|
Home
RFID still brings more
questions than answers for inbound logistics
July 14, 2007
Despite its clear value proposition
and much talked about benefits, radio frequency identification (RFID) has not yet impacted the inbound manufacturing supply
chain as it has other areas. There are pilots underway and research studies galore, but in terms of real-world, useful implementations
between OEMs and suppliers, there's still not a lot to benchmark against.
Questions abound when it comes to
RFID in the supply chain. First and foremost: who pays for it? There are a variety of models emerging, but no clear-cut winner.
Perhaps most well-known is the Wal-Mart/mandate scenario where a large buyer mandates that all of its suppliers tag their
outgoing shipments with active or passive RFID tags. While Wal-Mart and the Department of Defense were able to push such a
mandate (some analysts question the penalties for noncompliance), there has yet to be a manufacturer willing to step forward
and do the same. One of the challenges with such a model, says Matt Ream, senior manager of RFID systems at Zebra Technologies
in Vernon Hill, Ill., is that the manufacturer has to go "all in" to get the benefits. "For instance, if there's
an automotive OEM that feels RFID will help it reduce cycle time and orders, it has to get RFID rolled out to all its suppliers—it
can't just do a few to get the real benefits," Ream points out.
Ream says aerospace giant Boeing has come
the closest to RFID use in inbound by developing a plan for suppliers of certain parts to its Dreamliner project to tag shipments
with RFID. But the project involves only about 60 suppliers delivering major subsystems to Boeing. Zebra also has a customer
in the seafood distribution business working to get its 130 suppliers to tag inbound fish shipments to streamline the receiving
and testing process before the seafood is sold and shipped to customers. In that business model, the faster the turnaround,
the faster the sale.
Mike Liard, an RFID analyst with ABI Research in Oyster Bay, N.Y., says the Wal-Mart mandate
was much more of a supplier "order" while the Department of Defense's RFID program with its suppliers had a
much more collaborative, share-the-cost tone to it. But he says, "to date we haven't seen a broad initiative from
a manufacturer, like these ones." He says pilot programs at some consumer electronics firms do show promise however.
And a retailer in the U.K. recently mandated its suppliers tag shipments with RFID or risk paying a financial penalty per
pallet. "Suddenly, the mandate has some teeth," Liard says.
Another financing model emerging for RFID
is having the technology delivered as a value-add from logistics providers. Certain third-party logistics providers (3PLs)
and ocean carriers are willing to tag containers or pallets for tracking, provided they get the containers or pallets back
at some point to spread the cost of the tag out across multiple shipments. Pacific ocean carrier Horizon Lines announced early
this year it is in the process of tagging its entire fleet of containers serving the Alaskan trade with RFID tags and installing
RFID readers at distribution centers, terminals, and key Alaska highway routes. The project has been driven by Horizon CEO
Charles Raymond, who said in a company statement: "Having information on shipments early in the process—who is
shipping what, to where, and why—and then integrating that information into a real-time tracking system will streamline
the entire shipping process. Shippers will achieve savings from tighter inventory management. Carriers will obtain better
asset management and in-transit control. And the by-product of that visibility and efficiency is better security."
There are some RFID pilot projects for inbound supply taking place that supply chain and logistics professionals should
be keeping track of. Most recently, the Shanghai International Port Group and the Georgia Ports Authority tapped RFID technology
firm Savi Networks to launch an RFID-based network called the "Shanghai-Savannah Express Trade Lane Project" which
automatically tracks the location and security of containerized cargo transported between the Port of Shanghai in China and
the Port of Savannah in Georgia.
A recent EPCglobal pilot project tagged seaborne shipping containers traveling
between Hong Kong and Japan and used software from Oracle and Savi to provide real-time tracking information. At the time,
Liard said this pilot "represents a significant step towards the practical realization of a truly useful standard. It
is the first real-world demonstration among port operators of the potential created when multiple trading partners and service
providers can speak the same language."
While not as much interest to supply chain professionals, RFID has
gained a much stronger foothold in the manufacturing space for tracking works-in-progress, for several reasons. First off
all, the investment made is returned within the four walls—it's not being diluted or shared with suppliers or customers.
Secondly, the return is tracked more easily because the RFID tags can be applied to bins or pallets that don't leave the
plant floor.
Another major question regarding adoption of RFID technology within the supply chain is the skills
and expertise within the typical supply chain organization. According to a recent survey by the Computing Technology Industry
Association (CompTIA), 68.8% of technology professionals polled believe there is an "insufficient pool of RFID talent
to hire from." While that's down from 80% in 2005, it's still a significant percentage that see a lack of expertise.
And will that lack of talent impact RFID adoption? Seventy percent of those polled say yes.
Source: purchasing.com
 |
|
