Business Process Design and Optimization

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Business Process Design and Optimization

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• It was a momentous day in the history of
  business innovation when in early 2003, Wal-Mart,
  the U.S. retailing giant, formally asked its top
  100 suppliers to start adding Radio-Frequency
  identification tags to all the goods they ship to
  its distribution centers and stores.
• Suddenly, this technology that had been invented
  decades ago and had been moving ever so slowly
  into the marketplace was given a big push.

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• This chapter demonstrates that RFID and Real
  world Awareness can be used to make incremental
  improvements and to foster deep, long-lasting
  business innovations.
• RFID technology will help companies create and
  profit from the so-called consumer-driven supply
  network, with which they can be more responsive
  to market conditions and changing demand.

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Opportunities Abound

• Way that real world awareness can help improve
  operations
• Wherever there is a physical movement of
  objects-merchandise in a distribution center
• Products moving through an assembly line
• Delivery trucks on the streets and highways
• High-value diagnostic equipment in a hospital
• Preparing for the challenge
• General Motors and Boeing promoted a
  computer-to-computer business-communications
  scheme named electronic data interchange (EDI).
• Real world awareness can be added to existing IT
  system as a replacement for bar code scanning.

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The Approaching Flood

• At its core, EPC numbers recorded in specific
  tags that an enterprise is keeping track of.
• As designed by SAP, a copy of the Auto-ID
  software will run in each store, warehouse, and
  other facility in which a customer has installed
  RFID scanners.
• Cleaning up and normalizing data as it flows in
  from the field.
• To facilitate access to its data at the precise
  level of detail, or granularity, that any
  particular enterprise application may require.

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The Approaching Flood cont.

• Analytics
• In some cases, flesh-and-blood managers sitting
  at keyboards will do the analysis, as they do now
  with point-of-sale data and other transactional
  information.
• In other cases, IT systems will get programmed to
  do at least some analysis and interpretation
  autonomously, to identify patterns and
  relationships that are ripe for exploitation.
• Sensor-based data online analytic processing or
  OLAP, and data mining.

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• Responsive Replenishment
• Inventory-management problem
• Vendor-managed inventory (VMI)
• Adaptive Manufacturing
• The highly flexible production is adaptive
  manufacturing, and many corporations are striving
  to organize and participate in so-called adaptive
  business networks
• SCM has been to move from a push model to a pull
  model
• RFID become possible to maintain a real-time
  model of exactly where in the production process
  each important element of work is at any moment
• Top-floor-to-shop-floor-integration

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Adaptive Manufacturing cont.
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Adaptive Manufacturing cont.

• Talking Production At International Paper
• International Paper (IP)- Its using RFID
  technology to achieve real-time visibility of
  assets and WIP material
• The new technique of RFID has helped to turn
  warehousing into a function that actually helps
  improve the production flow
• A tracking system that would use RFID tags
  incorporating Electronic Product Code standards
  to give each product a unique identifier while
  providing visibility into how it is processed,
  where and how it is stored, and how it is shipped

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Adaptive Manufacturing cont.

• Challenges and Solutions
• The development team struggled to find the proper
  radio frequencies for transmitting information
  inside the mill
• Designing brand-new technology that could
  withstand the harsh surroundings
• With the new RFID scheme up and running, its
  possible for the mills information system to
  hold all the specifications for each product,
  including the customers name, date needed,
  grade, width, and mode of transportation entered
  at order entry. That data is linked to a tag.

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Preventive Maintenance - cont.

• The general structure of preventive maintenance
  of jet engines.

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Conclusion

• Companies can leverage Real World Awareness to
  achieve a wide range of improvements in their
  businesses, from the incremental to the truly
  innovative and even revolutionary.
• For some, RFID will merely offer a way to better
  monitor shipments leaving a factory or to better
  track pallets without a warehouse.
• For other companies, RFID will provide the
  foundation for a thorough rethinking of such
  vital processes as manufacturing itself or the
  sub-daily replenishment of store shelves.

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Interview with Zygmunt Mierdorf, Metro Group
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Interview with Zygmunt Mierdorf, Metro Group
cont.

• Q Whats the true potential of RFID for a major
  retailer? Cost cutting? Enhancing the customer
  experience? Competitive advantage? Whats METROs
  real motivation?
• RFID will bring significant cost savings or
  efficiency due to process streamlining. The
  customer can also expect great benefits because
  the systems will take care of replenishment
  automatically. We can use RFID for providing
  additional information for the customer, not just
  at the terminals, but also via screens.
• Q What will be the biggest mistake made by
  retailers with RFID technology?
• The biggest mistake- and we must all be aware of
  it-is over-promising. Thats , dont set
  expectations too high and dont be lured by the
  press into defining dream scenario here because
  they will backfire.
• The second biggest mistake would be to implement
  it shrouded in secrecy.

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Interview with Klaus Zumwinkel, Deutsche Post
World Net
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Interview with Klaus Zumwinkel, Deutsche Post
World Net cont.

• Q What areas of research are DPWN focusing on in
  its RFID trials? What are the advantages in using
  RFID in supply chains, transportation, and
  warehouse management ? What are the advantages in
  using RFID to deliver letters and parcels?
• The goals of their trials are twofold. On the one
  hand, we have to check the maturity of the
  technology for use in challenging logistics
  environments and physical problems have to be
  overcome. On the other hand, were exploiting how
  it might influence our business.
• The overall benefit we expect from RFID is better
  visibility of the transport chain and using this
  information to optimize our network and processes.

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Interview with Klaus Zumwinkel, Deutsche Post
World Net cont.

• Q Assuming the trials go well, how will RFID
  change DPWN in the long run? What is the best
  case scenario?
• RFID will not fundamentally change the logistics
  industry. But RFID is a promising technology for
  the enhanced identification of things. Examples
  of this might be inbound control, improved
  inventory management, picking control, increased
  track and trace for perishables, advanced
  security solutions for high value goods, or
  anything else.
• Todays supply chains consist of many partners
  like shippers, airports, airfreight carriers,
  etc. RFID will allow easier integration of all
  partners into an extensive logistics system.

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Interview with Ray Valeika, Delta Air Lines
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Interview with Ray Valeika, Delta Air Lines
cont.

• Q Will the application of RFID lead to
  evolutionary changes or revolutionary ones? What
  will it make possible, rather than refine?
• The next big change in maintenance will be to
  make the airplane talk to you, much more so than
  it does today, and so I see a variety of possible
  sensors we havent even though about. With an
  engine today, we monitor some very basic
  things-fuel flow, speeds, rotation, etc.
• The next phase is the application of sensor
  technology .I think we should have optical
  sensors we should have sensors that can smell.
  With an engine, for instance, if it were burning
  fuel the wrong way-maybe there is more carbon
  than usual or maybe more sulfur- it could smell
  that.

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Interview with Stefan Laure, Deutsche Lufthansa AG
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Interview with Stefan Laure, Deutsche Lufthansa
AG cont.

• Q In which field of business do you see concrete
  uses for RFID?
• Lufthansa Technik Logistik is investigating using
  RFID to track replacement parts in its warehouse,
  its goods issue department, and inbound delivery.
  There is a much larger potential for savings in
  using RFID technology throughout the material
  supply chain.
• LTL has assigned Lufthansas IT services
  department with the task of constructing a
  GPS-based tracking and tracing system for the
  stands used to prop up aircraft engines during
  maintrnance.