Originating Author: Kaushik Das
RFID technology allows enterprises to manage security, implement access control, and provide logistics for day-to-day business operations. It also brings real-time information gathering with tags, sensors, readers and state-of-the-art business application systems. RFID is steadily finding acceptance because of increasing business benefits, decreasing costs and availability of more and more applications and solutions. Amongst its main beneficiaries are retail businesses and industries, warehouses, parking lots, toll roads, travel, car fleet units, banks, airports, judiciary and government.
RFID is an over-the-air identification technology that brings business success. Accenture reported that RFID can boost sales to the amount of one to two percent. It can also reduce inventory stocking items. It can, for example, decrease inventory by 10 to 20% by cutting the amount of stocks.
RFID applications can be divided into three categories: pallet/case tagging, item level tagging; and card, payment key fob and e-passports. Although the market for pallet/case tagging is growing at the present moment and will continue to follow this trend till 2010, item-level tagging is expected to lead the market between 2010 and 2015.
Challenge for IT managers:
- Adoption of RFID technology largely depends on its integration with existing business applications and enterprise solutions. Seamless integration is necessary for least user discord and inter-operability of data and systems.
- Must ensure adequate coverage for the over-the-air RFID system. This will ensure that the system picks up sight of every package it needs to see/scan, without seeing others.
- Cost is a restraining factor that prevents many enterprises from adopting a complete RFID implementation. Enterprise must ensure a reasonable return on investment in a short time.
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Capability of RFID initiative
The enterprises are extremely eager to reap the benefits of RFID technology as bar code is gradually becoming obsolete. Depending on the type of industries, RFID technology can provide the following capabilities:
- Facilitate automation of manual processes and effective use of greater amount of data
- Help automation of the receiving operations leading to reduction of the labor cost, enhancement of accuracy, and saving of time
- Facilitate improvement in product diversion, production planning, inventory control and storage
- Create adequate opportunities for demand and supply planning, theft identification, etc
- Implement store level promotions and capacity planning, etc
- Facilitate real time manufacturing by integrating with the SCM, CRM, ERP and other web services
- Help in efficient operations at warehouses, for example, RFID tags can be used as bill of materials for transport, or process data, quantity control data and keeping track of personal security
- Implements confidential document tracking in government, banks and financial institutions.
Specific operational goals of RFID initiative
Expected effects on the IT budget
For integration with existing IT infrastructure, RFID tags are available from around 10 cents going up to the range of US$30 for rugged and high performance tags. In addition, the enterprise must include the cost of software, hardware, integration, and servers to manage the data.
A significant issue for an IT manager is to implement an effective, reliable, cost-effective RFID solution with low total cost of ownership (TCO). This is particularly true where RFID implementation is seen as an IT infrastructure spend as opposed to the production, manufacturing cost.
For a ball-park estimate of TCO for a mid-size organization, see the table below. These figures assume a Standard Wikibon business model organization with $1 billion in revenue, with 4,000 employees and an IT budget of $40 million per year.
Item | Estimated Total Cost |
---|---|
Deployment cost | $50,000 to $80000 |
Tag Costs | $20000 to $100000
(depending on the type of industry, quantity and quality of tags) |
IT management and end-user support costs | $30000 to $50000 |
The major expected business productivity improvements include:
The following depending on the type of industries:
Retail System:
- Implement inventory control
- Provide, for the stocked products, the product code, its description, manufacturer, brand, batch number, expiry date and price, etc.
- Sense the RFID tags and read the information, using small antennas fitted with the shelves, exit gates and warehouses, to update the inventory system on a real-time basis.
- Facilitate ‘just-in-time’ deliveries
- Makes feasibility for total asset visibility, full inventory history with tracking and reduced inventory-stocking levels
- Ensures better process control for products in the facility
- Reduces shelf space and lead-time leading to reduction of the docking time, higher-level security with the end result of fewer errors and better visibility of goods/ material.
Warehouses:
- Identify details of pallets and containers with details of origin, destination and other material
- Check for any deviation in the schedule by sensing the RFID tags through antennas fitted at entry and exit gates, escape routes, vehicles and cranes, and get the system records updated
- Pinpoint any unscheduled movements with precise tracking of the location of pallets and containers within the warehouse
- Help in considerable reduction of check-in and checkout costs and time
Parking Lots:
- Provide access control systems for parking lots and toll roads
- Direct vehicles according to their ‘status’ by sensing their access from the RFID cards containing their status, as provided to the vehicles
- Implement faster, low-congestion, automated systems, with enhanced security, strict implementation of access rights, easy and fast tracking of vehicles
- Help in better revenue generation in paid parking lots and toll roads through efficient management of automated status update.
Manufacturing:
- Track the full inventory including history of products
- Contain details of product carriers for the products they carry
- Monitor, using the antennas equipped at the entry and exit gates, all the products, whether incoming or outgoing
- Enable automatic control of the movement of the inventory.
Banking/Government:
- Provide a significant role in these organizations, where confidentiality of documents is absolutely critical
- Track, report, identify, manage and move documents easily and effectively
- Allow control over movement of critical documents from one place to the other
- Allows RFID document tags to be linked with the staff access control badge.
The RFID initiative
The RFID initiative will be implemented when an enterprise architects, designs, procures software and hardware components, implements and tests the RFID system. This initiative will ensure that that the intended users (enterprise employees) can use the system effectively and degradation is within the defined acceptable range.
Analyze Phase
Acceptance test considerations:
The analyze phase will be completed when the initial business case has been accepted by the sponsor, and an agreement has been reached to proceed to the design phase or kill the project.
Key analysis milestones:
The analysis should take about 1-2 months for most companies.
- Identify the business issues. This will depend on the types of industries the enterprise is engaged in.
- Analyse the requirements of an enterprise policy for RFID
- Define, evaluate, and gain agreement on RFID security policies
- Understand the requirements for RFID devices and networks, including determining the quantity and quality of tag requirements
- Analysis that can be achieved on automation of manual processes and effective use of greater amount of data
- Analyze the modality of confidential document tracking in government, banks and financial institutions
- Create adequate opportunities for demand and supply planning, theft identification etc
- Analyze how real time manufacturing can be achieved by integrating with the SCM, CRM, ERP and other web services
- Define reporting procedures for security breaches and analysis procedures to avoid breach repetition
- Get agreement on the reliability aspect
- Get agreement on the administration and management tools necessary to monitor, troubleshoot and maintain an end-to-end system.