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8/2/2004
11:17 AM
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Opinion: Focus On RFID's Possibilities, Manage The Pitfalls

RFID's future in corporate application portfolios depends on companies leveraging RFID to improve their responsiveness and become more adaptive. But that will take time. Just as we gave the bar code time to mature, we must demonstrate the same level of patience with RFID and its technology suppliers.

The introduction of RFID into business-technology portfolios has been just as interesting to watch as the technology itself, with enterprises dividing into several camps: the early adopters; the mandated; and those asking "What's new and valuable here for my enterprise?"

Not surprisingly, these groups have yet to find common ground in fully understanding the opportunities presented by RFID. This has led to mixed responses ranging from post dot-com apprehension to euphoric vision about the ways RFID can improve a business. RFID's future in the application portfolio, however, depends on companies finding common ground. In my view, their focus should be on leveraging RFID to improve the responsiveness of what I consider "The Adaptive Organization."

If we take a moment to look beyond current mandates, beyond debates about what is or isn't real, we see enterprises being pushed to react ever more swiftly to changing market conditions. The adaptive organization is one that senses business and market fluctuations and responds appropriately. However, many enterprises come up short in the "sensing" department.

I'm not suggesting that enterprises haven't made improvements in their adaptability. Many manufacturing companies, for example, have evolved from push-based to pull-based supply chain models (Just look to any automotive kanban just-in-time manufacturing organization.) However, the pull capabilities are often still lacking where the rubber meets the road--at critical checkpoints in product flow. For example, enterprises must react immediately to decreases in demand, but demand signals based on bar codes aren't fast enough.

At the same time, enterprises must improve receiving and logistics operations to ensure appropriate reaction throughout the supply chain.

How does one make these adaptive improvements? Simple: Improve the sensing capabilities of the enterprise. This, in turn, is the driving force behind RFID at the perimeter of the enterprise, but it's the integration of RFID with enterprise execution systems (i.e., applications) that drives and manages the response of an adaptive organization to market changes.

For example, RFID implemented to read a pallet at a time can improve the receipt of goods, but it's the further notification that many of these goods are being shelved (versus cross-docked) that can send an "I'm full" signal to suppliers and thereby stop further shipments until more are required.

Moreover, this signal can ripple upstream if the supplier also has enabled the sense-and-respond capabilities of an adaptive organization and has leveraged open-system RFID capabilities that are synchronized with a supply-chain partner.

Taking this notion of using RFID to make faster decisions a step further, let's assume that ERP systems are the brains of the enterprise and are linked to the RFID system. The "brain" could be used to compare the realities of product positions to forecasts. Moreover, it would analyze the environment to readjust the course of action as simply as a pilot changes direction due to weather reports ahead.

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