Get more BANG for your IT buck [Page 4]
-- Logistics Management, 4/1/2006
Page 4 of 7 -- When will logistics and supply chain managers begin to see the ROI in RFID?
A number of the early participants in mandate programs are less concerned with the physics or cost of RFID readers and tags. These companies recognize that the value of RFID is buried in the data that is now available and they are looking for scalable solutions that provide them with the capability to turn this data into information that improves their supply chain business decisions.
There have been some early success stories of companies that have improved inventory position with better visibility, increased sales through better promotion execution, and improved operational efficiencies as result of implementing RFID.
What are the most important factors logistics and supply chain managers need to keep in mind when considering an RFID project?
Any successful RFID initiative must develop business strategies that benefit both your company and your supply chain partners. As stated earlier, the true value of RFID lies buried in the data. RFID technologies provides access to information that gives companies the potential for end-to-end visibility of their supply chain, but the decision as to how to respond to this information is critical.
Developing a business strategy that determines what data is important, which business processes need to be connected to RFID-enabled applications, and, most importantly, a strategy that defines the business rules that enable quicker sense-and-respond capabilities for key events in collaboration with supply chain partners should be the number one item on the agenda.
Are supply chain managers anywhere close to getting full value out of their RFID investments? If not, what message would you like to leave with them that will help them get more out of their RFID investments?
MW: There are two main messages I would like to share. The first is that there is no substitute for experience. Even though the benefit case may prove hard to justify during a pilot project, you will gain invaluable experience. If your company is waiting for all the issues to be solved, stop waiting and get engaged in your own pilot program.
The second message is for shippers to look beyond implementation strategies that are limited to customer mandate compliance. Companies need to consider their deployment options beyond compliance in areas such as asset management and work in process manufacturing.
Hot Trends: SOA, On-Demand
Logistics Management: We’ve already mentioned the growing importance of Service-Oriented Architecture (SOA) and the rise of the on-demand software model. Let’s address SOA first. What does it mean and how do shippers stand to benefit from moving to SOA?
John Fontanella: SOA addresses two issues that directly impact supply chain performance. Today, applications have a very difficult time communicating with each other because they all present data differently. SOA greatly reduces the cost and time of integration by standardizing the way all applications and data sources ask for and retrieve information.
The second area, flexibility of applications, will have a huge effect on how business processes are designed in the future. Rather than have software dictate how we design business processes, SOA allows business users to use the functionality and data of many different applications at the same time, thus creating a process that meets the exact need of the business.
What are the biggest hurdles for a company moving to SOA?
SOA forces companies to think about technology in support of the business in an entirely different way. It requires that a new relationship be built between IT and the business user, one that is much more collaborative than we see today.
How do shippers arrive at a decision to move toward SOA?
Companies may already be using technology based on SOA principals and don’t know it. Supply chain and ERP vendors have or are building platforms based on SOA. Internal to the company, SOA is first adopted to reduce the cost and time of application integration. Continued...
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