Mixing Two Independent Technologies

Published Date: 02 Nov 2017

Abstract

Today’s dynamic and competitive business environment puts an ever increasing pressure on companies to innovate, redesign processes, and leverage the potential of partnerships along the supply chain. One of the technologies offering a solution is Radio Frequency Identification (RFID). RFID can be used to automate and thus streamline identification processes.

Also, the use of Enterprise Resource Planning applications has become widespread, especially among the world’s largest organizations. Broadly defined, ERP systems are multi-module applications that support many different functions within an organization across a single platform. Integration of such systems with RFID will indeed provide us with accurate, reliable & timely information about physical objects. The business functions covered in ERP implementations often include finance, human resources, supply chain management, sales, and customer service. When implemented properly, ERP systems can create efficiencies, unify processes, and drive value within organizations.

As ERP technologies continue to evolve, additional functionalities and capabilities are being incorporated into the systems to make them even more robust. One promising area of future innovation related to ERP systems involves the integration of RFID technology. The combined use of ERP applications with RFID could bring supply chain and inventory management to a level of sophistication that has never been possible until now. This paper will examine RFID technology and explore the possibilities it presents to ERP applications. New ways to utilize RFID technology in new and existing businesses are being discovered every day. As the costs to produce and manufacture the hardware decrease, RFID’s potential for widespread utilization increases.

Introduction

There is no doubt about the fact that the future of Radio Wave technology is RFID, and integration of RFID with the existing ERP infrastructure of an organization.

The future of Radio Wave Technology: RFID

RFID technology consists of two basic hardware components: a reader and a tag. A typical RFID tag is a non-powered microchip with an antenna that broadcasts encoded information. The tag transmissions are carried out over RF waves that are activated when placed in the transmission field of a reader. The data embedded in a tag can provide a wealth of information about an item and its current status. Two common uses of RFID technology are to show the following attributes about a product or good: location (manufacturing, inventory, in-transit, etc.) and product identification (price, serial number, store ID, antitheft protection). This system could allow accurate tracking of a product from the manufacturing process to a retail store shelf. These information-bearing tags are called "smart tags" or "smart labels".

One prominent feature of RFID technology is that once RFID tags are attached on the items at an upstream site, the same tags can be reused at its downstream sites at lower or zero variable cost.

How is this any better than our traditional barcode systems?

 It is the seamlessness of the communication in RFID that gives them edge over more traditional, less-agile barcode systems. Integration with ERP will leap our traditional systems forward to a much more automated environment. Fading are those days when organizations had to scan the barcodes, set merchandise on pallets, find storage area for the same kind of merchandise, print bar codes labels, and then carry on with the never ending process of procurement and lastly release goods. Now before beginning scanning the inventory, organizations set up the software by navigation to a specific location, and click and it is done! When time is money (which is the fact always), organizations are now in for a great deal of savings.

Now how do the existent ERP software, be it the SAP Business All-in-one, or the Microsoft Dynamics, or the Maximo from IBM, view integration with RFID?

The answer to this question lies in the very motive of innovation of the technology. RFID was not only built for replacing our, previously stated ‘traditional’ barcodes, but for much more. The capabilities that RFID might exhibit on integration are tremendous across the whole supply chain, from the supplier to the customer.

RFID is a set of Organization Standards, which can

Identify physical objects

Trace Information on products

It is also a powerful tool for automation, and hence manual labor reduction

Provides our existing systems with new senses, new data & new possibilities!

This is undoubtedly a revolution in the software area, and the future of the supply chain.

ERP & RFID as Complementary Worlds

ERP systems can, through the adoption of RFID, provide RFID-generated data with useful meaning.

Integration will provide ERP systems with accurate, timely & reliable information about the physical objects which may at one front become a part of inventory, whereas at another they may be sold at to the end user.

Business can exploit this technology to derive maximum benefits, and big players such as WalMartâ„¢ have already commenced on their journey towards integration.

A business aspect to the RFID Tag-generated data

These two technologies have a high potential that can be exploited. But here we must ask the question how can automatic reading of the physical data be profitable to the business? And how does the existing ERP adapt to the automated data entry system?

These questions are answered in detail in the following sections of this paper, but as a brief answer, it is the RFID/ERP Integration Layer which is responsible for communication between the two totally independent worlds of RFID & ERP.

Some characteristics of this integration layer are:

The layer is Standard-based

It is intelligent

Comprehensive

Flexible & Interoperable

Allows anticipation of events

Its is a mobile business logic, and

It is programmable and completely configurable as per requirement.

Hence here we can see a solution emerging for the integration of these two independent worlds.

There is no doubt about the fact that this integration will lead to mass automation, large scale process improvement, and eventually reduced time and cost.

Important Terms & Keywords

ERP- Enterprise Resource Planning

RFID- Radio frequency identification

Auto-ID- Automatic Identification

SCM- Supply Chain Management

Literature Review

Marc Schumacher and Dustin Gillespie, MGMT 579: ERP, RFID: ERP as a Critical Component (2005)

The momentum behind RFID technology is growing rapidly. As businesses begin to fully understand the benefits and efficiencies created by RFID, and as standards are solidified, it seems that the technology will become increasingly ubiquitous within numerous industries. By integrating RFID with ERP systems, businesses will have more abilities to access real-time product and location data and to leverage the value created within their supply chains.

Humberto Moran: Integration of RFID and ERP Challenges and possibilities (2004)

The RFID revolution is incomplete and cannot take place without the evolution of existing business software, particularly the middleware. The integration of RFID and ERP is unique in nature and different from other integration approaches. Integrating RFID and ERP requires an independent and autonomous integration layer with very specific characteristics. ERP systems need to undergo a major transformation to make the most of RFID.

Sanjay Sharma, QUEUE October: Integrating RFID (2004)

RFID has received a great deal of attention in the commercial world over the past couple of years. The excitement stems from a confluence of events. First, through the efforts of the former Auto-ID Centre and its sponsor companies, the prospects of low- cost RFID tags and a networked supply chain have come within reach of a number of companies. Second, several commercial companies and government bodies, such as Wal-Mart and Target in the United States, Tesco in Europe, and the U.S. Department of Defense, have announced RFID initiatives in response to technology improvements. Early struggles with RFID have all involved hardware. Readers, tags, and even wiring and infrastructure are likely to be the first challenges early adopters will face. In fact, these constraints have already caused some of the early adopters to relax their timelines. Compared with these struggles, software seems secondary. In the haste of adopting RFID, the question that will often be asked is whether RFID readers are simply new-fangled replace- ments for bar-code scanners. The view this paper presents is that RFID systems are fundamentally different from bar-code systems and that careful software and architec- ture design is necessary to achieve not only near-term performance, but also long-term return on investment.

Kurt Hozak, RFID Journal: Lessons Learned from ERP Can Help Drive RFID Adoption (2012)

Vendors specializing in RFID are more likely to be ERP-agnostic, which may allow them to increase their potential customer base and more quickly reach critical mass in terms of the depth and breadth of their applications within a vertical market. Although large ERP vendors can leverage their many support personnel and numerous consulting partnerships, the focus of specialized RFID vendors may lead potential customers to perceive them as more capable of overcoming industry- and RFID-specific implementation complexities. ERP vendors and more specialized RFID vendors each have unique strengths, but a company in either category could radically accelerate adoption and dominate a market by offering the integrated RFID applications that organizations currently on the sidelines demand. 

Infosys, Infosys’ Solution on SAP-RFID Integration (2011)

By leveraging enterprise applications and RFID technology organizations can achieve higher operational efficiency and reduce operational costs. Real-time visibility and accuracy of information on materials in the supply chain provide ‘physical information’ residing in the enterprise applications to enable better management of assets. Besides being a big boon to inventory management, this also directly or indirectly benefits other supply chain functions like Purchasing, Supply Chain Planning, Production, Asset Tracking, Returns Processing, etc.

SAP, RFID Technology: Changing Business Dramatically, Today and Tomorrow (2005)

In an era marked by change, uncertain economic conditions, and relentless competition, most companies’ decision makers are constantly on the lookout for ways to optimize their supply chain network. This is the key to cutting costs, increasing revenue, and reducing working and fixed capital.

As part of the optimization effort, organizations explore the use of RFID technology, which enables the noncontact identification, control, and tracking of goods and items throughout the entire value chain. That exploration is being encouraged in large part by major companies such as Wal-Mart, Albertsons, Target, Tesco, and Metro – and by government organizations such as the U.S. Department of Defense.

Gino Capone, David Costlow, W.L. Grenoble, Robert A. Novack: The RFID-Enabled Warehouse (2006)

RFID technology will positively impact warehouse applications. Receiving, Storing,

Picking, and Shipping processes will all become more efficient and effective.

Organizations can anticipate benefits in such areas as labor productivity, inventory reduction, facility productivity, and lower shrinkage. However, there are some current challenges that will accompany RFID implementation. The tags are not 100% reliable yet because the system can generate multiple reads and no reads. The system also must prepare to handle a large volume of data that goes with tags being placed on each case and pallet in a warehouse.

Roman Christian Rochel, RFID Technology Introduction and Impacts on Supply Chain Management Systems (2005)

RFID, a technology with immense potential, can be used to automate business processes, which means that more checkpoints along the supply chain can be established at decreased costs. But additionally, the technology can provide further benefits which make it superior to the currently widespread automatic identification (Auto-ID) technology of the barcode. However, as RFID is only a way to collect the data at the lowest level, the technology must be integrated with the supply chain management systems of the companies. Also, the various information systems along the supply chain must be integrated to allow for exchange and in order to give a meaning to the data.

Yousuf, An Account of RFID in ERP Solutions (2011)

RFID nowadays is being heavily deployed with ERP Supply chain management systems. RFID tag attached to a shipment can contain encrypted data associated with that shipment. The ERP system containing reader interprets the data from the tag and immediately the shipment is directed to the warehouse location. A passive RFID tag doesn’t need batteries; it draws its power from Radio frequencies generated by its reader.

As the researcher defines, the two properties of a meddleware in an ERP inventory are:

Handling Large Data Volume

Device Management

There has already been increasing interest in RFID technology. Soon it will completely replace barcodes; hence ERP inventory managers should look for RFID deployment in their solutions.

Seungjin Whang, Timing of RFID Adoption in a Supply Chain (2009)

This paper studies the incentives behind the adoption of radio-frequency identification (RFID) in a supply chain. One prominent feature of RFID technology is that once RFID tags are attached on the items at an upstream site, the same tags can be reused at its downstream sites at lower or zero variable cost. This creates an interesting, one-sided "free-rider" problem, where the downstream would wait to free-ride on the up stream’s first move, but not vice versa. Using a stylized game-theoretic model, we characterize the equilibrium strategies of the two firms. Compared to the first-best solution, firms in equilibrium tend to adopt too late. We then study the dual benefits of technology coordination between the two firms and find that it would not only save redundant costs of putting tags, but also speed up the down stream’s RFID adoption. We also show that the equal-cost-split arrangement shifts the benefit of free-riding to the upstream, thereby mitigating the negative impacts in many cases. But it may distort the market when it operates in the optimal manner. The general message of the model is that technology coordination and cost-split each contribute to the mitigation of the free-rider problem in RFID adoption.

Tim McLaren, Anan Kittana, Norman Shaw, Integrate or Hesitate? Evaluating the Readiness for Integrating RFID with Enterprise Systems in the Healthcare Supply Chain (2008)

This research work evaluates the readiness of the current business environment for integrating the current development in the field of RFID with the existing ERP systems. This real-life example gives us a lot of data to show the unexploited potential of RFID, which on integration will give us amazing results with the automation achieved.

Khristen Chapin, Achieve RFID/ERP Integration (2007)

This paper shows us how integration of RFID & ERP systems can improve business processes and reduce manual labor. It also depicts the business process re-engineering that would take place as a result of the integration, and the number of bottlenecks that would open up. This research also shows us how the organization transited from a non-RFID to RFID enabled plant, and how they went about the transition. The major difference through the RFID/ERP integration, as the researcher says, is Automation, which eventually results in massive reduction of human labor.