Today was the first day of IBM’s Innovating With Insight Symposium being held at the company’s RFID Solution Center in Stuttgart, Germany. Most attendees are from European automotive OEMs or suppliers, with roughly even representation from business process owners and IT managers. While everyone agrees that external market pressures are forcing auto manufacturers to either innovate or stagnate (one IBM survey noted 90% of auto industry executives want to drive moderate or substantial change in their organizations) many disagree on the role that RFID will play in this transformation:
- A few European divisions like DaimlerChrystler AG have invested in leading-edge RFID pilots oriented around operations processes (like vehicle tracking or container management, for example) but have not taken the next steps towards full implementation. Why? The benefits from faster data capture (through no line-of-sight requirements) quickly evaporate when you account for the common experience of 90% accuracy from Gen2 RFID readers — even though this is a significant improvement from ~70% rate from Gen 1. European companies have also been keen to point out that availability and associated costs of advanced RFID hardware design has been problematic, citing vendor priorities to supply American operations with the latest and greatest. And while smaller pilot projects can justify modest funding needs without a formal business case, the story changes when executives must approve a full-scale, multi-million dollar roll-out. At the end of the day, near-term RFID benefits will depend to a large extend on a companies current reality, and a company like DaimlerChrystler which has already tuned many of their operations will require demand 99.5% accuracy in their reads in order to justify tag expenses.
- Standards in areas like data structures, data exchange, and unique identifiers are clear enablers for more widespread adoption — particularly as companies move beyond mastering the physics and hardware of RFID and encounter next-stage challenges in data management and integration. Yet many of these standards areas are mapped to individual, industry-specific consortia (VDA or Verband der Automobilindustrie for data structures, for example) such than an end-to-end container management solution for a European automotive firm, for example, might require adherence of up to 7 different standards or guidelines — a precarious position for global firms looking to either scale projects across regional sites and/or rationalize investments in IT infrastructure.
- Finally, the auto firms in attendance seem to be adhering to a "fast-follower" innovation strategy, scrutinizing other companies and industries for known RFID use cases rather than identifying new, unique internal pain points that could be potentially addressed by RFID. Similar to other manufacturers, automotive firms seem to also have a bias for RFID projects which are "closed-loop" (i.e. confined within the internal our-walls of plant of distribution center — avoiding many of the collaboration barriers largely endemic of supply chain visibility initiatives) rather than tackle the higher-risk/higher-reward "open loop" opportunities which span across trading partners.
IBM and other leading systems integrators are in a good position to help companies along their RFID journey by providing on-the-ground deployment expertise lacking in many internal IT organizations. And since RFID will be certainly be a long-term journey, companies would do well to partner with a strategic SOA vendor to help rationalize and promote flexibility across the RFID middleware and applications software stack.
Business Process & Applications