Interview: Hans Thalbauer and Amar Singh at SAP discuss the advances in information sharing across global networks that RFID will enable.
ASCET: How do you envision RFID changing the collaborative business environment?
Amar Singh (AS): Once you have the capacity to get data from your trading partners, you can then utilize that data to capitalize business benefits. All the players from raw material suppliers to manufacturers to retailers are adding relevant information, whether its lot number, shipment date or customer number. In many cases today, all of that information is stored in local environments for each of those companies. Unless you collaborate on information, theres simply no way to access real-time information from different sources. If you can get real-time information through RFID, you can be more responsive and in turn help reduce out of stocks and ultimately drive better revenue for your company.
ASCET: The investment required to implement RFID is still quite high. Is the return worth it for most companies, and what are the costs to companies that dont adopt RFID technology?
Amar Singh (AS): The ROI for customers on RFID depends on the business process that youre going to leverage RFID for, as well as the products and the environment your company is in. For example, if youre a company that sells high-valued goods and is very concerned about theft, counterfeiting or diversion, RFID provides a quick ROI.
For certain consumer packed goods companies where youre selling fairly low-priced goods, the current price of RFID tags is still very high. If you already have a very efficient supply chain to begin with, then itll be hard to justify immediate ROI. Ultimately, the ROI depends on the type of company or industry and on the maturity of your business processes. In terms of the cost of not adopting RFID, companies that do not make the investment will not benefit from the competitive advantage that RFID provides. You have much better information with RFID on demand patterns, actual sales, etc., which help you reduce your inventory and therefore lower your costs and increase agility and efficiency.
Hans Thalbauer (HT): Companies that do invest in RFID technology will be able to distinguish themselves from their competition with the business processes they are running. The increased visibility that RFID technology provides allows companies to respond to customers much faster. That will differentiate RFID-enabled companies from the competition, and that will drive increased profit. Therefore, RFID is a key enabler for driving the growth of a company.
ASCET: What are the most interesting developments that you are seeing in supply chain?
Hans Thalbauer (HT): RFID is a key element. It is very important for supply chain management, and, perhaps more importantly, for the future of business processes. There is a real growth advantage in terms of the level of new information that will be available. We will see real-time, collaborative data that will change how we do business. New rules will be in place that will enable decision-making processes. The growth advantage is in the capacity to integrate and automate data from the shop floor to the top floor. With new information available, management will be able to make better decisions.
The second key aspect is the network aspect. Supply chain networks today include many supply chain partners, i.e., customers, suppliers, the OEMs, outsourcing partners and solution providers. There are many different roles and levels of collaboration in such a network. When companies are increasingly focusing on their core competencies, that collaboration is necessary in order to manage the whole supply chain and to fulfill demand.
The third aspect is fulfilling the demand by becoming progressively more demand-driven. So to summarize, the three key trends for supply chain management are the real-world emergence of vastly increased levels of new information from the supply chain; greatly enhanced networks; and demand-driven processes.
ASCET: Whats SAPs role in pushing RFID forward?
Amar Singh (AS): If you think about RFID infrastructure requirements, you typically need reader tags, a reader network and the software that can manage and share data from local environments to enterprise applications. From the tags and the reader perspective, the hardware required needs to be standardized, produced or made more cost efficient. That is where SAP and Intel are partnering to identify the best standards and practices possible. We are working together to connect SAPs hardware and semiconductor expertise with Intels intelligent chip expertise. We think our work together will help to establish highly adaptive, global supply chain networks.
