Supply Chain

Harmonize Supply-Chain Complexities
with RFID

By Wong Joon San

Political and economic forces are driving businesses to adopt radio frequency identification (RFID) — an automatic identification method that relies on storing and remotely retrieving data, using devices called RFID tags or transponders.
Speaking at the recent 4th China 3PL Summit 2008, held in Shanghai, Larry Trebesh, general manager of Savi Networks China, said that as globalization and outsourcing of operations have increased, more businesses are using RFID as a tool to harmonize the supply chain’s complexities.

Supply chain challenges
“Supply-chain efficiencies have become a competitive differentiator, and as the supply chain has become longer, businesses are seeking tools and solutions to assist them in their business decisions,” Trebesh says.
He added that post 9/11 security measures will continue to increase logistics costs and increase the need for network-based efficiency.

What IT investors want
In a 2006 Aberdeen Group survey, businesses planning to make IT investments in the next 24 months said their top three concerns were

•  lack of critical supply-chain process visibility
• uncoordinated multitier supply-chain processes
• longer lead times and lead time variability

Lesser concerns included customer collaboration, international transportation management, trade compliance and risk management.
Those surveyed also said that they would invest in supply-chain

• visibility (77 percent)
• collaboration (63 percent)
• cost containment (51 percent)

RFID benefits
RFID may be the answer to some of these needs. In an AT Kearney report, RFID tracking appeared to have multiple benefits, including

•  reduced inventory
•  reduced out-of-stocks
• reduced lead time variance
•  increased manufacturing uptime

There is a cost. Supply-chain executives estimate that the total average benefit per container from an end-to-end RFID tracking solution will be approximately $1,150.

The future
In China, RFID technology is rapidly being accepted by the industry and is being used for data gathering at the gate entrances of Shenzhen Port’s Chiwan Container Terminal and Shekou Container Terminal — two of the most active terminals situated in the Pearl River Delta. In addition, Savi Networks’ SaviTrak has also been implemented at Hong Kong’s second-largest container terminal —Modern Terminals Ltd. — in March this year.
In terms of solutions, Trebesh says RFID provides the supply chain with real time visibility, alert and alarms, security and environmental monitoring, route planning and verification and performance management.
Given the high variations and distributions in throughput time, he adds, shippers can use the data to improve their supply-chain processes and reduce cost. And because shippers are using only about 10 percent of the total functionality and data in SaviTrak, shippers can expect to gain further supply-chain
efficiencies.