Magazine Article | May 24, 2009

Drive RFID Implementation Success

Source: Field Technologies Magazine

By thoroughly evaluating what the goals and potential savings are for a radio frequency identification (RFID) project, VARs can enjoy more successful RFID installations.

Integrated Solutions, May/June 2009
Active RFID and real-time location system (RTLS) technologies hold a lot of potential for organizations looking to reduce costs or improve quality. This potential leads many operations managers astray simply because there is so much that can be done and so many options. Often what occurs is that active RFID and RTLS projects grow so large and have so many objectives that the project becomes unmanageable and the opportunities for success are slowly whittled away.

There is a better way to tackle these implementations and guarantee success with high returns on investment, but it will take some planning and a determination to avoid feature and scope creep.

The first step is to identify everything that you want to accomplish:
  • Reduce the time the test driver spends looking for a particular machine
  • Ensure that every vehicle passes through several inspection points before being loaded onto a truck for delivery
  • Balance a production line to increase throughput
  • Ensure delivery of product to the production line when it is needed
There are several types of projects, and RFID and RTLS can play a key role in each of these. However, there are other key costs that many people forget to consider. The second step, therefore, is to determine what the costs are for both the RFID and RTLS but also the other costs. Other costs could be other third party hardware, software and services such as handhelds, printers, lights, yard management software, integration into some back end system, and many others.

Then there are the internal costs: wiring of the hardware into the facility, IT services for setting up all of the equipment on internal networks, the project management during the installation, and such. Many times, the cost of the RFID or RTLS is only a small portion of the overall costs, so this step is critical to being able to really understand the true costs of a project. Determining overall costs will require involving all of the internal stakeholders in identifying the costs that they will incur if a project is put into action. This process will require discussions with the IT department, facilities managers, and operational personnel. They will have their own costs associated with the project, and they will also need to be a supporting member of the project team in order for the project to be successful. By getting the customer stakeholders involved early, the cooperation is increased, and future roadblocks are removed before they can gain strength.

Of equal importance is understanding how a system like this may add value and to thoroughly document all of the potential cost savings: labor, holding costs, late fees, production throughput, shipping costs, equipment costs, and all other associated costs. The next step is, therefore, to look at the potential savings for each project. Remember that the savings must be related to the key objective and assumes that the key objective is met. The temptation is highest at this point to try and combine projects, and that is where most of these types of projects fail. This is because the complexity begins to creep upward at an exponential rate due to:
  • Unknown process interfaces
  • Misalignment of the objectives and goals of each individual component
  • The introduction of requirements that are in conflict and require compromise or complete reworking
By keeping the projects separated, they can be evaluated on their own merits and the true ROI determined. In many cases, combining projects causes one project to have a diminished ROI while the other experiences an unwarranted boost.

By taking these two key steps, you will be able to create a list of smaller projects that can be prioritized based on true ROI and benefit. You will then be able to execute a smaller project that will allow you to test and evaluate your chosen technology, knowing that you will be able to achieve your ROI on that one project. You can then look to the remainder of the list and use the knowledge you have gained to reassess and execute projects with a lower risk to everyone. My experience has shown that small, targeted projects yield higher ROIs with lower risks. The rollouts of these smaller projects into larger projects also yields much higher success.