RFID and The Perfect Order

When measuring the efficiency of a supply chain, there is no better indicator of fulfillment man holes and planning stop signs than that holy grail of metrics - "The Perfect Order". It is an elusive goal to most of us and is subjected to the vagaries of the economics weather and the "perfect" matching of supply to demand.

Imperfect Tendencies - Missing the Mark

What is a “Perfect Order”?

• On Time
• Complete
• Damage Free
• Correct Invoice

Research shows we are missing the mark

• 84% -WERC/DC Velocity
• 80% -AMR study
• 23% -Retail Compliance Council

Source: WERC 2006

Now we have a new bridge to achieving this Perfect Order, gossip abounds of RFID, and how by embracing it one can better one's supply chain. Of course there are different disciplines contributing to making the order perfect, accurate forecasting, optimal planning to those forecasts and of course execution systems that can fulfill demand, match supplies and coordinate tasks. Of course, some of the inefficiencies are just poor business processes and outdated practices or sofware.

RFID would in essence make the job of locating, tracking those elusive supplies much easier and by transference make the matching process more efficient and streamlined. Before we go into how that can be done, we need to understand what a perfect order is. There is a perfect order to a customer and a seller, operationally of course to a seller, this means the least cost - inventory acquisition and holding, labor and space, order processing and so on, we ignore pricing and other non supply chain factors for perfection outside for now. To a customer, perfect order in our world is measured by correct item shipped, in time, without any damages.

Figure 1a: Measurement Metrics and suggested RFID solutions

Figure 1b: Measurement Metrics and suggested RFID solutions

Figure 1c: Measurement Metrics and suggested RFID solutions

Figure 1d: Measurement Metrics and suggested RFID solutions

Metrics for Comparison - Level 2 and 3 Metrics

From the benchmarks it is clear that the two major contributors to an imperfect order are "% on-time delivery" and "% complete". With sample averages for "% on time delivery" at 51.7% and "% complete" 47.7%, there is significant opportunity for improvement. It is, necessary for us to drill down to level 2 and 3 processes to be able to identify what can be improved and more importantly, what can be tracked for improvement. As industry standards for metrics gain wider adoption, companies can benchmark against industry specific best-practices, this also enables companies the opportunity to implement continuous improvement using similar scales.

Adopting Cycle Time metrics for Intra Facility Activities

While the above metrics and the facilitating RFID capabilities that benefit companies are useful, it is leveraging RFID and associated transactions and processes at the most granular levels that interest this professional. To actually adopt and measure for the purposes of continuous improvement, tracking and measured should be done at the task level.

Fig 2a: Fulfill and Deliver Cycle Time Metrics

Taking Intra-Facility operations as an example, we can again leverage and derive SCOR standards to track, measure and benchmark activities. Since Cycle Time KPI's at are the most granular level, these are the best indicators of actual efficiency improvements. This approach can be adopted during pilots to quantify possible benefits if approval is required for actual adoption.

Of course the schematic above is only a partial representation of what can be measured and what needs to be tracked. In conclusion: in order to improve order fulfillment, companies must go down to this level (II, III and lower) to track down potential improvements with regard to labor efficiency, inventory accuracy and tactical optimization.

Show me the Money - RFID Metrics

Of late there has been a lot of "chatter" in the rfid airwaves in APAC, we see renewed interest from all stakehokders in the RFID ecosystem, this includes end users, hardware manufacturers, service providers including implementers and software and solution providers. as is often the case prior to blessing an undertaking the 100 million dollar question is about the 100 million yuan, rupee, yen, won - in other words "show me the money!!". An article in CXOtoday does give us some numbers, but not user numbers, these are current and potential market numbers, according to said article it is USD 170.3 million and a potential red erasing 646.3 million by 2013 (see article).

Where is the money .. ??

In order to measure ROI benefits for RFID, one needs to be able to first identify tracking and measurement metrics. this is easier said than done given the varied uses of rfid, since we restrict ourselves to Supply Chain RFID Applications it makes our task a little easier. As I see it there are levels of RFID adoption and the resultant benefits and automation that accrue. "" As companies evolve from deploying compliance mandates to actually enabing more granular rfid enabled transactions, the benefits also improve progressively. Of course we do not know the relationship in the cost and benefit economic graph, but it is safe to say that benefits are accruing and the few brave souls who have ventured to the more unexplored territory of rfid deplopyments are finding gems and treasure.

Metrics, Metrics, Metrics .. but what to use

So, how do companies track, measure and benchmark rfid deployments, these may be RFID Pilot vs. Old processes & technologies or they may be continuous improvement projects that are underway.

Why Standards ?

When we use standard metrics to measure performance, subsequent benchmarks conducted by organizations like WERC & Academic institutions allows for accurate benchmarking and a shared experience which will contribute to continuous improvement and result in manufacturing like six-sigma process in distribution and logistics. Standard metrics also allow for process efficiency benchmarking and labor selection, continuous improvement efforts.

Which Standards ?

As of this moment, there are a number of organizations which have approached the unenviable task of trying to abstract and record business processes and activities, then using the acticity to determine metrics. Of course there are the tried and tested metrics, such as the holy grail of fulfillment - "Perfect Order Fulfillment", this metric one feels is suitable for the Mid-Level RFID enablement, not the more granular processes, as you can see from the following figure, there are theoretical and proven benefits to the Perfect Order from RFID enablement.

Please stay tuned in for more Metrics - including using Fulfillment Cycles Activities and Metrics in the upcoming post..

Oracle RFID Applications - Addressing Pharma Pedigree, Authenticity Issues

This article introduces us to the issues of drug counterfeiting and diversion problems and stringent legislature for Pedigree requirements from State and Federal government. We also propose an approach using an RFID based solution to address these problems. Though some of these issues reflect the global nature of procurement and proliferation of piracy some have come in the wake of tightening legislation, for example Florida item-level serialization and e-pedigree requirements coming from California.

We propose a tactical and strategic roadmap leveraging current investments in RFID to reap benefits from the investment in the future. By using serial and lot genealogy, companies can tag, trace and measure the progress of their goods throughout their lifecycle, even through the reverse supply chain - returns, refurbishments.

In the US Pharmaceutical, Life science & Biotechnology Market, Counterfeits & Diversions (Marketed & Distributed target market mismatch) pose a major problem in identifying that the correct product is received by the buyer. In addition, Pedigree & Serialization Vision & Legislature is also starting to clamp up to ensure that products are tracked and authenticated through the supply chain. This means that companies have to tag and trace each product/lot as it moves from Source to Destination or Consumption in some cases. In addition to issues like damage, loss etc, there is the additional problem of Genuineness of the product when it is eventually received and that there has been no tampering or fraud.

RFID applications which have the capability to store, cross reference, track, maintain an audit trace and authenticate the product, whether through serial, lot or case tracking and tagging will provide the most efficient long term solution for all geographic, economic, trade and physical requirements. Genealogy, the act of tracing a product from production to assembly and beyond is a capability that is required in order to be able to perform the required tracking, in addition, event driven tracking actions can also be used to determine shipping, transportation exceptions.
Coupled to Partner data interchange where the EPC is linked to an ASN, the same system can be used to validate authenticity of goods during receipt. Of course the authentication issue is rather best solved by a standards body and a proposal much like PGP of encrypting the code is one of the discussions on how to resolve this. the EPC Standards body could be proposed to be the holder to partner encrypting and decrypting keys which can be used to authenticate lots or serials as they are read. This undoubtedly places a burden on the application that is processing the tags and also opens up questions as to how to enable the dual purposes of event, location awareness with authentication.

Oracle RFID Logistics solutions provide customers with a proven Edge Server platform, BPEL capabilities embedded in the SES and Solutions with Oracle Supply Chain Execution products. The logistics applications allow tagging and tracking from manufacturing to assembly to distribution and shipping, while SES allows for flexibility, BPEL driven implementations with a view for the future. For more details refer to O.com and the section on RFID and Supply Chain Execution products.

Hope you find this first post interesting and food for thought.