RFID next step but tread carefully

Dell supply chain guru gives them thumbs-up, but advises caution

RFIDs are the next major step in supply chain management, but unless you understand your supply chain, adopting them could do more harm than good.

Dell’s Mike Gray, who goes by the increasingly common title of supply chain evangelist, is positive about most aspects of RFIDs. He notes that big retailers such as Wal-Mart and Tesco are adopting the technology, but reiterates that without a sound knowledge of the underlying supply chain, “they’ll just add cost”. However, once the technology becomes widely adopted, “it will revolutionise the supply chain”.

The US-based Gray acknowledges that it is Dell’s direct sales model, rather than the supply chain systems and software it runs, that allow it to sell PCs and associated gear more cheaply than competitors, but says Dell’s use of MRP (manufacturing resource planning) software rather ERP (enterprise resource planning) also helps keep costs down.

ERP involves rescheduling the whole enterprise “every time you run it”, but that isn’t necessary under MRP.

“There are three MRP functions at Dell — execution, planning and strategic.”

Execution involves rescheduling many times a day at factory level, whereas planning involves doing it once a week at sales and operations level. “It makes the procurement plan, not the factory plan.”

The third level, strategic, involves a monthly change, he says.

Dell uses a mix of inhouse and off-the-shelf supply chain software from vendors including Oracle and i2.

As a longtime participant in the supply chain business, Gray sees the future of the supply chain management software industry moving further and further away from the big bang ERP implementations of the mid-1990s and closer to the specialised, block-by-block sales approach that has become more popular in the past few years.

“When the major players were selling ERP, it was very frightening for businesses to light-switch their whole company. Now you have different pieces and that fits in nicely with the distributed computing model.”

If the title supply chain evangelist doesn’t impress you, Gray is also CPM (certified purchasing manager) with the American Institute of Supply Management and is CIRM (certified in integrated resource management) by the American Production and Inventory Management Society.

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