RFID's impact on real-time
By Roberto Michel, Editor at Large -- Modern Materials Handling, 7/1/2005
Radio frequency identification (RFID) mandates may be here, but don't expect electronic product code (EPC)-based RFID to have broad impact on real-time supply chain management soon, at least from the supplier perspective.
Steve Banker, service director, supply chain management, at ARC Advisory Group (781-471-1000), says that most EPC pilots have concentrated on compliance, and haven't reached the stage of getting high volumes of data back from partners. Actually getting return on investment from the knowledge gleaned from the tags could take years, he adds, citing an ARC study last fall of 24 companies investing in EPC RFID. The study found that 95% of respondents believed the payback period would be greater than two years. Some vendors involved in EPC, however, say EPC tags will start producing useful information as soon as they are rolled out and start getting read. "We have analyzed significantly more than 1 million tag reads already, so we're already providing value to the companies we are working with," says Peter Rieman, executive VP with T3Ci (650-969-5200) an EPC/RFID data analysis vendor. Rieman concedes that 1 million tag reads is a drop in the bucket in terms of inventory in retail supply chains, but he says EPC will unlock insights into hard-to-assess factors such as "dwell-time" for cases and pallets at retailer DCs and store stock rooms. This data could be analyzed by suppliers to adjust forecasts or promotions. Tag reads could also be used to trigger financial settlements, as well as the provide proof of delivery, he adds. Outside of the scope of EPC, however, RFID has been used for years, and as such, is helping with real-time supply chain management today, says David Adams, a senior vice president with Trenstar (303-220-1133), a vendor that uses RFID tags to track pooled assets such as beer kegs and reusable containers. Adams says three of the biggest breweries in the United Kingdom use Trenstar's beer keg asset pooling. The service cuts out the lengthy reverse logistics for empty kegs that existed when the breweries owned and managed their own kegs. When an empty keg leaves a pub, rather than having to be shuttled back to a particular brewery, it can go the nearest one that needs the asset. "The pooling eliminates a big chunk of the miles empty containers used to have to travel at end of brewers' supply chains," Adams says. The service relies on RFID for real-time tracking of unique assets, says Adams, but wouldn't have the adoption rate it enjoys (Trenstar claims 62% of the U.K. market for kegs) if it didn't focus on user benefits. "We started off with a supply chain-centric business proposition, and then applied the technology," says Adams.
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