RFID--A New Technology Set to Explode? Part Two: Early Adopters, Challenges, and User Recommendations
P.J. Jakovljevic - April 23, 2004
Early Adopters
Radio frequency identification (RFID) technology could potentially replace bar coding in the long term, if global technical standards develop. While the radio transmitter technology has been around for decades, the technology got a major endorsement this past fall when both the U.S. Department of Defense and retailing giants Wal-Mart and the METRO Group decided to make RFID tags a key part of their logistics. To that end, Wal-Mart has recently instructed its top one hundred suppliers that it expects RFID transmitters on all pallets and cases starting January 2005, although there indications that the deadline will be delayed for a few months at least. Namely, as the world's largest retailer, with over 5,000 outlets worldwide, Wal-Mart currently uses traditional bar-coding and UPCs (unique product codes) to identify items and cases and pallets of goods as they move through the supply-chain and out to the stores.
By 2005, Wal-Mart has envisioned to have live implementations of RFID tagging using new EPCs (electronic product codes, which can transmit significantly more useful data than UPC's), with a mandate to its top one hundred suppliers to provide RFID tags on cases and pallets at DCs, followed by item-level tagging at a much later, unspecified date. In theory, EPCs on RFID tags should be easier and quicker to read than barcodes, since there is supposedly no need to unpack pallets to check contents, as RFID readers do not require line-of-sight like bar-code scanners. This should result with less labor, fewer errors, and the better management of inventory.
However, companies implementing RFID should expect increased labor in the first year or so, because vendors have yet to perfect solutions for automating tagging and embedding RFID in packaging material. Also, the current state of RFID technologies would also revolve around label creation and production, plastic chip developments, intelligent shelving, and packaging, to name but a few. Furthermore, to gain benefits such as product tracking, supply chains should logically have to begin RFID implementation at the manufacturer's plant or warehouse, rather than at the distribution center, which is one step closer to a retailer in the supply chain. There are indeed some indications that the main burden for compliance will fall on suppliers, not retailers. To that end, RedPrairie has thirty of Wal-Mart's top one hundred suppliers as its clients, while the vendor guarantees 100 percent compliance for all customers, not just the mandated top one hundred. Still, "source tagging" cases at the manufacturer site will for some time remain too disruptive for most companies to implement.
Provia Software is another SCE provider. It began life as a subsidiary of German elevator system manufacturer Haushahn GmbH, whose elevator technology led it to develop material handling and automated storage and retrieval systems (AS/RS) in warehouses. Provia Software has been busy leveraging its material handling heritage to the use of RFID, which will be a topic of a separate article in the future.
This is Part Two of a two-part note.
Part One defined RFID technology and covered RFID pioneers.
Tier 1 SAP Response
SAP has been deeply involved in emerging RFID technologies, as mentioned in Part 1, and as illustrated by its announcement of SCM applications with built-in RFID capabilities at the recent National Retail Federation (NRF) show. SAP has been tacitly researching RFID-enabled processes since the late 1990s, in which time it has created an RFID customer council with over eighty customers. It was one of the first software suppliers to join the erstwhile Auto-ID center (now EPCglobal, an organization which is designing the critical elements and creating global standards for the next generation barcodes as a mainstream method of business-to-business [B2B] product identification. This process is called the EPC). SAP has created proof of concepts with retailers METRO and Procter & Gamble.
Having been an overall enterprise applications leader, SAP has a more holistic view of where RFID should fit and is building capabilities that will enable it to have more flexibility in how RFID is applied for specific customer requirements across the entire value chain. To that end, the solution provides out-of-the-box support for packing and unpacking, goods issue, receiving, and track and trace business processes. SAP applications bundled to provide these capabilities include SAP's Web Application Server, SAP Auto-ID Infrastructure, supply chain event management (SCEM), and SAP Enterprise Portal. The Auto-ID Infrastructure, which links RFID data to disparate back-end systems, includes a Business Rule Configurator for creating new business processes, while SAP Event Management aims at monitoring exceptions to business processes triggered by data coming from RFID-tagged products or other sources.
The core data structure of the solution will be built on the Handling Unit Management module within SAP Warehouse Management (WM), to which SAP has added RFID adaptors to integrate the data with its core enterprise resource planning (ERP), SAP APO (Advanced Planning & Optimization), and other supply chain management (SCM) applications. SAP's concept of a "handling unit" (i.e., a distinctively defined entity that can capture a nested setup of sub-elements, such as a mixed palette or multiple items in a case) is aimed at deploying RFID at various levels (such as palette, case, individual item), which will be important as RFID technology matures to support these intricate requirements. This RFID infrastructure with the handling unit concept appears a bit more ambitious and thus heavier and more expensive in terms of implementation services than that offered by supply chain execution (SCE) best-of-breed-vendors, but will eventually allow for the practical usage of RFID data across more and broader processes and applications within the value chain. Furthermore, the real benefits of RFID will be achieved when the integration of the EPC data will be a substantial part for the control of business processes. For example, the SAP solution could be applied in warehousing, manufacturing, and transportation and at touch points between these (for example., production line replenishment of the warehouse, cross-dock from receiving to production line, shipment verification in warehouse, to manifesting, control of yard movements, and then in-transit visibility up to a final proof of delivery in transportation).
Oracle too has recently introduced the Oracle Warehouse Management product offering by combining a rule-based architecture with its workflow engine, rendering it quite a configurable solution. The product tackles task dispatching and management functionality within its Task and Labor Planning Control Board module, while some other value-added WMS capabilities (including yard management and dock scheduling) are expected in future releases throughout 2004 and 2005 delivery. At its recent AppsWorld 2004 conference, the vendor unveiled RFID-ready versions of its SCM applications and middleware that include EPC capabilities and will use Oracle Database 10g and Oracle Application Server 10g. PeopleSoft and Microsoft have also joined the fray and updates that add RFID-data support to their warehouse and inventory management applications and data-collection middleware are in the works and expected to be delivered some time in late 2004.
As recently as on April 5, Microsoft announced the formation of a new Microsoft RFID Council focused on RFID technology, which will look at RFID requirements and how to take advantage of today's technology to make it easier for retailers and manufacturers to track and ship merchandise. The giant also highlighted a growing ecosystem of partners—spanning RFID hardware vendors, supply chain execution (SCE) retail systems and services providers—is using the Microsoft platform today to add value to their RFID solutions through Microsoft technologies such as Microsoft Windows CE, SQL Server, and BizTalk Server for collection, management, and integration of RFID data. These partners also are working with Visual Studio and Web Services Enhancements (WSE) for Microsoft .NET to create Web services-enabled RFID solutions.
The company plans to hold the first Microsoft RFID Council meeting in April and already has several partners, including Accenture, GlobeRanger Corporation, HighJump, Intermec, Manhattan Associates, and Provia Software, signed up to participate. As a part of the Microsoft RFID Council, Microsoft and partners plan to address industry needs for RFID solutions that are low-cost, simple to deploy and built on a robust scalable technology stack.
On its hand, Microsoft Business Solutions (MBS) division is also working with RFID partners to extend the capabilities of financial management and SCM solutions for small and midsize businesses. The company began a six-month RFID pilot at the end of 2003 to develop and test RFID software for commercial use hopefully in 2005. During its recent Convergence 2004 user conference in March, MBS showcased the pilot project for Danish snack manufacturing company KiMs, an MBS Axapta back-office user, which has leveraged RFID tags to track pallets from production plant to 3PL (3rd party logistics) warehouses, as to significantly improve their visibility and reduce (or completely preempt) pilferage rates, which have been painfully unacceptable in the past had been.
Microsoft also announced it has recently joined EPCglobal, and will work closely with it to take product and item identification to the next level across manufacturing and retail supply chains. The company is already a certified In Sync alliance partner of UCCnet Inc., an industry-endorsed initiative to resolve product data inaccuracies among trading partners. Earlier this year, Microsoft announced the Microsoft BizTalk Toolkit for UCCnet, which allows retailers and their suppliers to relatively quickly and cost-effectively connect to UCCnet and helps bring them together with trading partners.
SOURCE:
http://www.technologyevaluation.com/research/articles/rfid-a-new-technology-set-to-explode-part-two-early-adopters-challenges-and-user-recommendations-17248/
P.J. Jakovljevic - April 23, 2004
Early Adopters
Radio frequency identification (RFID) technology could potentially replace bar coding in the long term, if global technical standards develop. While the radio transmitter technology has been around for decades, the technology got a major endorsement this past fall when both the U.S. Department of Defense and retailing giants Wal-Mart and the METRO Group decided to make RFID tags a key part of their logistics. To that end, Wal-Mart has recently instructed its top one hundred suppliers that it expects RFID transmitters on all pallets and cases starting January 2005, although there indications that the deadline will be delayed for a few months at least. Namely, as the world's largest retailer, with over 5,000 outlets worldwide, Wal-Mart currently uses traditional bar-coding and UPCs (unique product codes) to identify items and cases and pallets of goods as they move through the supply-chain and out to the stores.
By 2005, Wal-Mart has envisioned to have live implementations of RFID tagging using new EPCs (electronic product codes, which can transmit significantly more useful data than UPC's), with a mandate to its top one hundred suppliers to provide RFID tags on cases and pallets at DCs, followed by item-level tagging at a much later, unspecified date. In theory, EPCs on RFID tags should be easier and quicker to read than barcodes, since there is supposedly no need to unpack pallets to check contents, as RFID readers do not require line-of-sight like bar-code scanners. This should result with less labor, fewer errors, and the better management of inventory.
However, companies implementing RFID should expect increased labor in the first year or so, because vendors have yet to perfect solutions for automating tagging and embedding RFID in packaging material. Also, the current state of RFID technologies would also revolve around label creation and production, plastic chip developments, intelligent shelving, and packaging, to name but a few. Furthermore, to gain benefits such as product tracking, supply chains should logically have to begin RFID implementation at the manufacturer's plant or warehouse, rather than at the distribution center, which is one step closer to a retailer in the supply chain. There are indeed some indications that the main burden for compliance will fall on suppliers, not retailers. To that end, RedPrairie has thirty of Wal-Mart's top one hundred suppliers as its clients, while the vendor guarantees 100 percent compliance for all customers, not just the mandated top one hundred. Still, "source tagging" cases at the manufacturer site will for some time remain too disruptive for most companies to implement.
Provia Software is another SCE provider. It began life as a subsidiary of German elevator system manufacturer Haushahn GmbH, whose elevator technology led it to develop material handling and automated storage and retrieval systems (AS/RS) in warehouses. Provia Software has been busy leveraging its material handling heritage to the use of RFID, which will be a topic of a separate article in the future.
This is Part Two of a two-part note.
Part One defined RFID technology and covered RFID pioneers.
Tier 1 SAP Response
SAP has been deeply involved in emerging RFID technologies, as mentioned in Part 1, and as illustrated by its announcement of SCM applications with built-in RFID capabilities at the recent National Retail Federation (NRF) show. SAP has been tacitly researching RFID-enabled processes since the late 1990s, in which time it has created an RFID customer council with over eighty customers. It was one of the first software suppliers to join the erstwhile Auto-ID center (now EPCglobal, an organization which is designing the critical elements and creating global standards for the next generation barcodes as a mainstream method of business-to-business [B2B] product identification. This process is called the EPC). SAP has created proof of concepts with retailers METRO and Procter & Gamble.
Having been an overall enterprise applications leader, SAP has a more holistic view of where RFID should fit and is building capabilities that will enable it to have more flexibility in how RFID is applied for specific customer requirements across the entire value chain. To that end, the solution provides out-of-the-box support for packing and unpacking, goods issue, receiving, and track and trace business processes. SAP applications bundled to provide these capabilities include SAP's Web Application Server, SAP Auto-ID Infrastructure, supply chain event management (SCEM), and SAP Enterprise Portal. The Auto-ID Infrastructure, which links RFID data to disparate back-end systems, includes a Business Rule Configurator for creating new business processes, while SAP Event Management aims at monitoring exceptions to business processes triggered by data coming from RFID-tagged products or other sources.
The core data structure of the solution will be built on the Handling Unit Management module within SAP Warehouse Management (WM), to which SAP has added RFID adaptors to integrate the data with its core enterprise resource planning (ERP), SAP APO (Advanced Planning & Optimization), and other supply chain management (SCM) applications. SAP's concept of a "handling unit" (i.e., a distinctively defined entity that can capture a nested setup of sub-elements, such as a mixed palette or multiple items in a case) is aimed at deploying RFID at various levels (such as palette, case, individual item), which will be important as RFID technology matures to support these intricate requirements. This RFID infrastructure with the handling unit concept appears a bit more ambitious and thus heavier and more expensive in terms of implementation services than that offered by supply chain execution (SCE) best-of-breed-vendors, but will eventually allow for the practical usage of RFID data across more and broader processes and applications within the value chain. Furthermore, the real benefits of RFID will be achieved when the integration of the EPC data will be a substantial part for the control of business processes. For example, the SAP solution could be applied in warehousing, manufacturing, and transportation and at touch points between these (for example., production line replenishment of the warehouse, cross-dock from receiving to production line, shipment verification in warehouse, to manifesting, control of yard movements, and then in-transit visibility up to a final proof of delivery in transportation).
Oracle too has recently introduced the Oracle Warehouse Management product offering by combining a rule-based architecture with its workflow engine, rendering it quite a configurable solution. The product tackles task dispatching and management functionality within its Task and Labor Planning Control Board module, while some other value-added WMS capabilities (including yard management and dock scheduling) are expected in future releases throughout 2004 and 2005 delivery. At its recent AppsWorld 2004 conference, the vendor unveiled RFID-ready versions of its SCM applications and middleware that include EPC capabilities and will use Oracle Database 10g and Oracle Application Server 10g. PeopleSoft and Microsoft have also joined the fray and updates that add RFID-data support to their warehouse and inventory management applications and data-collection middleware are in the works and expected to be delivered some time in late 2004.
As recently as on April 5, Microsoft announced the formation of a new Microsoft RFID Council focused on RFID technology, which will look at RFID requirements and how to take advantage of today's technology to make it easier for retailers and manufacturers to track and ship merchandise. The giant also highlighted a growing ecosystem of partners—spanning RFID hardware vendors, supply chain execution (SCE) retail systems and services providers—is using the Microsoft platform today to add value to their RFID solutions through Microsoft technologies such as Microsoft Windows CE, SQL Server, and BizTalk Server for collection, management, and integration of RFID data. These partners also are working with Visual Studio and Web Services Enhancements (WSE) for Microsoft .NET to create Web services-enabled RFID solutions.
The company plans to hold the first Microsoft RFID Council meeting in April and already has several partners, including Accenture, GlobeRanger Corporation, HighJump, Intermec, Manhattan Associates, and Provia Software, signed up to participate. As a part of the Microsoft RFID Council, Microsoft and partners plan to address industry needs for RFID solutions that are low-cost, simple to deploy and built on a robust scalable technology stack.
On its hand, Microsoft Business Solutions (MBS) division is also working with RFID partners to extend the capabilities of financial management and SCM solutions for small and midsize businesses. The company began a six-month RFID pilot at the end of 2003 to develop and test RFID software for commercial use hopefully in 2005. During its recent Convergence 2004 user conference in March, MBS showcased the pilot project for Danish snack manufacturing company KiMs, an MBS Axapta back-office user, which has leveraged RFID tags to track pallets from production plant to 3PL (3rd party logistics) warehouses, as to significantly improve their visibility and reduce (or completely preempt) pilferage rates, which have been painfully unacceptable in the past had been.
Microsoft also announced it has recently joined EPCglobal, and will work closely with it to take product and item identification to the next level across manufacturing and retail supply chains. The company is already a certified In Sync alliance partner of UCCnet Inc., an industry-endorsed initiative to resolve product data inaccuracies among trading partners. Earlier this year, Microsoft announced the Microsoft BizTalk Toolkit for UCCnet, which allows retailers and their suppliers to relatively quickly and cost-effectively connect to UCCnet and helps bring them together with trading partners.
SOURCE:
http://www.technologyevaluation.com/research/articles/rfid-a-new-technology-set-to-explode-part-two-early-adopters-challenges-and-user-recommendations-17248/
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