POMG 248

1
Radio Frequency ID Supply Chain Management

• By Jill Zinke
• POMG 248
• May 10, 2003

2
Radio Frequency IDs

• A Day in the life of . . .
• Sallys Smart World
• Her smart kitchen
• Her automated household data system
• Her automated shopping experience

3
RFIDs (cont)

• A day in the life of . . .
• The suppliers Smart World
• Marketing
• Ordering
• Manufacturing
• Suppliers

4
What are RFIDs?

• A system of tagging items with a unique
  identifier
• Consists of 3 main components
• Data chip (transponder or tag)
• Antenna
• Reader (interrogator)

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Two Types of RFID Chips

• Passive
• Programmed with a unique set of data
• Unmodifiable
• Usually 32 to 128 bits of memory
• Similar info as that found on barcodes
• Power is generated from reader

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Two Types of RFID Chips

• Active
• typically read/write capabilities
• battery powered
• typically up to 1 MB memory
• work in process
• give a machine a set of instructions
• machine in return can write its new status
• more expensive
• limited life (10 years max)

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RFID Antennae

• Readers include antennae
• Used to send and receive radio signal between tag
  and reader

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RFID Reader

• AKA Interrogator
• Houses decoder
• Includes antenna
• Can be fixed
• Door mount
• Or portable
• Hand-held

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How is RFID Used

• Used for tracking items throughout the supply
  chain
• Data collection
• No line of sight required
• Many items can be simultaneously scanned

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Operational Applications

• Inventory Control
• Aids in Manufacturing Control and Planning
• Aids in Master Production Scheduling
• Fraud/theft reduction
• Marketing/Sales tool
• Accelerates customer service
• Reduces Labor Costs

11
Inventory Control

• Each items whereabouts is always known
• Track how many items are in production
• Track how many items are in warehouse
• Track how many items are in transit

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Tracking Through the Supply Chain

• Each items movement through supply chain is
  tracked
• Each component tracked as used
• Each finished product tracked from
• Manufacture
• Storage
• Packing shipping
• Transport
• Retailer/customer
• Consumer use
• Disposal

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Manufacturing Control and Planning

• See patterns in component /materials requirements
• Faster, more accurate management of
• Human resources scheduling
• Machines scheduling
• Materials procurement
• Storage/warehousing

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Manufacturing Control and Planning

• Can identify production holdups
• Bottlenecks
• Machine breakdowns
• Setup delays

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Manufacturing Control and Planning

• Can track consumption immediately
• JIT
• Pull system from consumer to manufacturer
• As consumer reduces retail inventory, manufacture
  orders are immediately made for replenishment

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Master Production Schedule

• Master Production Scheduling
• Integrate data from marketing/sales
• Create better production projections
• Results in accurate Material Requirements
  Planning
• Data collection optimizes ordering of raw
  materials/components to fulfill MPS
• Identifies where materials are in supply chain
  relative to need
• Minimizes Bullwhip Effect

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Fraud/Theft Reduction

• Each item uniquely identified
• Each item accounted for throughout supply chain
• Immediate knowledge of missing items or shipments
  (undelivered merchandise)
• Immediate removal from inventory records of goods
  sold
• Stolen goods recovery and return

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Marketing/Sales Tool

• Consumer patterns/tastes can be tracked
• Individualized profiling available
• Merchandising strategies can be tracked and
  analyzed

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Accelerates Customer Service

• Point of sale debit
• No checkout necessary
• Out of stocks reduced
• Retail zoning streamlined

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Reduces Labor Costs

• Automatic tracking and data collection
• Automatic sales and replenishment

21
Practical Applications

• Ticketing
• Luggage tracking
• Toll booth collection
• Supply chain management
• Currency ID

• Pet/property tracking and recovery
• Targeted individualized marketing
• Parking garage management

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Advantages

• Inexpensive
• Currently about 5 cents per tag
• Expected 1 cent per tag by 2010
• High ROI
• Savings from loss prevention
• Increased production efficiency through accurate
  projections
• Increased sales through consumer target profiling
• Lower labor costs

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Disadvantages

• Public backlash
• Privacy issues
• Consumer profiling objections
• Criminal scanning