Supply chain finding its voice

31 Jan 2008

The dream of RFID is losing out to other technologies in the contest to transform the supply chain, writes Niall Byrne.

RFID has been hyped as the next big thing in supply chain management but the technology has several shortcomings that will prevent its rollout in all but the most ideal environments.

Instead, voice-directed logistics is gaining momentum as the emerging trend that most companies are likely to follow.

Both these technologies have been around for some time. While voice-automated technology is beginning to make the breakthrough, the impact of RFID is still minimal.

While excellent in the right environment, RFID will remain a complementary technology, believes Ronan Clinton, managing director of Heavey RF.

“The technology is fantastic, it does work but sometimes it’s an expensive solution looking for a problem. If it is properly implemented where warranted it can produce fantastic results.”

Clinton says RFID can have a bright future as soon as integrators and suppliers realign their expectations of the technology. Once they get more realistic about what it can achieve we will see more beneficial projects beginning to materialise. At the moment, there’s more bad press around RFID than good, a situation Clinton puts down to the technology being rushed into environments where it can’t bring a return on investment or even solve a specific problem.

Barry Long, sales manager with Zetes Ireland, shares Clinton’s less-than-enthusiastic assessment of the possibilities of RFID.

“RFID needs a certain amount of things to be actually viable: it needs to work in a closed-loop environment, usually dealing with high-value items. While we are involved in RFID installations throughout Europe, the projects we’ve been involved with have involved very specific types of applications that derive very specific results.”

When discussing RFID with clients, nine out of ten times they end up going back to barcoding, says Long. Barcoding is familiar, easier to implement and a lot cheaper.

The emergence of 2-dimensional (2D) barcoding has given this technology, the bedrock of the supply chain for so long, new impetus. 2D barcoding has existed for about 15 years but its integration has been delayed due to technical factors. Many of the old scanners didn’t register 2D barcodes; modern scanners will read 2D barcodes by default.

“A lot of people are now in a position to adopt 2D barcoding,” says Clinton.

2D barcodes have their problems. The more information you want to contain, the bigger the barcode needs to be. They can susceptible to environmental damage, such as extreme heat, and are difficult to use outdoors.

Nevertheless, many companies that might have been tempted to investigate RFID are finding 2D barcoding a more cost-effective alternative. Pharmaceutical companies en masse have championed this technology.

“The pharmaceutical companies evaluated RFID and discovered it would be far too expensive to deploy and manage and the 2D barcode became a very viable alternative. The governing bodies in that sector have specified particular formats for use in 2D barcodes. We will see that an awful lot more in the pharmaceutical industry,” says Clinton.

The delay in adopting 2D barcoding is a sobering lesson for pushers of RFID, says Clinton. “The 2D barcode has been around 15 years and it has taken that long for it to be adopted because of the amount of change that’s needed within an organisation to adopt something like that. Now RFID is significantly more complicated, more expensive and much more technical of a change than switching to a 2D barcode. That’s part of my argument why RFID in the supply chain will not become the norm.”

Implementing an RFID infrastructure means updating scanners, software, gates and the backend. Unforeseen environmental factors can result in the costs quickly spiralling out of control.

“I don’t think any retailers would accept adding even half a cent on to the price of their items to pay for RFID,” says Long. “It’s not a replacement for barcoding. Barcodes can be utilised a whole lot better if companies sit aback and analyse their supply chains.”

One technological change in the supply chain that is paying dividends is voice automation.

“Voice is almost a standard in retail high-picking environments now,” says Long. “What we are finding is the early adopters for voice were the big guys with a few hundred pickers in a warehouse; we’re now seeing companies with five to ten pickers getting a return on investment.”

According to Clinton, the technology is moving into other areas of the warehouse, such as replenishment, shipping, loading and receipting.

While they’re not cheap systems to install, usually costing a few hundred thousand euros, they improve productivity and accuracy remarkably.

“The cost of mistakes might not be a cost a company is looking at now but if it sits back and analyses the supply chain correctly that is a real cost,” adds Long.

“I see absolutely massive growth in voice-directed logistics,” says Clinton. “In every single case of implementing voice-directed logistics we’ve seen the benefits we’ve expected.”

The other big trend is enterprise mobility, where courier and freight companies are issuing drivers with handheld devices to record proof-of-delivery (POD).

“I’m not sure if that trend is because of the focus that’s put on it by companies like us or whether people are really starting to see the benefit of it,” admits Clinton. “I think it’s an industry trend that people need to be seen to be keeping up with the Joneses. If you’re a courier company and you don’t have a POD system, you’re going to lose business.”

Either way, data capture in the field is being heavily promoted by vendors and heavily adopted within industry, with several companies reporting improved efficiencies as a result.

By Niall Byrne