Five Steps to Successful RFID Deployment
Contrary to perceptions fostered by the recent buzz around mandates from Wal-Mart, Target, Albertsons, the Department of Defense (DOD) and others, RFID is not a new technology. It was first used more than 60 years ago by Britain to identify friend and foe aircraft in World War II. For more than 20 years, every railroad car in North America and many other countries have had RFID tags on them. And if you have an ExxonMobil Speedpass or use a tollway transponder in your car, you are using RFID technology.
However, the way manufacturers and suppliers are being required to apply the passive electronic product code (EPC) technology in their distribution operations to satisfy current compliance mandates is pioneering.
Suppliers to Wal-Mart, Target, DOD, and the others have a brief window to learn about and deploy RFID technology to meet rapidly approaching compliance deadlines. This is complicated by the fact that passive RFID technology for EPC is still in its infancy, and existing tags and readers may be obsolete in less than 12 months.
Companies exploring RFID for purposes other than EPC compliance may not have strict deadlines, but they still assume similar risks. In the absence of best practices and clear, proven value for suppliers and manufacturers, companies should proceed with a well-defined RFID road map, based on carefully considered business objectives.
There are five essential steps to follow for successful RFID deployments, whether you are responding to EPC-based mandates or simply trying to gain competitive advantage through RFID. However, before getting started, it is important to understand some of the challenges that RFID deployment presents in its current state of development.
RFID Deployment Challenges
The most important issue to understand is that everything associated with RFID deployment is changing rapidly. Software, tag and reader designs, standards, and vendors are all in a state of flux, with many vendors and standards groups vying for dominance. It will take at least two years to shake out the winners and losers.
For example, the class 0 and class 1 passive tags and readers from Matrics and Alien, respectively, available in 2004 will be quickly made obsolete when the EPC standards body, EPCglobal, completes definition of the class 1, gen 2 tag later this year. Matrics and Alien, the main EPC tag and reader providers today, will have to retool to meet this standard. Meanwhile, the major potential chip providers, Philips and Texas Instruments, have not yet entered the EPC market. Their entrance could have a significant impact on costs and availability.
The International Standards Organization (ISO) is working on its own RFID standards ISO 18000-6. Although the DOD has indicated they will accept the EPC guidelines, they would prefer that the two organizations develop a common standard. But there has been little progress in that direction.
RFID radio frequencies are another challenge. The generally accepted frequency range for EPC applications is the ultra-high frequency (UHF) band, from 868 MHz to 956 MHz. However, there are regional differences in using this band, with Europe using the lower end, North America using 915 MHz and Japan leaning toward the higher end. This variability impacts reader design and read ranges for global applications. There are also interference issues since many traditional RF systems also use the UHF range, as do many cordless phones.
What does this mean for deployment? Your RFID deployment road map must be flexible enough to adapt to the changing vendor and equipment landscape. That is not an easy task with so much in flux. The five-step process takes these challenges into consideration to minimize the impact of variability on the success of your deployment.
Establish the Business Case
It is important to develop a strong understanding of the technologys challenges and opportunities right from the start. Do your research learn from companies that have conducted pilot programs, attend objective industry seminars and workshops, engage respected consultants, consider joining EPCglobal, and read as much as possible.
Use innovative thinking to discern potential applications for RFID in your operations. Although an EPC compliance mandate might be your pressing priority, consider the technologys potential applications within your entire supply chain. Research where your company can derive the most value. EPC compliance by itself is cost additive, but there are many areas where the application of RFID technology can result in considerable reductions in cost, increases in throughput, and enhancement of revenue.
Make sure you interview all areas of the organization to solicit potential opportunities and get payback estimates. Think outside the box when evaluating options. Your greatest returns will usually not come from simply automating current processes. General areas to consider include improvements in visibility, reductions in labor, and reduced theft and counterfeiting.
Based on a thorough review of the potential areas within your company where RFID technology may have positive impact, select one to three targeted applications for detailed case analysis. This selection should be based on which opportunities appear to provide the best potential return on your investment. Of course, if supplying Wal-Mart, Target, or the DOD is a major part of your business, this must be one of your selected opportunities, but look beyond compliance to how the technology can add value to your operations.
To develop a business case for your selected opportunities, you will need a well-defined plan that is clearly tied to your business objectives. Defining the system requirements, establishing costs, and developing clear expectations for ROI (e.g., where, how much, how long will it take, etc.) will help you accomplish this step.
If preliminary research indicates RFID could be a valuable solution for your company, continue to the next phase: planning a realistic RFID road map. If the results are questionable, you may need to re-evaluate your companys situation and weigh technology alternatives. Or revisit your original list of potential opportunities based on what you have learned to determine if other applications may be more appropriate.
Similarly, be cautious if the results appear unrealistically high. Your assumptions about costs or returns may be too optimistic. For example, if you based your business case on the assumption of the much over-hyped 5 cent tag, you will find your predictions will not hold up to reality.
Build a Practical Road Map
Several factors should be carefully considered as you develop your road map. How will your company absorb and deploy the technology, and will the market be able to support these activities? Is the project based on customer-driven demand (i.e., Wal-Mart)? Consider your supply network how do you bring products to the marketplace and how would you deploy the technology based on your topology? What about transaction volumes and infrastructure? If your company only ships small quantities and limited SKUs to Wal- Mart or other retailers, your strategy will be different than if you ship to multiple mass merchandisers on a global scale. Honest and realistic answers to these questions will reveal if your company should continue to explore and invest in RFID.
A key part of this step is to develop the key performance indicators (KPIs) that will serve as the yardstick by which you will measure the success of the subsequent steps and deployment. Without meaningful, relevant KPIs as evaluation criteria, subsequent steps will yield uncertain results.
The road map you build for RFID deployment will be very similar to those for other technology deployments. However, make sure you include time and any necessary support for unique RFID issues such as tag placement, reader/antennae placement, orientation and attenuation, and environmental testing. In most cases, expertise in these disciplines will not reside within your company.
Conduct Proof of Concept
Before mounting a full-scale RFID implementation, it is critically important to conduct meticulous product tests in a real-world environment. Companies must define optimal technology combinations during product testing (i.e., various types of tags, readers, and business software). A complicating factor is the changing vendor and technology landscape. Make sure your technology selections will still be appropriate at time of deployment. Design contingency plans to deal with potential changes.
You must also understand how the environmental attributes of your products will affect RFID readability. For example, what is the optimal read distance and tag size, and how many antennas are required for a consistent read? The presence of RF technology using the UHF band can cause prohibitive interference; how will you get around this issue?
Product makeup will also affect readability (liquids absorb radio signals, metals scatter them), as will mixed pallet scenarios and tag placement. Make sure your testing takes all of these factors into account or it will come back to bite you later.
Finally, understand the product certification requirements demanded by your clients; for example, a mass merchandiser may require certain performance standards (i.e., 100 percent tag readability on a conveyer at 150 feet per minute). The results from environmental proof of concept tests will yield key information for a successful pilot. It may also whittle down your list of opportunities for further consideration.
Pilot the Proposed Solution(s)
To begin the pilot phase, closely integrate your RFID software with your logistics applications in order to truly approximate a real-world environment. Then connect to host systems for actual data transfer. Because you cannot shut down actual operations to conduct the pilot, be sure the two can run in parallel. This may require modifications to existing systems.
To the extent possible, design your pilot tests to reflect the business case scenarios defined during requirements definition. For example, if your pressing need is to ship to the three Wal-Mart distribution centers in Texas stipulated for January 2005 compliance, your pilot should test the product types and quantities, material handling equipment, and shipping methods that will be used for that purpose.
Besides testing equipment, software, and processes, be sure to test your business case assumptions. Use the results of pilot testing to rework your ROI analysis and your deployment road map. Dont be afraid to rule out applications or deployment plans that no longer meet expected ROI or other corporate objectives.
Rollout ROI-based Solutions
In order to obtain executive buy-in and approval for RFID implementations, use pilot test results to demonstrate the technologys value to your organization. Be prepared to specify where RFID will add value, how it will benefit your operations, and exactly how much savings your company can achieve from each application. Be prepared to discuss how this value compares to associated costs and risks, and demonstrate in detail how RFID supports corporate objectives.
Your rollout plan should implement the highest value RFID applications first, based on your business case analysis. Use the KPIs to gauge success and measure performance against actual results at each stage. Analyze results from each implementation and adjust rollout plans for future implementations accordingly.
Even with the best business case analysis and thorough road maps, there is one item often overlooked that can determine success or failure of deployment change management. People are naturally reluctant to change. This is usually caused by fear of the unknown. Resistance can usually be overcome with proper training. Since much of projected ROI may be based on streamlined processes, employees must be trained how to perform the new processes and operate new equipment. Training should explain why the new technology is beneficial, thus addressing any fears.
Summary
Experience shows the companies most successful at deploying new technologies are those who have a clear business case, a welldefined road map, and who continually measure against their original objectives, making adjustments accordingly. RFID deployments are no different; they just have a few extra technology considerations to address.
Rigorous application of this five-step deployment methodology will minimize internal risk and put your company on the right track for RFID compliance and competitive advantage. Although your immediate motivation may be meeting compliance mandates, the real value of RFID deployment will come from improving your companys operations.
