Essay Preview: Rfid
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Despite some customer mandates, its long been thought that the initial rollout of radio frequency identification tags would apply to circular flowing logistics assets, i.e. pallets, bins, containers and other reusable items.
In the past, business has sought better control over these items, mostly to avoid shrinkage and the associated cost of replacement. But as RFID deployment grows, companies are connecting the technology with logistics asset management to reduce capital costs, improve customer satisfaction and the availability of assets in the right place at the right time.
“When Wal-Mart jumped in with both feet, the suppliers all said, thats where the money is going to be,” says Tom Ryan, VP of value chain research at Aberdeen Group. “But up until that point in time, their pilots, their processes, their focus was on things like logistics assets.” The reusability of tagged assets makes the technology price attractive right now, as opposed to “one-way kamikaze tags that are cheaply made, poorly trained and make a one-way flight into a warehouse,” Ryan says. “Assets are the allies, we want our boys to come home.”
Ryans new RFID logistics asset benchmark report confirms that logistic asset shrinkage is unacceptably high, greater than 10 percent, for about 20 percent of respondents. Almost half of respondents indicated that logistics asset management consumes 5 percent or more of corporate revenues.
By itself, this finding is a red flag, but the report goes past cost containment to explain the need to improve capital utilization and increase asset availability.
Beyond tagging and tracking, Ryan says businesses should measure asset performance based on overall customer satisfaction and asset availability. Forward-thinking companies recognize that a key to revenue growth is customer retention and organic growth. Thus, RFID-enabled logistic asset management is a key to improving customer satisfaction, which in turn unlocks customer retention.
“Its quite simple, the right products are placed correctly inside the right container and the container is available when the customer needs it,” Ryan says. Thirty-one percent of respondents said existing technology supported asset management operations have resulted in 7 percent improved customer retention.
Its not a tough metric to gather, though it should be understood that service levels vary across industries. Theres more forgiveness in consumer environments where bread trays and rolling carts dominate, (often at the cost of excess asset inventory). But on the manufacturing side where parts bins feed parts to a robotic plant, parts placement is