chain technology has, for some time, been based on the traditional bar-code
technology familiar to ordinary shoppers and consumers, but recently the software
capability has been expanded to also use radio frequency identification
(RFID) technology. While radio ID tag-enabled software is still just a miniscule
part of total supply chain management (SCM) providers' revenues, more
and more user companies and software vendors are adopting this technology (see
Leaders Partner To See Beyond Their Portfolios). This technology, which
has been on almost everyone's lips lately, seems to be heading for the mainstream
and boardroom priorities, almost directly from scientific labs—its making its
way, of course, with a number of caveats due to the technology's current imperfection
technology consists of tags or transponders, which transmit electronic product
codes (EPCs) and communicate wirelessly to other devices over radio
frequency (RF) waves. Attached to physical objects, including the actual
product as well as the cartons, pallets and containers in which they are shipped,
the tags should uniquely identify the items, as readers communicate with the
tag via RF. In a distribution center (DC), once within range of a reader,
the data will presumably be captured, accepted, and then executed against by
a SCE solution.
for retailers and other vertical industries, RFID tags potentially present enormous
opportunities to improve supply chain operations, such as:
stock outs due to supplier vendor managed inventory (VMI) and/replenishment
proof of delivery
Improved security of products
Warehouse labor reduction
physical counts and reconciliation
work in process (WIP) inventory and aging/quality control
returns processing and credit note handling
to legal regulations for tracking and tracing
the speed within the supply chain
is Part One of a two-part note.
Two will discuss early adopters, the challenges they face, and make user recommendations.
RFID Technology Pioneers
the backdrop of the ongoing RFID frenzy and the attempt of vendors to jump on
the RFID bandwagon, there has naturally been a type of vendors' public relations
(PR) war-of-words (as well as of true actions) in their zeal to portray themselves
as an RFID thought leader of any sort. However, while customers should be encouraged
by the apparent interest of vendors and their commendable moves, which speak
volumes about the technology's prospects, customers should note that many vendors'
PRs, after cutting through customary hyped-up rhetoric, merely have trial, pilot-stage
projects; initial participation in standards-making councils; or laboratory-based
simulations of real-life RFID-based scenarios.
as the recently proclaimed SCM leader in terms of SCM-attributable revenues,
claims to have been the first vendor in the market to demonstrate how RFID technology
can improve the SCM and enterprise asset management (EAM) operations
in real-world operations. Namely, live projects with METRO Group
and Procter & Gamble in early 2003 were far ahead of the rest
of the SCM pack that was mainly still experimenting and pondering METRO Group
and Procter & Gamble brought the technology and the related software to a further
degree of stabilization. While those implementations have reached broad visibility
throughout the SCM world, the implementation with Frankfurt Airport
AG was also innovative, potentially producing the future direction
on how assets can be maintained in distributed, "smart" environments.
addition to its leading supply chain execution (SCE) market share,
where Manhattan Associates seems to be spearheading the competition,
would be its embracement of RFID technology in terms of the compliance issues.
To that end, early in 2003, the vendor announced that it expanded its retail
compliance guarantee for the top one hundred global retailers and the top one
hundred US retailers to include any new and emerging RFID standards. Meanwhile,
the company has also developed several related solutions including:
in a Box: provides the necessary software, hardware, and implementation
services needed to deploy RFID.
Integration Platform for RFID: eases implementation by providing
a highly configurable implementation platform and eliminates much of the custom
development typically required.
RFID-enabled SCE applications: capture and execute on information provided
by RFID tags in warehouse and transportation environments.
the business processes that support this new technology continue to evolve,
Manhattan Associates remains committed to developing solutions and the associated
domain expertise that will support RFID in its customers' distribution centers
(DC) and in the overall retail supply chain.
Associates is not the only SCE vendor doing something with regards to SCE. In
early in 2002, RedPrairie (then called McHugh Software
International, Inc.) announced at its 5th annual Industry Summit the
formation of a Center of Excellence to explore the potential
applications and benefits of employing RFID technology within consumer goods
supply chains. Joining RedPrairie as founding members of the Center of Excellence
were Intermec Technologies Corp., Unilever,
Georgia-Pacific, Marconi InfoChain, and CHEP
International. RedPrairie and the other participants then pledged to
work together to define where, within the supply chain process, RFID will have
the greatest benefit and will translate these benefits into increased functionality
within SCE applications. To that end, the vendor has since conducted over a
dozen of educational workshops on RFID around the US last fall and this spring,
in addition to providing real-life RFID portal demonstrations at its well-attended
booths at tradeshows.
Manhattan Associates was the first pure-play SCE provider (given the overall
enterprise applications leader, SAP, was one of the founders of the Auto ID
Center) to join the former Auto-ID Center (now EPCglobal),
a not-for-profit research organization headquartered at Massachusetts
Institute of Technology (MIT), and which is designing
the critical elements and creating global standards for the next generation
bar code—called the EPC Network. Through this program, Manhattan
Associates will continue to contribute to establishing a future standard where
everyday objects with EPC tags can be identified anywhere automatically. The
vendor's partnerships with Microsoft, IBM, Alien,
Matrics, Printronics, Symbol,
Zebra, Dell, HP, and Accenture
should also allow for a comprehensive and relatively rapidly deployable RFID
pilots and solutions. One should note though that meanwhile many other prominent
vendors like RedPrairie have also become EPCglobal members and will sit on the
same software, hardware, and user action groups, and will contribute at least
equally to those standards.
Auto-ID Center was established in October 1999 by The Gillette Company,
Procter & Gamble and the Uniform Code Council (UCC).
Today, more than eighty companies from around the world support the Center's
work. The technology system in development at the EPCglobal could help businesses
save billions of dollars in lost, stolen or wasted products. For example, EPC
tags affixed to packaging could provide manufacturers, distributors, and retailers
with the following benefits:
authenticity—allow distributors and retailers to confirm, with pinpoint accuracy,
whether or not the goods on their shelves are authentic. Users will have instant
access to information indicating precisely when, where, and by whom a product
Product availability—manufacturers will have true "produce-to-demand" capability
and will be able to eliminate excess inventory by drawing on the latest data.
Greater efficiencies—combining "produce-to-demand" capability, inventory reduction
and balance plus reduction in manual stock keeping, the supply chain could
recognize cost efficiencies in the range of hundreds of billions of dollars.
Enhanced recycling—by coding a package as cardboard, aluminum or plastic,
the technology may greatly simplify and improve waste management and recycling
a DC, once within range of a reader, the data will be supposedly captured, accepted,
and then executed against by a SCE solution like a warehouse management systems
(WMS) or a transportation management system (TMS) application suite. With RFID/WMS/TMS
integration, it will be possible to have totally automated logistics tracking
processes, enabling products to pass through the DC without manual checking
and scanning. For example, when an incoming shipment is physically moved into
the four walls of the DC, the facility's antennae should capture information
from the embedded RFID tags. These antennae then pass the data onto the WMS
application, which accepts the information and automatically receives the inventory,
thereby eliminating the manual receiving processes of counting and scanning
individual items, cartons, or pallets.
Real-time inventory control, tracking, and alerting capabilities would be other very important advantages of RFID. As tagged inventory goes through ports, terminals, freight forwarders, and actually into a DC, the RFID tag provides real-time visibility of an item's whereabouts at all times. With RFID, WMS/TMS suites will be able to track and maintain inventory with minimal supervision in an entire network of DCs in a fraction of the time currently required.
a follow up, mid- 2003, RedPrairie further articulated its strategy for helping
customers implement and benefit from emerging RFID technology. As part of this
strategy, RedPrairie announced availability of RFID Accelerator,
a new application that will supposedly enable companies running virtually any
distribution technology, including all versions of RedPrairie's DLx
Warehouse and other packaged or legacy systems, to become compliant
with the RFID information-sharing requirements of major retailers such as Wal-Mart
and Target. RedPrairie's RFID strategy addresses the three
issues companies are facing today as they plan for inevitable RFID adoption:
how to comply with the dominating retailer's 2005 requirements,
how to transition from current barcode environments, and
how to move to the ultimate scan-free environments that will be possible as
RFID technology matures.
the RFID Accelerator is designed to enable companies to meet the demands of
the large retailers without replacing their existing infrastructure. The application
provides agents to collect and verify RFID tag information, retrieve related
inventory data, and pass this combined information to the retailers in advanced
shipping notices (ASNs), which will provide the pallet and case RFID-based
information that retailers Wal-Mart and Target will require. Moreover, because
taking full advantage of RFID technology will entail a fundamental change to
distribution operations, companies will need to transition to this stage over
a period of time while continuing to leverage their existing investments in
RF and barcode infrastructure. To facilitate this dual mode of operation, RedPrairie
has integrated RFID functionality with traditional processing so that distribution
operations are independent of the data capture source, which should enable customers
to take early advantage of RFID benefits, such as increased inventory visibility
and accuracy, reduced labor costs and faster cycle times, without disrupting
as RFID technology matures, it will enable companies to fundamentally redefine
distribution operations, which currently require manual scanning to be replaced
by scan-free operations that query, collect, store, and transmit inventory information
without human intervention. RedPrairie is working with some of its customers
and the RFID Center of Excellence to define these new operational requirements
and build support for them into its application suite. This, should have a positive
impact on warehouse efficiency, labor productivity, transportation turnaround
times, and retail in-stock levels.
For most companies, true value from the technology will only come when business applications, such as forecasting, planning or inventory management can reliably and intelligently use information emanating from RFID tags in at least near real-time. However, that will require sophisticated middleware that can translate RFID data into formats that applications can use, and also redesigned applications that will be able to handle the flood of data volumes and share that data with other applications.
at the end of 2003, RedPrairie announced it has built a fully functional, electronic
product code or EPC, compliant RFID laboratory to test RFID technology
in a real-world environment. The RFID Lab is driving customer
pilot programs, enabling RedPrairie customers and prospects to research RFID
tag placement and readability as they prepare for RFID compliance. In addition,
using company-specific data and scenarios, the RFID Lab is helping companies
determine how RFID will impact their supply chain and how they can achieve maximum
value from RFID investments through supply chain process improvements. Possibly
the first of a kind in the industry, RedPrairie has established an RFID test
lab for clients to do product and environmental testing. The vendor has also
been striving to fully integrate RFID processing into its SCE suite rather than
just offer "in the box" starter kits, as many of its competitors.
given many still outstanding unknowns and hurdles to more commercial use of
the RFID technology, the idea behind the lab is to help customers test a variety
of hardware solutions, tag configurations, and products to understand how the
technology applies to their business requirements. RedPrairie's RFID Accelerator,
the afore-mentioned middleware compliance application, is at the heart of the
RFID Lab, integrating RFID scanned information with WMS data to produce the
ASN and shipping documents required by Wal-Mart and the US Department
of Defense (DoD). It accepts scanned data from multiple
tag manufacturers including, among others: Alien, Matrics,
and Intermec. RedPrairie has also developed a mobile lab for
client pilot studies and industry events. Additionally, the vendor has entered
into a valued-added reseller (VAR) agreement with Metrics
to integrate and sell their RFID readers and tags.
but not least, on March 30, RedPrairie and RF Code, a world
leader in Auto-ID data collection middleware and Active RFID technology systems,
announced a Strategic Partnership Agreement. The partnership will enable RedPrairie
to introduce RFID-enabled supply chain applications leveraging RF Code's middleware
platform and Active RFID systems. In other words, RedPrairie will employ RF
Code's TAVIS technology to enable long-range tracking of mobile
assets across the supply chain to streamline and secure supply chain processes.
to the agreement, RedPrairie will become a VAR for RF Code's data collection
middleware and active RFID technology. RedPrairie will integrate RF Code's TAVIS
data collection system, RFID products and other auto-ID devices to enhance its
data capture capabilities for transportation and yard management, labor management,
supply chain security, and mobile asset management. The combined applications
will enable customers to use active RFID technology to more accurately identify,
manage, and track physical assets, information and personnel. This partnership
is touted as significant in that it takes RedPrairie beyond its tradition supply
chain execution focus while introducing RF Code to RedPrairie's blue-chip customer
now part of 3M, owing to its origin as Data Collection
Systems Inc. (DCSI), a provider of bar-code data-collection
systems to track labor costs and inventories in manufacturing plants and warehouses,
has not been sitting still either. Namely, in November, HighJump announced that
it has RFID-enabled its broad SCE offering, Supply Chain Advantage.
With enhancements to existing solutions and several new applications, the vendor
now claims to provide a broad and flexible collection of RFID-enabled solutions
for warehouse management, visibility and tracking, shop floor data collection,
and RFID compliance. This is made possible with HighJump's RFID Configurator,
a Wizard-like application that should empower user companies to quickly configure
specific processes to utilize RFID, bar codes or both, depending on their individual
customer requirements, and at multiple points within the supply chain through
the following HighJump solutions:
Advantage: HighJump has extended its warehouse management solution
to include RFID compliance as well as workflows that support RFID, so that
all HighJump customers now have the option of selecting which activities they
want to perform with RFID, bar codes or both.
Compliance Advantage: This solution allows suppliers to
relatively quickly and easily achieve RFID compliance as mandated by leading
retailers such as Wal-Mart as well as the DoD, and it can also be adapted
to meet evolving RFID standards and future mandates.
Tracking Advantage: This solution provides tracking for
returnable containers and other high-value assets in closed-loop environments.
In addition to providing hands-free recognition of inbound and outbound containers,
this application aims at ensuring total management and visibility of these
containers throughout the supply chain.
This solution should enable manufacturers to track WIP and finished goods
with RFID technology, which is especially important to the manufacturers that
track items in lots or by serial number.
With the introduction of RFID Configurator, HighJump claims to offer a unique and powerful approach to incorporating RFID into existing supply chain processes, as it should allow customers to effectively position their operations to meet RFID mandates from their mighty customers, while preparing for additional RFID utilization and compliance requirements as they evolve. Like the earlier mentioned RedPrairie's offering, this approach too fully supports the co-existence of bar codes and RFID that most industry experts predict will be necessary for many years. For example, because configuration capabilities are available at the trading partner level, truck loading for Wal-Mart could be configured to use RFID processing while bar codes are used for other retail customers. This can be accomplished on a stand-alone basis or by adopting integrated solutions that link the information flow from suppliers all the way to customers.
concludes Part One of a two-part note.
Two will discuss early adopters, the challenges they face, and make user recommendations.