Time to Roll with RFID

Knowing about RFID is only the first step to competitive success

By Owen Davis

Radio frequency identification (RFID) technology has been around for more than a decade, slowly gaining momentum. But only recently has it taken a front-row seat as a promising and viable option to track, monitor and manage inventory, assets and shipments.

Unlike its predecessor, bar codes, RFID requires a complete and dedicated investment in people, systems and processes. It's not a quick fix or a place to test the waters; rather, it requires a complete paradigm shift and process re-engineering. But it's an investment that companies are beginning to accept. Market research firm Gartner Inc. predicts the market for RFID products will grow from $504 million in 2006 to more than $3 billion by 2010.

Some companies turned to RFID in response to mandates from major entities like Wal-Mart, the U.S. Department of Defense and the U.S. Food and Drug Administration for their supply chain partners to comply with RFID initiatives. A greater number of organizations — more than 40 percent — say they are implementing RFID to improve operations and supply chain processes, according to ChainLink Research.

That level of implementation and timetable of implementation creates two urgencies: a demand for a skilled RFID workforce and training for existing employees now forced to embrace this strange new world of technology. Since most of the early adopters of RFID are either self-taught or skilled in the more technical aspects of RFID, the responsibility lies heavily on No. 2: training (and retraining) the workers who've been doing it the old way.

According to author and futurist Stewart Brand, once a new technology rolls over you, if you're not part of the steamroller, you're part of the road. It's time to roll with RFID.

Challenges and Skills

Since its inception, RFID has presented a number of challenges. Among those are the cost and quality of RFID labels, limited competition between manufacturers trying to market their RFID systems or products, and return on the RFID investment. But one of the greatest challenges has been lack of end-user awareness about RFID technology and its potential applications.

The end-user group — those who work in companies who are using or have the potential to use RFID technology — lacks the understanding that RFID is not a tool unto itself, but rather, an enabling technology with systems to capture and use data for various applications. The possibilities are limitless but are now just being explored to their full capacity. Manufacturers such as Proctor & Gamble and retailers such as Best Buy and Sears are now using RFID for physical asset management, theft prevention and process tracking. Other companies are using RFID to expedite shipments through customs by storing shipping container information electronically for easy retrieval.

RFID end-users at all levels need to understand the basics of RFID technology, the advantages and challenges, the standards and expectations, and the return on investment from RFID technology. Moreover, they should be given a keen understanding and as well as a physical perspective of how the RFID process works: tracking, tracing and authenticating goods as they move through the supply chain. And they should be given specialized training, as needed, regarding mandates, technology updates and how to tag challenging materials.

While this may be obvious for those production or distribution-area associates who are in direct contact with RFID tags or readers at end-user companies or distributors, the training needs to extend to management whose responsibility is business processes, change management, ROI calculation or information technology. By educating this combination of direct workers and those who oversee the big picture, end-user companies will not only learn to use the technology, but immerse themselves in the new RFID-enabled culture, and discover additional applications and solutions to benefit their business.

Innovation and Process Improvement

In the case of RFID, training and skill development of employees is just the tip of the iceberg. Successful "employee" RFID training isn't particularly complicated; the basics can be accomplished by using traditional operational training processes. While it's essential that workers understand the proper placement of RFID devices, how to use and monitor readers, and how their role connects with that of the next department, it's the next level that RFID-enabled companies should strive to achieve.

That step is critical knowledge transfer, i.e. how to use RFID technology to improve the supply chain process — make it faster, improve the quality, or better track and monitor orders or shipments. The ability to apply the extensive collection of data mined by using RFID to improve the selling and/or purchasing process is also a logical application.

An organization that supports a higher level of technology such as RFID likely has a system for process improvement already in place. The new challenge is to marry RFID with existing processes and allow that dramatic process change to facilitate innovation. And businesses that know how to turn creativity, knowledge and innovation into dollars are positioned for success.

Creativity and innovation isn't just for the marketing team. Associates at all levels must look at the process and think about how it can be used to do things better. They must be encouraged to generate and share ideas about how RFID technology can be used. Creative people plant seeds: they aren't afraid to suggest an idea, for fear it will be rejected or worse — considered "silly" by a supervisor or co-worker. They are willing to take giant leaps, or at least small steps, toward their creative vision. In a team environment, these innovators can look at an established process, or start with someone else's ideas, and come up with ideas to change it in a positive way.

Businesses that have implemented RFID must take concrete steps to encourage innovation in order to gain maximum success. They must find and develop talent in their employees, making them engaged and active participants. Management must inspire and mentor their direct reports and connect them with others who can help transform their ideas into action.

Additionally, companies must capitalize on relationships with employees as well as customers, to develop and enable creative ideas. For example, Best Buy went directly to its suppliers and customers and asked them how to implement and use RFID technology that would serve them better.

Without innovation, even the best company will succumb to its rivals. Successful implementation of RFID requires more than learning and using a new technology; it demands applying that technology to existing or future problems and generating new, exciting solutions.

By doing so, RFID will make the company both efficient and profitable. The possibilities are extensive: RFID adoption promises more accurate data, improved delivery reliability, reduced waste and defects, more supply chain visibility, lower labor expenses, improved marketing data and reduced shrinkage (Frost & Sullivan).

According to former General Electric CEO Jack Welch, an organization's ability to learn — and then translate that learning in action — is the ultimate competitive advantage. RFID offers both the opportunity to learn and to win in the global marketplace.

Read the full-length version of the sidebar "The EQ Factor" by Scott Barrella, MS CPIM.

About the Author: Owen Davis is managing director of U.S. Operations of TrainingFolks, which specializes in performance consulting, leadership development and designing and executing employee-based development systems. He can be reached at [email protected].