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Lots of people today are talking about RFID. There are special groups who are encouraging businesses, government and NGO for using RFID.
What is RFID and where is it being used ?
RFID stands for Radio Frequency IDentification. It is a very old technology being used at a lot of places, and we were not aware of this implementation.
How old is this technology ?
Entrance and hence even the exits had installed RFID based system to avoid theft in big shopping plaza’s.
Remember that Toll collection system being used on the free way which reduces the time to collect Toll and thus reduces the cost involved to collect toll. The Toll collection body had people’s car installed with Radio Tag which could be identified when they cross the Toll booth and the Toll would get collected automatically.
Ever thought how the Smart Card ID is used to open a secured area within the business premises. Well it uses a low powered RFID tag to identify each individual who is trying to gain access to a secured area.
These were some of the earliest uses of RFID.
Today when people talk about RFID, they are mostly talking about implementing it in places where they could be used more effectively to enhance the day to day business activities of the business.
RFID can be almost use anywhere in an organisation which need to track and locate items / things in near real time or real time.
Given below are some of the examples for usage of RFID.
1. In hospitals for tracking equipment, patients, medicine and drugs.
2. In office to trace important document on the shelfs.
3. On road to pay Toll on the Toll both.
4. In mobile phones for paying using credit/debit card.
5. Accessing secured area
6. Locating items in whole of supply chain in near real time to real time
7. In library to track all the books and other assets of the library
8. In coal mines for locating persons and equipment
9. In pharmaceutical industry for identification of fake drugs and medicine
Some of the controversial uses of RFID are as given below
1. In humans to track movement within the enterprise premises and find out what is the amount of time that they spend at their desk and other places
2. In passport / government document issues to public for easy identification of duplicate and counterfeits
3. In school to track the students attendance for all the classes
Integration perspective
For an RFID implementation to be successfully, one has to integrate the RFID system with its business partners to leverage most of their implementation. Suppose RFID was a standalone system just by itself, then it would not be of any use as the information flow would be stopped there.
Integration is of two types, integration in the internal systems across the enterprise and integration with business partners, vendors and customers business systems. No matter how much of integration is done internally within the enterprise, if the enterprise is not able to leverage on the business partners systems/ application then they would be losing out on major deals/profits. Which could have been easily realised by integrating into the business partner’s systems.
Integration with Business Partner’s Systems was traditionally done with EDI on top of VAN’s. This system was very expensive as the VAN provider would charge the business on per byte / kilo byte of data transfer. This was only implemented by large corporates with their important and major business partners / customers. With the advent of Internet these business also started integrating the smaller business partner / customer into their IT systems.
When implementing RFID one always has to keep in mind about the integration of their systems which can help in saving manual labor ( which can be re-directed to the core functions of the business ), use automated process to do small and mundane business tasks, increase visibility into the business processes and or inventory depending on the business that an organisation is in.
We will take a real life example of a Retailing company here to demonstrate how RFID and integration would help them archive more profits and reduce their costs per item sold.
Super Discount is a medium sized retailer who has around 300 vendors supplying them with finished products. They currently have a manual processes for doing all the tasks from receiving the products, stacking them onto the self by monitoring the shelfs and also doing other back end systems.
The cycle starts from receiving the products from vendors. Since they have a manual process, a person is designated at the warehouse to count all the boxes and pallets that have arrived from the vendors and update the inventory system at the warehouse. This takes up a lot of his time as each and every pallet and box has to be checked and counted for the no of items. Once the items have been successfully received they are stored in the warehouse for further distribution to the retailing sites.
The retailing sites order for the products when they find they are running low on the product. The retailing site has a person who is also designated to continuously check the inventory physically and update the inventory control system. This takes up most part of his working hours and he/she is not able to devote time to the retailing part of the business. Another person at the retailing site has the responsibility of keep optimum about of products on the shelfs as and when required. This has to be done manually by making rounds of all the allys of the store to make sure that all the items are adequately stocked all the time. When a customer shops for products and goes to the check out counter, he has to wait in a long queue, as the person who is collecting cash from the customer and passing them the bill of the purchase is doing the task of scanning the bar code which requires a line of sight. So the person at the counter has to take each individual item and pass it through the scanner to make sure that the item is billed for.
As and when the stocks at the warehouse get depleted the inventory manager at the warehouse orders for the products from the vendors and confirms with them about the delivery to the warehouse by a pre-agreed date. This whole task of manually ordering the products is the second last in the cycle. Once the products arrive at the warehouse, then the whole cycle of distribution starts again.
As can be seen from this a lot of things are done manually which lead to lower productivity and the chances for error are very high in this case. Also the processes involved in the business cycle take too much time to convey the information across the enterprise. This in turn lead to inappropriate inventory being maintained. Lost of business due to out of stock products and thus leading to loss opportunity to do business.
With the implementation of RIFD, and integrating this system into the business systems a lot of the manual tasks can be automated which lead to higher productivity, increase business as the products are almost never out of stock. All this leads to higher business and profits.
Given below is the change in the business after implementing the RFID system.
Once the RFID tagged products are received at the warehouse gate, there is an RFID reader installed either in the forklift or in the door frame of the warehouse. This reader reads the information from the tagged products being delivered. The reader sends this information to a data hub. The data hub does a lot of notification and updates to the business system. The first thing that the hub does it to update the inventory system. After this is is done a notification is sent to vendor about the goods delivered. This notification contains all the information about the delivery such as date, time, products, quantity, etc. Another notification is sent to the account department about the orders received for the payment. Another notification is send to the purchase department about the products received. All this notification is done automatically using the data hub based on per-determined business rules.
All the orders from the retailing sites are received by the inventory control system. These orders are grouped together from the warehouse for delivery based on the requirement at each retailing site. The orders are then dispatched to the retailing site. Again on the forklift or the warehouse gate, there is a RFID reader installed which reads the information on the RFID tagged products. This information is then again sent to the data hub. From the data hub, the information regarding the dispatch is sent to the retailing site, inventory system is updated accordingly. Once the products are received at the retailing site. Another reader either on the forklift or stores door read the information about the products being received by the retailing site. This information is then updated in the inventory system of the retailing site, a notification is sent to the warehouse of the delivery. All this updates and notification happens using a similar data hub application installed at the retailing site.
Shelfs on the retailing site are installed with RFID readers. These reader provide the information about the number of products present on the shelves in real time. The information about the products and their numbers is being constantly monitored by a person at the retailing site. This person then only has to update the stock at the locations where the inventory is running low. This saves the time and effort for the person to re-stock the shelves with the products, which can then be utilised for other core business related activities. As soon as the person re-stocks the shelves, a notification is send to the local hub system about the products inventory. This notification then updates the inventory system.
Once the products are being picked up by customers and they have completed their shopping, they go to the cash counter for their billing. All the products which the customer have bought, are then read using another RFID based reader installed at the cash counter. The data about all the products are read in one shot by the reader in not more then 10 seconds. This save a lot of time for the person deputed at the cash counter. So in effect the person caters to more number of customer in the same time as compared to earlier. This bring down the cost per transaction for the business. The data read by the RFID reader at the counter is then updated to the hub, which in turn updates the sale to the business system and updates the inventory. Based on the amount of inventory for a retailing site, a daily report is created automatically about the level of inventory and sent to the warehouse.
Benefits of the RFID System:
1. Real time integration within and outside the enterprise
As the information is flowing and being updated in real time with all the concerned business system. This helps in better decision making and process.
As the information is flowing and being updated in real time with all the concerned business system. This helps in better decision making and process.
Also since all the vendors are integrated in real time with the business systems, there is no delay in the orders being placed and better management of the orders information. This leads to lesser number of issues with respect to the products orders and products delivered.
2. Better Inventory management
As the orders and only placed when required, this leads to better inventory management, which leads to better management of cash and the business need not hold inventory more then require red.
As the orders and only placed when required, this leads to better inventory management, which leads to better management of cash and the business need not hold inventory more then require red.
3. Very few or no “Out of stock” situation
As the products are monitored in real time by the RFID readers placed on the shelves, there is very low chance of “Out of stock” situation, this leads to the better sales and which leads to better profits.
As the products are monitored in real time by the RFID readers placed on the shelves, there is very low chance of “Out of stock” situation, this leads to the better sales and which leads to better profits.
4. Less effort on manual task
As the data collected by the RFID readers is accurate and does not take more then few seconds to read all the products, it reduces the amount of time taken to count the stock and then store them at the designated location. RFID readers placed at key locations can also help in locating products on the warehouse floor or the retail floor. This leads to better productivity, time management and profits, as the resource utilisation is very optimal and deployed for the business.
As the data collected by the RFID readers is accurate and does not take more then few seconds to read all the products, it reduces the amount of time taken to count the stock and then store them at the designated location. RFID readers placed at key locations can also help in locating products on the warehouse floor or the retail floor. This leads to better productivity, time management and profits, as the resource utilisation is very optimal and deployed for the business.
5. Better management of return of goods by customer
In case if a customer want to return a product then it is very easy to identify the product, as each and every product is pasted with RFID tag. This tag not only identifies the products but also will be used to retrieve information regarding the date and time of when it was purchased. All this information would be used to validate legal purchasing done by a customer from a person faking a product purchase.
6. Identification of Fake products
The RFID tag is very difficult to duplicate and requires a lot of investment in case if one want to duplicate the tag. As it would required access to chip manufacturing plant. This would help in cases if the products are very valued and protect customers from cheap counterfeits which can be fatal to customers.