There are lots of conflicting assessments. Some crow that RFID offers the sure path to supply chain profitability while others cackle that RFID stands for Rapid Failure Into Decline! You want clarity and the ability to learn from others' mistakes to mitigate risks and ensure project success. What you need is a roadmap for the successful implementation of an RFID project.

RFID projects tend to be difficult because they are different from most other SAP projects. They involve both the physical deployment of tags and readers as well as the logical deployment of system interfaces, configuration, and process integration (Figure 1). Therefore, if you neglect any of the challenges, the overall project may fail.

Figure 1

RFID roadmap

While individual RFID projects differ, they share a number of key challenges for which recommendations should help companies navigate the RFID implementation landscape. I'll cover six key challenges to an RFID implementation and provide recommendations to help you overcome them.

Challenge 1: Your Business Case

Technology is a business enabler and RFID is no exception. Make sure the business case to adopt RFID is sound before you start deploying the technology in your business. It's the business case that's driving the project and it must be able to stand on its own. Remember, deployment is not just an excuse to explore RFID technology.

To make your RFID business case, set clear objectives, then prioritize and monitor your efforts to ensure that the case is being made. The objectives of your RFID project should be unambiguous and communicated throughout the team. RFID can improve many areas in your supply chain, but it is important to clearly identify the opportunities and the goals you are trying to achieve.

The next step is to prioritize your goals and set specific business objectives before launching a pilot or deployment. Possible RFID-enabled business objectives include:

• Cost reductions through increased scanning efficiencies
  
  
• Enhanced data accuracy via improved first-time read rates
  
  
• Improved asset transparency throughout the supply chain
  
  
• Increased operational efficiency via aggregated scanning

Once you've targeted specific business objectives, establish business-based metrics to measure the success at your company. Regularly monitor these metrics to determine if the RFID project meets expectations. A common obstacle for RFID implementation teams is to focus too much on technical metrics (successful tag read rates, scan speeds, etc.) and not on business performance. Use value-tracking tools to capture the impact of RFID on inventory, cycle time, related employee productivity, and other business metrics.

Many employees are analyzing RFID technology to determine how it can fit in their company's supply chain activities. Don't make the mistake of letting technology drive your business processes or determine where you will try to extract value. Set goals that are consistent with overall corporate strategy and contain very specific criteria for measuring success, and then monitor how RFID is helping you achieve results.

Challenge 2: Size

RFID projects are unwieldy because they involve new hardware, software, integration, and process redesign. I recommend that you do a small pilot project to get a feel for what will be involved in the larger enterprise-wide RFID implementation.

Whether you consider RFID to be the latest revolutionary technology or just the next step in automatic information capture, it's likely that your first couple RFID deployments will be full of surprises and unintended consequences. For example, I know of one company that discovered monitoring its quality of incoming tags from the vendor was a critical step. The firm discovered a 10% to 20% failure rate in new tags and insisted on tighter quality controls.

The only way to overcome the uncertainty in RFID implementations is to shorten the learning curve. The faster you can identify, analyze, and overcome RFID implementation hurdles, the greater your ability to reap the full benefits this technology has to offer. Small, quick projects are a low-risk way for your RFID project team learn what challenges and pitfalls await them and how to overcome the challenges in an efficient, timely, and preventative manner.

Challenge 3: Technology and Environment

RFID communication is based on radio waves, which impose certain constraints due to the electromagnetic spectrum and the laws of physics. Some substances are problematic for radio waves and your company will need to engineer workarounds. For instance, metal can distort radio waves and water can absorb them. In addition, other technology — cordless telephones, microwave ovens, etc. — can interfere with RF communication.

To avert would-be problems, catalog all the items you plan on tagging, conduct a site analysis, and perform pre-pilot field tests. Investigating RFID requires an understanding of your physical environment and the inventory and packaging you are working with. In your environment, a low-frequency tag may be desirable in order to have the RF penetrate non-metallic containers containing high-water content products. On the other hand, you may find the need to use higher frequency tags so you can scan at a distance with quicker data transfer rates.

The bottom line is that not all radio frequencies are equal and determining the best fit requires due diligence. I recommend cataloging all items you plan on tagging to determine if different types of tags are required. No single tag can effectively operate with metal, liquid, glass, wood, and paper.

An important step in the RFID analysis process is to create a descriptive list of all the functionality and constraint options by which you will measure RFID technology. Some common measurement characteristics are:

• Size
  
  
• Shape
  
  
• Read range
  
  
• Battery life
  
  
• Frequency
  
  
• Read only, read/write
  
  
• Passive/semi-passive/active tags
  
  
• Dwell time (how long an item needs to be in the read zone)
  
  
• Tag positioning on product

Before committing to a particular RFID technology, conduct live-site field tests. Make sure you understand how a particular technology performs in your environment and the variables that might influence performance. Perform a site analysis to locate possible sources of interference. Put controls in place to ensure new devices introduced into the environment are checked for RF interference before they become operational. One of the common mistakes in RFID implementations is not testing the technology in conditions that are similar to the production environment.

Challenge 4: Choose Your Technology

In many ways, investing in RFID and committing to a vendor is like buying your first personal computer. As time passes during the evaluation phase, you notice prices declining while product features are being enhanced. The physical size of the components becomes smaller while the value of the technology to you and your company increases. The horizon is always a little sweeter, so you may find yourself continually evaluating the latest and greatest equipment. This becomes a problem when your implementation timelines start to slip because you're holding out for some future technology or enhancement. Keeping the business case in the forefront of your evaluation combats the tendency toward too much experimentation.

Applying RFID to the supply chain is still in the early phases of the technology adoption life cycle. As a result, standards have yet to converge and there are many competing technologies, services, and vendors. Ultimately, your business needs to commit to a course of action. Once you commit, the clock is running. Quick, successful deployments are required to reap a return on your RFID investment, because the minute your commit, the value of your RFID investment begins to depreciate.

Challenge 5: Lack of Focus

The potential business impact of implementing RFID is great enough to warrant the creation of a core team that focuses specifically on RFID-related issues. The ideal core team is cross functional because the application and benefits of RFID extend beyond the supply chain into other aspects of business. A critical step in forming the core team is to obtain executive sponsorship and participation from key members in the supply chain — including warehouse subject matter experts (SMEs) and IT representatives.

Challenge 6: Prior Bar-Code Investment

It is unlikely that RFID technology will completely replace bar-code technology. Some analysts predict bar codes will be around for another 10 to 15 years. Implementing RFID incrementally and slowly replacing bar codes over time is a more reasonable strategy to follow. In some cases, bar-code technology may be the right choice for data collection. Instead of focusing solely on RFID, take a broader view of automated information capture technologies to determine the advantages and disadvantages of all potential technologies.

There is no single recipe for success with RFID implementations. However, all RFID decisions should be based on business strategy and meeting predetermined business cases while remaining flexible for future technology growth. Keep in mind that the roadmap to an RFID implementation typically involves stops at each of the six points mentioned.

Taylor Erickson

Taylor Erickson has more than 12 years of experience with ERP systems. He has worked with SAP for eight years, specializing in SD/SCM, reporting, and compliance. Taylor is a member of the Institute of Internal Auditors and has facilitated global SAP system implementations and trained numerous SAP customers. He is currently a manager at BearingPoint. Prior to that, he was a consultant for SAP America, and later, practice director of corporate compliance and security for Virtuoso, LLC, an SAP FI/CO consultancy. His latest research is on the effects that Sarbanes-Oxley will have on IT departments running SAP, and leveraging existing R/3 functionality to achieve compliance.

You may contact the author at taylor.erickson@bearingpoint.com.

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