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RFID Help From The Outside
Small and midsize companies are turning to systems
integrators and consultants to help them design, test, and implement RFID
initiatives
By Laurie Sullivan, InformationWeek
March 28, 2005
URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=159905595
When Bradshaw International Inc. asked
several software vendors to help it come up with a plan for its radio-frequency
identification project, the advice was this: Rip out the existing IT
infrastructure and start over. But Bradshaw refused. So the midsize importer of
cookware turned to systems integrators with RFID expertise and knowledge for a
more palatable plan.
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Many businesses, particularly small and midsize
companies that don't have extensive IT teams or well-padded IT budgets, need
systems integrators and consultants to help them map out business cases, manage
projects, and test implementations to eliminate interference with other
technologies in their supply chains. More companies are turning to specialists
that have the expertise and resources that enable them to keep abreast of a
quickly evolving technology. Despite Wal-Mart Stores Inc.'s and other retail
chains' aggressive positions on using the technology, passive RFID, which
relies on batteryless chips and readers to power them, is still a relatively
new semiconductor technology that few technicians and executives have expertise
in.
Granted, there aren't many small and midsize
businesses that are using or testing RFID yet. In a study conducted earlier
this year by InformationWeek Research, only 12% of the small and midsize
companies that responded use RFID, and only 22% are pilot testing. The
rest--66%--aren't using or planning to use RFID.
But Wal-Mart and other retailers are asking more and
more suppliers to step up; by January, Wal-Mart will require the next wave of
suppliers to begin shipping RFID-tagged cases and pallets.
A closer look at InformationWeek's survey
indicates that small and midsize businesses could use some RFID help. Of those
responding, 74% said it was difficult to select a primary RFID hardware vendor,
and 65% said it was difficult to select a software vendor. Choosing a
third-party service provider to help wade through an RFID implementation is
even trickier: 82% of small and midsize vendors responding said choosing a
services provider is difficult.
For Bradshaw, finding a services partner was critical,
no matter how difficult. "Software companies weren't willing to work
around our existing systems," says
Mobilexe Inc., a 2-1/2-year-old systems
integrator with 10 employees, got the job in August because its CEO, Jeffrey
Kurschner, agreed to spend long hours with Bradshaw's IT department to make the
necessary modifications to Bradshaw's custom and commercial software so it
would work with RFID, rather than pulling it all out and staring anew. Bradshaw built
and runs its own warehouse-management system, which is integrated with an
enterprise-resource-planning platform from Prophet 21 Inc. Data is stored in a
Microsoft SQL Server database. Crystal Reports is used for analytics.
Bradshaw's five-person IT team, with the help of two
Mobilexe consultants, was able to complete the project in four months.
Mobilexe helped Bradshaw connect the
Prophet 21 ERP platform and the homegrown warehouse-management system to a
Printronix Inc. SL5304 printer to automate the RFID tag-printing process.
Mobilexe also built a conveyer system that contains fixed SAMSys Technologies
Inc. RFID readers, which scan tagged cases and collect data detailing the
cases' content. Automatic switches can stop the conveyer if an unreadable tag
is detected. The data from the readers is fed into the warehouse-management
system, which checks it against purchase orders. The collected data is stored in a
Microsoft SQL Server and eventually will be transmitted to Retail Link,
Wal-Mart's Web-based software that lets the retailer's buyers and some 30,000
suppliers check inventory and sales, and reports on when and where RFID tags
are read.
Integration among RFID systems, warehouse-management
systems, and ERP apps is perhaps the most difficult aspect of RFID
implementations, though such integration can yield greater supply-chain
visibility and other benefits. Systems integrators are well prepared to help.
This will determine the winners and the losers, Gartner analyst Jeff Woods
says. "Software integration is more complex than a slap-and-ship approach,
and this is where companies can benefit from a systems integrator," he
says. "Companies can integrate invoice processes with ERP systems and
create new procedures around in-store merchandising management."
So far, Bradshaw has spent $45,000 to $50,000
on its RFID project, excluding the costs for the 6,000 to 10,000 tags it has
used on cases so far. It also had to pay the standards group EPCglobal Inc. a
$25,000 licensing fee and a $5,000 annual recurring fee to use the electronic
product code numbers. But Foster contends the importer could have spent
hundreds of thousands of dollars more had it torn out its existing IT
infrastructure and started over. The company's RFID costs will likely
rise--there are about 70,000 pallets of goods sitting in its Rancho Cucamonga,
Calif., distribution center on any given day. And while there are no plans to
ship individually tagged products to retailers, if that changes, costs could
skyrocket.
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Now nearly three months into its RFID project,
Bradshaw is shipping RFID-tagged cases and pallets of 17 of the 300 products it
sells through Wal-Mart, including cookie sheets, muffin pans, and plastic
storage containers. Mobilexe will assist in expanding pilots with Albertsons in
three to four months and Target in early 2006, Foster says.
Tanimura & Antle Inc. views its RFID initiative as
an opportunity to test an exciting technology with Wal-Mart, says Tom Casas, VP
of IT for the privately held, midsize grower of cauliflower, broccoli, lettuce,
and more. "It's not new for us to be one of the first to pilot a project
with Wal-Mart," he says.
Jumping in early can prove beneficial, says Kara
Romanow, an analyst at AMR Research. "It brings attention to the smaller
supplier the retailer might have overlooked in the past as being a company
willing to step up when called on," she says.
Tanimura & Antle created an internal group of IT,
sales, and distribution employees, then "went to find an outside firm to
help us stay on track and to bring in knowledge from experience with the
technology." The RFID team came together by January 2004 and made its
first presentation to Wal-Mart on March 16, 2004. It began shipping tagged
containers and pallets to Wal-Mart this month.
Tanimura & Antle tapped Hitachi Consulting to help
it map out a business case; create new processes, such as developing a combined
bar code and RFID tag and putting them on plastic bins in the field; stick to a
budget; determine goals and objectives, such as what vegetables to begin
tagging first and how to phase in others; and deliver the proposal to Wal-Mart
so the grower could begin shipping RFID-tagged produce this year.
Perhaps most important, though, Tanimura & Antle
sought out a partner to help it test RFID equipment, tags, and read rates. The
company has a programmer who can manage most of the critical design work.
Though it has a developer, Stefan van der Bijl, with two years of experience in
the semiconductor industry and experience designing an RFID system for tracking
300-millimeter semiconductor wafers for an Intel supplier while at Intrabay
Automation Inc., the grower didn't have the experience or necessary equipment
to fully test its implementation.
As a migrant farming company, Tanimura & Antle
requires a portable RFID infrastructure. The system is mounted on a
transportable post, with one reader from Matrics Inc., acquired by Symbol
Technologies Inc. in July 2004, and another from Alien Technology Corp. The
readers are set up in the distribution center where forklift operators can
drive through with RFID-enabled plastic bins and pallets. Tags being used are
Alien Class 1 and Matrics Class 0+. Much of Tanimura & Antle's products
have a high water content, which can interfere with the radio waves, resulting
in missed tag reads. Testing the read rates can help the grower determine the
best placement of tags on goods to ensure optimal read rates. "I'm not in
a spot where I want to fail with Wal-Mart," Casas says.
In addition, the pallets, which contain 40 stacked
1.5-foot by 3-foot reusable plastic containers of produce, are subject to the
outdoor elements, such as fog, which can make them wet and make it difficult to
affix an RFID tag.
Tanimura & Antle ships plastic bins with a
combined bar code and RFID tag and RFID-tagged pallets of cellophane-wrapped
lettuce to Wal-Mart's
A Microsoft SQL Server database houses the information
collected by readers and bar codes from harvesters in the field and
RFID-scanning portals in the distribution center. "We're still in the
preliminary stage of trying to develop reports and determine how to use the
data," says van der Bijl, the lead developer for Tanimura & Antle's
RFID program. This data eventually will help create new business processes.
"When we can track [via RFID] what time a product is harvested in field A
versus field B, we can make a process decision on which product will ship
first," Casas says. "With these decisions, we can improve the
product's quality."
Midsize companies aren't alone in their need for
outside help with RFID. H.J. Heinz Co., a consumer-goods company with about $10
billion in annual revenue, knew it lacked the expertise and physical resources
to complete its RFID project and comply with Wal-Mart's request to begin
shipping RFID-tagged goods by this past January.
So in June, Heinz hired IBM Global Services. In spring
2004, IBM helped Heinz draft a business case by examining its internal business
processes and outlining possible uses for for RFID, both now and in the future.
The resulting document details cost estimates, the technology's evolution, and
the potential savings and strategies for Heinz in the future. "That is the
benefit of working with a consulting firm or systems integrator," says
Doug Ostrosky, Heinz's RFID program manager.
Identifying business processes affected by RFID and building
a team to work with the technology are critical to an RFID implementation's
success, says Eric Gabrielson, director of worldwide RFID solutions for IBM
Global Services. "Now you have the model, it's important to develop the
road map," he says. "Understand near-term and long-term changes that
will take place and how to eliminate problems. It's important to understand all
of the different pieces that will affect the project, such as the data around
cost and savings."
Once the business case was completed, IBM Global
Services helped Heinz test the processes. Pallets stacked with cases containing
ketchup bottles, bags of frozen potatoes, and jars of spaghetti sauce were
shipped to IBM's lab to test how various tags would react to the liquid,
plastic, and metal in those products. The tests were completed, and Heinz has
since set up a testing center in a
The business case helped Heinz develop a step-by-step
plan that calls for Heinz to outfit a production line with an RFID-tagging
station at each of its 10 manufacturing plants throughout
The consumer-goods company also is taking lessons
learned from its compliance tests with Wal-Mart to figure out how to apply RFID
internally. The goal is to track reusable containers used to transport raw
materials that today are monitored but with uncertainty. Asset tracking is a
step toward automating inventory replenishment to restock spices, tomatoes, and
other materials as they're consumed. "Our relationship with IBM has helped
us to think differently," he says.
Thinking differently in Bradshaw's case meant the
difference between ripping out investments and investing wisely.
Copyright © 2004 CMP Media
LLC