April 25, 2005



Posted: 12.04

The Next Link

Increased accuracy and mobility in the supply chain promise long-term profitability.
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By Carolyn Heinze

Arguably one of the biggest challenges associated with the smooth
operation of a manufacturing facility or retail operation is tracking inventory. No matter how careful you are, no supply chain management process is entirely foolproof; mistakes happen, and they can be costly.
The technology sector recognized this long ago, developing solutions that enable companies to keep better track of their goods and decrease the number of errors and subsequent losses that occur along the supply chain. Today, bar coding is an industry standard among manufacturers and retailers.

While bar codes have facilitated supply chain management, there is still ample room for error. At some point in the process, inventory tracking goes manual, and the data listed on the proverbial clipboard must be input—by human hands—into the system.

The Role of RFID

Enter the application of radio frequency identification (RFID), upon which a number of technology developers have based systems that are capable of automating supply chain management and eliminating the need for human data entry. Thanks to RFID, those charged with tracking inventory can move around the warehouse, gathering information that is automatically entered into the system. Mobility has come to the supply chain.

Error reduction isn’t the only benefit offered by RFID-based systems, tech developers argue. RFID tags are capable of storing more information, such as the origin of a product or shipment, where the items were manufactured, how much they cost and where they will eventually end up.

Symbol Technologies, based in Holtsville, N.Y., specializes in the development of secure mobile information systems that integrate handheld computers with wireless networks for the purpose of capturing voice, data and bar codes.

“I would say that mobility in the supply chain means different things to different people,” says Leif Eriksen, the company’s director of industry solutions. “In the pharmaceutical industry, tracking and tracing the supply chain is becoming increasingly critical because of counterfeiting issues, so that is what is driving their interest in RFID.”

RFID can be applied to the automotive industry, where the need to manage supplies, track spare parts and monitor the status of specific pieces of equipment is critical. “We talk about manufacturing [in general terms], when in fact there are a lot of different industries [under the manufacturing umbrella] and each of those different industries has different challenges,” says Eriksen. “Interestingly, pretty much all of them are interested in RFID.”

Eriksen notes that for all of the accuracy that it offers, RFID doesn’t always require users to be as precise as they must be with bar code systems. “The advantage of RFID is that you don’t have issues concerning line of sight,” he says. “This means that you don’t have to have someone lining products up with a bar code scanner.”

The Labor Factor

Still, according to Eriksen, the companies that are adopting this technology will continue to use their old systems until all of the wrinkles are ironed out—a transition process that will take a while to complete. “It’s important to understand that RFID is going to co-exist with bar codes. The two technologies are going to co-exist for three to five years,” he predicts.

Eriksen argues that this won’t result in a significant increase in labor, but it certainly will take time for companies to notice a considerable difference in savings. “I don’t think that it is going to add any labor to their processes for the most part; on the other hand, it’s not going to result in any decrease at this stage, in terms of labor, because the technologies will need to co-exist for a while,” he concedes.

“It’s essentially taking the clipboard away and extending the existing computer system in the office out to the people on the floor,” illustrates Richard Bauly, VP of strategy and business development at Psion Teklogix, a maker of mobile computing systems headquartered in Mississauga, Ontario. “It’s pretty minimal. You don’t need to change your business process substantially—it’s just getting rid of the clipboard and all of the errors that clipboards create by the time you bring the clipboard back to the office and someone keys all of that information in.”

At the same time, those familiar with bar coding technology shouldn’t be thrown off by RFID, nor will all RFID scanners require human interaction. “Remember that most of these folks have been using bar code scanners and handheld terminals for a little while. This is just another way to gather information in a warehouse environment,” says Eriksen. “Also, many RFID readers will be fixed: They will sit at the dock doors, and as products come in and go out, [they will be scanned]. In manufacturing facilities, there will be fixed readers on conveyor belts throughout different parts of the facility.”

While the need for portable reading devices remains, fixed stations reduce the amount of labor required. “Instead of having people at the dock doors scanning things as they come in, and then moving to the backend systems and recording the information, there will be an RFID reader there that will read the information automatically, without any human intervention,” Eriksen explains.

The Impact of Interference

However accurate technology is touted to be, it’s not entirely hands-free. “Because of some of the issues that are associated with RFID today, there will still be a need to have humans there to check on the validity of the data as it comes in,” says Eriksen. “It will take some time before everything is worked out, and it’s a completely unmanned type of operation.”

For example, RFID isn’t always reliable when used around items containing liquids or metals. “If you have a product that has a liquid in it—shampoo, for example—or a small amount of metal, that can create interference in the radio waves and, therefore, a false reading,” Eriksen explains.

AeroScout, a developer of positioning technologies based in San Mateo, Calif., is addressing this issue by basing its systems on Wi-Fi. “The difference between us and other companies is that the approach we took was to look at the wireless network and the Wi-Fi standard and build our solution completely within those standards so that we can ultimately merge the infrastructure required for wireless data with any infrastructure required for real-time [data capturing],” explains Andris Berzins, AeroScout’s VP of marketing and business development. “We believe that this, certainly in the long term, is the most efficient way to implement a wide range of location-based and RFID solutions in the enterprise space, because Wi-Fi wireless networks will be very widely deployed.”

By building systems based on multiple platforms, AeroScout is able to get around some of the obstacles that are in the way of RFID, Berzins argues. “This allows us to provide better performance,” he says. “Environments like automotive manufacturing, welding shops—which are basically big rooms full of metal—can still perform by getting lots of signals bouncing off the walls and equipment all over the place.”

The Road Ahead

Technological progress is always accompanied by its quirks; in the beginning, bar coding systems provided their own set of challenges and obstacles to overcome. Those companies that are committed to improving their supply chain management processes should be prepared for a few glitches along the way. According to many, however, the benefits outweigh the disadvantages.

“RFID clearly opens up a lot of doors for doing new things that we weren’t able to do before,” Eriksen declares. “One of the things that has held up the widespread use of these devices is the fact that they were too costly to employ across the workforce, and for a lot of the workforce—particularly technicians and operators in the field—the systems were too complex to use. With the interface making it simpler to use and the cost coming down, we have a lot of companies looking at this. It’s the beginning of lift-off for this space. It’s going to be exciting over the next three to five years.”

Where at one time mobile supply chain systems were reserved for large companies with considerable financial resources, smaller organizations will soon be able to implement this technology as well, Bauly predicts. “More and more clipboards can now be retired at a lower cost than ever before, so it’s becoming affordable for smaller warehouses,” he says. “This is a good thing, because you eliminate mistakes in collecting data, you make customers happier and you lower the cost of running a warehouse. More and more companies can now access this technology.” •

Carolyn Heinze works from her office in Vancouver, British Columbia ([email protected]).

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