Mandate Fixation

WHEN YOU ARE COMPELLED to do something, you rush to get it over with. So it is with RFID. Pressured by mandates, manufacturers and distributors focus so much on compliance that they fail to see the technology’s long-term business value, according to Thomas K. Ryan, vice president of value chain at Boston-based consulting firm Aberdeen Group.

“The true benefit of RFID is that you can recognize the contents of a carton without having to tear it apart,” Ryan says. “But RFID’s benefits are enabled by the tag, not caused by it. If you don’t change your warehousing operations, you won’t get the benefits.”

In his new report, “RFID in the Consumer Industries,” a study of more than 200 companies, Ryan offers a “fulfillment solutions framework” that helps supply chain and operations execs spotlight the areas where RFID would add the most capabilities. A color-coded chart provides a bird’s-eye view of RFID’s impact on the total enterprise, dividing it into areas that would and would not derive advantages from the technology.

An important thing to keep in mind, Ryan cautions, is that RFID is far from mature, with a high failure rate in pilot projects. “No sane business would put a process in place that failed about 20% of the time,” he says. In addition, most tags in use today are passive (without their own energy source). “RFID is really two pieces. So far, the mandates require what I call a ‘kamikaze’ tag — it’s cheap, it’s short, it makes a one-way trip, and it dies in some warehouse. The second type of tag, which is active, is reusable and is attached to an asset that has value.”
Rama Ramaswami