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Growth of SCM RFID integration slow among manufacturers

RFID was a popular buzzword a few years ago, but adoption of RFID in manufacturing has been slow. One of the biggest -- and, if successful, most rewarding -- challenges posed by this technology is SCM RFID integration.

A few years ago RFID was hotter than hot. Mandates from companies such as retail giants Wal-Mart and Target propelled a lot of interest and it seemed like nearly universal adoption of radio frequency identification (RFID) was right around the corner, despite challenges such as integration with supply chain management (SCM) systems. SCM RFID integration in manufacturing seemed poised to take off.

The mandates haven't gone away and the big retailers remain committed to their RFID goals, but even the most enthusiastic boosters of RFID have had to set their sights a bit lower, said Noha Tohany, an analyst at AMR Research.

For those contemplating RFID and wondering about integration with a supply chain management system, Tohany said the long-term consideration for manufacturers is how well an RFID system can track everything, right down to individual pieces and parts.

"(Vendor) pedigree is seen as increasingly important because the big risks in the supply chain often have to do with quality," said Tohany. Companies are finding that there can be advantages in tracking every item by serial number in order to know exactly who touched the product at any stage of production. That makes it possible to identify and fix problems before they happen -- or assign blame after a problem crops up.

"Even now, you want your SCM system to focus on batches if there is a recall or some other problem, she said. "RFID is very important for that."

Still, RFID hasn't seen a lot of growth. "It is still a fairly young technology (lacking) the critical mass of people using it -- which is necessary to drive the creation of standards and best practices for implementation," Tohany said.

The bigger issue is that even if the technology is mature, the supply chain system and the supply chain organizations don't know what to do with all the information RFID can supply.

For example, many enterprise applications that include a focus on supply chain execution or supply chain visibility deal with SKUs in a product category. The applications might be able to count the number of items for a given SKU but they aren't designed to process items with individual serial numbers. So, the trend toward serialization and an end-to-end supply chain will require new thinking, new software apps and collaboration up and down the supply chain to make sure suppliers and customers take advantage of RFID and share RFID information, Tohany said.

The serialization trend will also affect the scale of IT, as terabytes of information become a more and more common unit of measurement. Up until now, warehouse systems weren't designed to deal with one unit serialization, just with counts.

"If we are talking about products that are expensive, like consumer electronics, or things that need a lot of safety checks like pharmaceuticals, we will definitely need to be able to track each unit on its way to the consumer," she said, "and we will need to make sure the supply chain applications can do this."

About the author: Alan Earls had his first exposure to computer programming on one of Digital Equipment Corp.'s PDP-8 minicomputers. He went on to serve as editor of the newspaper Mass High Tech and is the author of the book Route 128 and the Birth of the Age of High Tech, a photographic essay on a key part of Massachusetts economic history. He currently is a freelance writer, covering many aspects of IT technology and writing regularly for SearchManufacturingERP.com.

This was last published in December 2009

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