most people know that it uses portable tags to carry information. And they know that the information is transferred using radio frequency waves. But most people don't understand what RFID can do for them.
Q: Does that mean people are hanging back, waiting for others to take their bumps as they learn how to use it?
That depends. Yes, there is definitely a wait and see attitude among many potential end users. The business case has not yet been made very strongly for them to try it. But that doesn't mean certain companies are not putting the technology to work. There are a gizillion pilot projects for RFID underway. And people tend to be very closed mouthed about them. This is a technology that these companies expect will give them a true competitive advantage. So they aren't willing to say much.
Q: Since so few are willing to talk, can you give us some ideas of where there's a strong business case for RFID?
Let's take carburetors for lawn mowers. RFID can be used from the beginning of carburetor production to actual use of the finished mower. New information can be added along the way and the tag can actually be used for multiple purposes.
You can put an RFID tag on the core of the carburetor, and it will carry assembly instructions on the shop floor. At the end of production, a serial number can be added to the tag along with additional product information. This information can then be collected as the carburetors are readied for shipment. That way the manufacturer knows what shipped and can notify its customer.
Then at the customer's receiving dock, the tags can be read again and the company's production system can direct inventory to storage or the production line. There, more information can be added that links the carburetor to the specific lawn mower model it's being built into. This can be used for quality control purposes at the plant and after the mower is sold.
Q: Now what's the business case for all that?
To begin, the assembly instructions streamline production, reducing cycle times and allowing lot sizes of one. At the shipping dock, the right items get shipped in the right quantities and the manufacturer knows it, That makes invoices more accurate and improves cash flow The lawn mower builder enjoys streamlined handling at its receiving dock and can minimize the amount of time it holds the carburetors, trimming those costs. Quality control is easier and tracing problems in the event of a recall is eliminated. As you can see, the business case is pretty strong for the technology.
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|Title Annotation:||Steve Halliday of the Association for Interactive Media, radio frequency identification|
|Comment:||THE BUSINESS CASE FOR RFID.(Steve Halliday of the Association for Interactive Media, radio frequency identification)|
|Publication:||Modern Materials Handling|
|Article Type:||Brief Article|
|Date:||Feb 1, 2001|
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