RFID (radio frequency identification), the technology behind wireless sensors used for tagging products to track their location, is getting attention across a number of industries, including manufacturing, retailing, transportation, and logistics. Giants like Wal-Mart Stores, Target, and General Motors are already incorporating it into their supply-chain operations.
Although all those RFID tags are barely out the door, RFID vendors are now adding a business intelligence layer to the location-based stack to help a company measure and improve its operations.
However, as RFID gains traction, the major responsibility for tracking the tracking data will fall on IT's shoulders. RFID tags currently hold about 18 bytes of data. According to Retail Forward, a management consulting and market research firm in the retail industry, if Wal-Mart put an RFID tag on every item in every store and tracked every change in presence information, it would generate 7.5 million terabytes of data daily.
It will fall into the lap of IT to gather, sift, and purge all of that incoming data, according to Bret Kinsella, global lead at Sapient Supply Chain Group. The biggest challenge IT and senior managers will have is that of scaling the systems to accommodate all that data and developing data management strategies to separate important data from noise.
Kinsella says managers can do that by focusing on certain deltas, such as changes associated with business rules that managers need to track. Adding business rules to location-based data, one of the key changes in RFID technology, will allow companies to do that. But even then, after the data is collected, how will it be integrated into existing systems?
RFID creates an opportunity to reduce costs and gives a company a competitive advantage, so you can bet that it will not be overlooked by any serious company in a variety of industries. Kinsella predicts that businesses will look to IT to provide the insight when considering this new technology.
Looking even further out on the horizon, RFID is another component of what those in the supply-chain industry call the glass pipe, meaning total visibility. As Kinsella says, any company would trade inventory for visibility.
Take NYK Logistics, a 3PL (third-party logistics) company, for example. NYK tapped WhereNet to revamp its yard management system because WhereNet is one of the first to add those business rules to the location-based data.
NYK manages a yard at the Port of Los Angeles with about 1,200 parking spaces for trailers and shipping containers. The yard handles approximately 700 to 1,000 incoming and outgoing gate transactions daily.
By adding parking assignment rules, door assignment rules, and check out blocking rules to the typical RFID tag data, NYK and its customers are managing resources far more efficiently.
"If one thing goes awry at the yard, it's going to affect everything downstream and could easily shut down an assembly line," says Rick Pople, general manager at NYK Logistics.
With that glass pipe, NYK and customers "are all looking at the same database and same reports," Pople says.
However, as Kinsella reminds us, IT and senior management need to think about how much data they are getting and distributing. Giving real-time forecasts to all of your suppliers on a daily basis when they used to get it at the end of every month may be more than they can handle.
What do you think?