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RFID Value Chain:
ROI through Internal Optimization

online columnist Marlo Brooke and James Williams     Column published in DMReview.com
September 22, 2005
  By Marlo Brooke and James Williams

DMReview.com welcomes new columnists James Williams and Marlo Brooke of Avatar Partners, who will share their expertise in the realm of synchronized value chain focusing on radio frequency identification. Watch for their column each month.

Much is touted about RFID usage in conjunction with shipping and the supply chain. Yet through the forest of "mandatory compliance" we can overlook the most obvious fruits of opportunity with RFID. Although perhaps less breathtakingly bleeding edge, the practical business benefits of RFID for internal optimization provide great motivation for taking a look at RFID's more practical usages.

Consider, for example, high value units that a given organization has disbursed throughout a plant, campus or hospital environment. These high value items, such as electronics, tooling components, equipment and other devices, seem to continually reduce in size, while becoming increasingly more mobile and expensive. Furthermore, the ability to take a device where it is needed, rather than bringing the work to the device, has increased employee productivity, improved cycle times and has even saved lives.

As miniaturization of equipment continues, mobility will insure that more and more high value assets will be disseminated throughout the environment. I remember back to the time when taking a large oscilloscope and spectrum analyzer to a job location was next to impossible. Today's portable equipment, however, goes everywhere.

Problems arise when a piece of equipment is needed at location A, but none can be found; or they are all in use, and no one has an accurate matrix for when the next one will be available. Problems also arise for planners when the condition or current status of such equipment is not known. Rich Corey, manager at Avatar Partners, describes an issue that we so often see with our customers, "Large facilities that house a great many such assets can experience critical bottlenecks. Such situations can be a cost-saving opportunity for active RFID."

Information is Key

"RFID is the most robust information-gatherer we have," continues Corey. By using the appropriate RFID tag, it is possible to know not only where an item is but provide additional data such as how long it has been in use and by whom, its current configuration or the current level of fuel, paint, staples, etc. We may also be able to learn its mechanical or operational condition, such as units produced, or environmental conditions, such as temperature ranges or pollutant contact. RFID engineer Deon Nel of Avatar Partners explains that the data accumulated through RFID helps his customers make better business decisions that optimize equipment, processes and personnel. "The accumulation of data through RFID allows executive and front-line managers to determine critical paths for usage of devices and thus insure better availability throughout the enterprise," says Nel.

"As an example," says Nel, "We are helping hospitals to implement RFID asset tracking to insure the availability of high value equipment when and where it is needed." Hospitals have found that even relatively large items can become "lost" for a while or are in need of service and not repaired. Items often have a tendency to disappear out the front door for lack of better automated monitoring of equipment, such as wheelchairs. However, with RFID it is usually possible to know where the item is and, in some instances, even its condition.

These conditions can be exacerbated if the equipment is either loaned or rented to another organization. For example, it is not uncommon for production companies to rent the photofinishing or audio equipment from a film lab rather than just sending the media to the lab. Another example is manufacturers who must ensure the appropriate critical path for work in process is being followed in order to optimize equipment and fulfill orders. Equipment location, frequency of usage and operational condition are all factors critical to scheduling and operational optimization. It is possible to set up an RFID tracking system to give management this type of information in real time.

The advantage of in-house asset tracking is that we are usually using relatively few reusable tags in association with high value items or equipment that is responsible either for income generation or maintenance. In projects like these, we have found that helping organizations develop an effective cost-benefit matrix in which tangible, rapid return on investment for RFID is both compelling and strategically wise.

The fruits of RFID are not to be found in theoretical concepts driven from a couple of large players in the marketplace; opportunity with RFID waits for us today, we need only see the forest through the trees.


For more information on related topics visit the following related portals...

Marlo Brooke and James Williams are principals at Avatar Partners (www.avatarpartners.com), an Irvine, California-based consulting organization specializing in end-to-end supply chain solutions, systems integration and Six Sigma. They lead a 25-consultant team that has helped many companies implement RFID and other supply chain optimization solutions. You can contact them at mbrooke@avatarpartners.com or jwilliams@avatarpartners.com.

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