2012 Logistics Management Technology Roundtable
May 01, 2012
RFID: Buzz is back
Logistics Management: Eight years ago you couldn’t pick up a business publication without seeing some news on the Walmart or DOD RFID mandates. Only recently has it boiled up into the news again. What’s driving the latest RFID buzz?
Michael Liard: There’s been a new level of activity for the RFID industry since it was announced in August 2010 that Walmart would begin tagging apparel items for men’s jeans and basics. Dozens of U.S. and international retailers and brands such as American Apparel, JCPenney, Macy’s, Gerry Weber, and Serge Blanco have been stepping up their RFID tagging programs and efforts over the last two years, and VDC expects more will announce deployment plans this year and next. The end result is billions of tags on apparel items expected in supply chain and in store environments across the world over the next few years, including more than 1.5 billion by the end of 2012 alone.
LM: What are the biggest benefits to item-level tagging for retailers?
Liard: According to studies completed over the last two or three years, such as the item-level tag research projects conducted by the Information Technology Research Institute (ITRI)—part of the Sam Walton Business School at the University of Arkansas—retail business results are able to be measurably improved using RFID item-level tags to achieve and maintain higher inventory accuracy levels, which in turn provided an uplift in sales; a reduction in out of stocks, as well as improved inventory management visibility; a reduction in shrink; improvement in profit margin; and a reduction in manual labor for inventory counts.
LM: Are manufacturers getting to this level of tagging?
Liard: An increasing number of manufacturers are moving toward item-level tagging. In the retail apparel sector, there are a several brands using RFID that operate closed-loop supply chains where they manufacture, distribute, and sell apparel in their own branded stores. These RFID end users are tagging at the source and reading the tags throughout the supply chain. Open-loop retail apparel supply chains, such as Walmart’s, are also deploying RFID at the item-level, asking their trading partners (such as VF Corp. and Hanes) to adopt RFID and use tags closer to or at the source; however, these deployments are more complex as a number of players are involved. In the IT asset arena, several manufacturers are embedding or attaching RFID to IT components and hardware such as servers and blades during manufacture.
LM: How have readers and tags evolved over the past eight years?
Liard: Prices for both readers and tags have come down steadily since 2004, and performance has improved. Tag costs still depend on volume and packaging/form factor, but improvements made in the number of die per silicon wafer for ICs, less expensive antenna materials, and other developments have helped drop the cost of passive UHF EPC tags—especially for high-volume, low-cost item-level tagging deployments where an inlay is now a few cents. Passive UHF EPC reader costs, too, have come down due to reader chipset innovation that reduces the number of components, size and overall costs.
LM: What’s holding supply chain organizations back from adopting RFID?
Liard: Supply chains are complex environments, and each industry and specific business processes is unique. According to our end-user research, a few considerations come to mind: cost concerns linger, including a lack of understanding around ROI and total cost of ownership; lack of awareness and education around specific applications/use cases and RFID value propositions; bar codes may be providing “good enough” visibility, therefore, an alternative AutoID system is not required; and now that we can effectively capture RFID data through improved technology/hardware, there’s now a question as to how we can effectively leverage that RFID data.
Social Media: Liking productivity
Logistics Management: You’ve presented at a number of conferences recently on how social media should be defined in the business world. Most of us are using it in our personal lives, but how do you see social media evolving to help logistics professionals do a better job?
Adrian Gonzalez: First, let’s define “social media.” Most supply chain and logistics executives have a very limited definition of the term—for them, social media equals Facebook, Twitter, and LinkedIn. As a result, executives have a hard time seeing how social media can have an impact on supply chain and logistics processes.
But social media also includes a broad set of solutions that companies are deploying internally to facilitate collaboration and communication between employees and functional groups, as well as externally with suppliers, customers, and other partners in a private manner. At the end of the day, social media is another tool logistics professionals have in their toolbox to facilitate communication and collaboration with their peers and partners.
LM: How has your social media vision for logistics and supply chain professionals been accepted?
Gonzalez: Pretty well, but the next and more difficult step is seeing the business value. In a survey I conducted last year, supply chain and logistics executives said “unclear business value” was the biggest obstacle to achieving greater adoption of social media in supply chain processes. In essence, what many executives are saying is, “We know social media will transform supply chain processes, we just don’t know how exactly, and where to start and why.”
The problem is that many executives get caught up in the terminology—blogs, wikis, tweets, discussion forums, RSS, Enterprise 2.0—and view social media as more work to do, more information they need to sift through in addition to emails and voicemails, instead of taking a step back and thinking through the work they and their colleagues need to get done, and then determining how these tools can help them achieve their objectives in a more productive and effective manner.
LM: If you dare to dream, where does social media take business communication five years from now?
Gonzalez: In five years, we won’t be talking about “social media in business,” it will just be business. This is history repeating itself. Back in the early 90s, as the Internet and web were creeping into the business world, we were having the same types of conversations, and everybody (thanks to analysts and pundits) were putting “e” in front of everything. The Internet is now ubiquitous, and we don’t even think about it as we go about our work. The same will be true with social media.
That said, here are some general predictions: First, the worlds of social media and mobile computing—smartphones and tablets—will continue to merge, and that’s where a lot of the innovation will come from; second, email will become less relevant, especially for young professionals who prefer texting; third, “public” social media tools like Facebook, Twitter, and LinkedIn will become better integrated with “Enterprise” social media tools, leading to faster connectivity and enhanced business intelligence.
LM: While humans love to communicate, we don’t like change. What would be a simple piece of advice for a logistics manager who may be reluctant to gravitate toward social media?
Gonzalez: Don’t fear it, and don’t fight it because sooner or later you will have to use it. Think beyond Facebook, Twitter, and LinkedIn, and don’t get caught up in all the buzz words. Instead, focus on the work you and your colleagues need to get done and see if social media tools are a better, more effective solution than email, conference calls, and other ways you’re currently communicating and collaborating. Finally, encourage the young professionals on your team to take a leadership role in finding opportunities to improve existing processes using social media, and train/mentor colleagues who are less experienced using these tools.
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