http://www.rfidjournal.com/article/articleview/8037/1/1/

Until the RFID system was launched monthin mid-2010, verifying that an order was filled correctly required employees to look up each product’s serial number and associated stock-keeping unit (SKU) number, in order to confirm that the items being packed matched the order, and to then scan the bar-coded number printed on the packaging and corresponding to the product’s serial number. While workers rarely make mistakes, Lee says, the process is slow. RFID, he notes, should reduce the time spent ensuring the proper items are being packed.

Time will tell, but this type of application should continue to provide immediate ROI.  Ensuring order accuracy has always been a time-consuming part of the fulfillment process.  With relatively high-cost products like camera electronics, errors can be quite costly, and as a result, companies don’t take any chances, putting systems in place to verify order accuracy very meticulously.  RFID should provide a very effective alternative with the wave of a wand.

The Universal Postal Union (UPU), an arm of the United Nations that coordinates international postal mail services, has embarked on a project to use RFID (Radio Frequency Identification) to track the speed of international deliveries. The program, using tag processing systems from Reva Systems, will begin a test phase later this month in 21 countries. The UPU expects it to be used in 100 countries by 2012.

This is an outstanding example of something I’ve talked about before.  RFID doesn’t have to be used to tag every little thing.  Sometimes the best solutions are merely on the margin.

Improvements are often best made on the margin.  Particularly in large, well developed organizations, much of the efficiency has already been squeezed out.  Stop looking for something to change your world over night and look for several (or many) things that will change your world just a little bit.  Consider the compass-heading analog.  If you are off course by a few degrees in the beginning, you wind up way off course the further out you go.  So goes efficiency improvements.  Small differences can manifest change dramatically over time, either by growing exponentially themselves or by turning you on to new ideas as you slowly evolve.  Agile is a great illustration of this concept.  Do something, take a snapshot and re-evaluate.  Small, incremental changes will begin to lead you in directions you never knew were possible.

Instead of one 10% improvement, consider ten 1% improvements.

Perhaps a good extension of the mirror is a rear-view mirror.  I like this quick review from Supply Chain Digest: http://www.scdigest.com/assets/On_Target/09-01-15-4.php?cid=2161.

RFID implementation may certainly fit into this lateral component of capital budgeting.  While short-term IRR and NPV may not appear to justify enterprise-wide implementation, a longer-term ancillary-benefit assesment may lead to a different conclusion.  This is particulary true in light of the difficulty capturing accurate costs and cash flows with technology that is designed to reduce direct labor costs.   That being said, Dean cautions quite aptly: “some projects are [considered] so pivotal for the long-run welfare of the enterprise that they possess high strategic value which overrides mere economic considerations and lifts their evaluation into a mystic realm beyond the ken of economic and financial analysis.”

Throughout the capital budgeting process, I would suggest taking a bit of latitude—certainly within perspective of the current business climate—and considering those projects which may yield long-term fruition of organizational objectives.

A fixed stock system assigns a location to each stock-keeping unit (SKU) within a warehouse.  When a new widgit comes into inventory, it goes with all other widgits which share its SKU.  This stocking systems provides the most systematic layout for inventory, and it assures a well-organized warehouse.  However, it also dictates that each stock location must have capacity for the maximum quantity of inventory of that unit at any given time.  Invariably, this results in having a warehouse which is much larger than is necessary.  Memory stock systems rely on the memory of a small group of stocking employees.  The employees put stock where it will fit and rely on their memory for picking at a later time.  Obviously, this provides for an efficient space utilization, but has weakness tantamount to the reliability, availability and sometimes attitude of the employees.  In a zone system, items are grouped together by type or size and can be thought of as a cross between the fixed stock and random stock (which I will return to) approaches.  Zone stocking has its place, but it can lead to honeycombing—a type of inefficient space utilization—and other problems.

Lastly, there is the random stock system.  A random stock system is similar to the memory stock system with one key difference.  Unlike the memory stock system, where employees use their memory to locate stock position, a random stock system uses a detailed, accurate and up-to-date database system to catalog each item along with positioning information.  Records management within a random stock system is paramount, as the accuracy of positioning information must be accurate to ensure efficient stock picking.  What was once done by transaction—using something like a stock movement card—can now be automated real-time by implementing RFID.  Rather than having employees make notes or scan barcodes during inventory movement—whether it be storing, re-locating or picking—RFID can be used to accurately read tags embedded on pallets, cases or items.  Interrogators can be placed on material handling equipment, at common entry/exit points and throughout a facility to capture temporal and spatial positioning of a given item.

Stephen Covey talks about time management using a matrix. As you can see on the right, Quadrant 1 refers to items in our life that are both urgent and important; Quadrant 3, not important, but urgent; Quadrant 4, not important, and not urgent. With reference to RFID, I want to talk about Quadrant 2—items which are important, but not urgent.

Items which are important, but not urgent, represent those things in our lives—both personal and professional—which are not on the front burner. Despite the fact that they are not pressing—which do not warrant our immediate attention—but are important in the long-term none-the-less. The most common example would be planning. We all recognize the importance of planning. We realize that to reach our long-term objectives, we must first determine what they are. We must make a plan to acheive those objectives, and then, we must work toward them. They are not urgent in the sense that planning does not take precedence over those urgent items in our life which must be done right away. However they can not be ignored. Much like planning, many items can wait until tomorrow, but need to be done to achieve our long-term goals.

RFID is a prime example of a Quadrant 2 activity. Realistically, given other pressing matters like the day-to-day operation of a supply chain and the very real costs associated with implementation, RFID can wait until tomorrow. In fact, it can wait until next year. But, I will caution you; RFID implementation can not fall to the wayside in the chaos of our Quadrant 1 items. Supply chain managers must realize the long-term advantage—and necessity—of implementing RFID technology. It has been said over and again that “competitive advantage is temporary.” To be certain, RFID is rapidly becoming a competitive advantage for those organizations that can implement it effectively. As time goes on, organizations that postpone their RFID projects will quickly realize that they have missed their opportunity to gain a competitive advantage. And, if too much time passes, those asleep at the wheel will realize that what once could and would have been a strong competitive advantage has become a necessity. They will realize that they have not only missed an opportunity to move ahead of their competition by taking advantages of the cost-savings that RFID can provide, but they have slid behind their competition and that advantage has been taken by someone else. The time will come in which organizations who delayed RFID implementation for whatever reason, will be playing catch-up to merely maintain parity in the marketplace.

Put RFID alongside your Quadrant 2 activities. Realize that although it is not urgent, its consideration is extremely important. Do not wait until your competitors have passed you by, and you have missed the opportunity to gain a competitive advantage.

I tend to agree.  If you look at some of the world’s longest-running, most-profitable organizations, they each have a strong commitment to honesty and integrity.  Businesses cannot succeed if their employees lack trust in their management, if their customers lack trust in the organization or if their investors lack trust in the business model.

From a supply chain standpoint, companies would do better to realize that their customers rely on the commitments that are made.  If obligations are not met and commitments are routinely broken, the supply chain customers will not be able to make good on the commitments they have made to their own customers.  If you take the partnership approach, if you believe that you as a supplychain provider are working in tandem with your customer toward the ultimate goal of serving their customer, you must realize that the commitments you make to your customer are as important as the commitments they make to theirs.