Recognizing Real RFID Adoption Potential

Three critical questions to answer before embarking on a radio frequency identification initiative

There are three key factors that can determine where significant radio frequency identification (RFID) progress will be made over the next four to five years. RFID adoption breakthroughs depend upon a baseline of value, physics and collaboration. The pace and scope of your company's RFID adoption can be gauged by how well some key RFID blocking and tackling questions can be answered about your solution's value, physics and collaboration.

What is taking RFID so long to progress from today's stagnant state of piloting and establishing standards into its predicted ubiquitous role in value chain commerce? You should understand that great expectations for RFID adoption have been set by vendors of RFID products and services without regard for some basics. Ubiquitous — don't believe it seriously. Where will RFID make a difference?

Let's take a look at a simple method that can separate the legitimate breakthrough opportunities from the rest, and also how an exciting breakthrough RFID adoption is now unfolding in the pharmaceutical industry.

Question 1. Do you have a real value proposition?

Consider a compliance-only situation to be a red flag. There clearly must be more than simply compliance for you to succeed with RFID. Just look at Wal-Mart's suppliers and how they have failed to embrace RFID throughout their own supply chains. As a rule, they continue to fight RFID, and as they are strong-armed into it, they adopt only the basics of "slap and ship." The bottom line issue for compliance RFID is that the significant tagging costs that are incurred are not offset by minimal benefits.

It is important to have a business case for implementing RFID. Costs, benefits and timing all need to be assessed and quantified. Get hold of a best practice assessment process and value calculator tools to define your solution's value.

Question 2. Do you understand the physics of your environment?

Identify and understand RFID requirements from the ground up in your manufacturing and distribution operations. Know how fast you will need to read tags, from what distances and be certain your bar coding that is already in place does not address your data collection needs. Recognize that metals and liquids in your product or its packaging can pose significant physics limitations for RFID radio waves.

Know what RFID can and can't do. Be sure to understand why it must be only RFID and not another less expensive means of data collection. Consider compensating for RFID limitations if another form of data collection can work in parallel. Your solution may need to be a hybrid approach of RFID, barcode and other data collection devices.

Question 3. Are you willing and ready to establish new collaboration wtih your supply chain partners?

Make sure all partners in your supply chain understand how they win with RFID. Sharing of data requires a level of trust that may not already exist. New data sharing agreements must have clear benefits for each partner.

Ownership of the RFID data is a key element of collaboration. For example, if a distributor collects data that can be used by another trading partner to then make deductions against the distributor, there will be reluctance to share data. The lesson here is that ownership and access to the data will need to be negotiated early on.

Pharma on the Fast Track

The pharmaceutical industry is today's fast-track RFID opportunity. The industry is where the first major breakthrough in RFID adoption is happening. The major driver of RFID is the need for what is called electronic product pedigree (e-pedigree). e-Pedigree can be defined simply as the ability to validate and authenticate a drug's chain of custody from manufacture, through distribution to dispensing. e-Pedigree provides a means to reduce the occurrence of counterfeit drugs throughout the pharmaceutical supply chain.

Answer 1. There is a real value proposition for the pharmaceutical supply chain

e-Pedigree benefits extend beyond the critical area of patient safety into an array of strategic and economic benefits. Several comprehensive business cases from both within the pharmaceutical industry and from independent research companies have concluded that pharma supply chain partners (manufacturers, wholesalers and the retail pharmacy chains) will realize a positive return on investment. The ratio of RFID tag cost to average pharma product margin truly differentiates pharma's return on investment from other industries, likeconsumer goods.

Answer 2. Physics challenges are being understood and overcome

Some practical answers have resulted from the extensive RFID piloting done in this industry. Small size of tagging surfaces at the item level and products that contain metals and liquids are some of the physics hurdles that have been overcome. Currently, pilots are testing high frequency (HF) RFID tags as a technical solution to many of the physics challenges. Bar codes will be used in parallel at the item level, providing a means for back-up data collection.

Answer 3. The pharmaceutical supply chain is building new collaboration

e-Pedigree has become a catalyst to bring a new level of collaboration to the pharmaceutical industry supply chain. This collaboration is based on each player recognizing that the sum total of collaborating effectively is better than the individual pieces. Many of the quantifiable benefits in pharma business cases depend on new levels of collaboration around data. The key to collaboration in the pharma supply chain is that all partners obtain value. Ultimately, expect the pharma manufacturer to own the data because they will gain the most from the transformational effects of real-time supply chain visibility as it extends out to patients in the future.

What Does This Mean for Me?

Up front, recognize that there is a barrage of biased RFID hype that is being pushed in your direction. Don't be fooled into believing the "ubiquitous" RFID story. Understand that you don't really need to immediately jump on the RFID bandwagon before it's too late. Ultimately RFID will have an impact only in focused applications that solve a problem in a unique way and that are value driven. A good way to quickly evaluate your RFID opportunity is to answer the three questions discussed in this article. The pharmaceutical industry is moving rapidly towards RFID adoption. For pharma, there is a real RFID value proposition, physics challenges that have been overcome, and a new collaboration process that is working across the supply chain.

About the Author: Robert Goodman is the founder of Get It Done Consulting, a consulting firm providing RFID and supply chain services. He can be reached at [email protected] or 617-852-3805.