Take a Long, Hard Look at ROI from RFID
Take a Long, Hard Look at ROI from RFID
By Bill Arnold
A quote from the great Albert Einstein makes a good analogy for the struggle government entities and their supply chains are having with RFID: “We can’t solve problems by using the same kind of thinking we used when we created them.”
To illustrate, remember when PCs were first introduced, everyone (that had a network) used terminals that shared the applications on a mainframe. At that time, it was very difficult to imagine placing the applications on everyone’s desktop and sending the resulting outputs across LANs and WANs. This technology revolutionized the business world. Why? Appropriate business applications when combined with the technology (PCs in this case), delivered productivity improvement and thus, ROI for government.
Today, everyone who writes about RFID analyzes the same question: “Where is the ROI with RFID?” The answer to this question is quite simple. No technology by itself delivers any ROI without the hard, in-the-trenches work required to discover the specific-to-your-entity applications that could be improved and then prioritized based on the amount of challenges they cause.
This type of investigation should provide a detailed map to be used to prioritize and allocate resources based on the best ROI options. Then, it is possible to evaluate whether RFID can be applied to the defined business improvement opportunities.
Many times, even if this challenge is undertaken, government may have difficulty with “seeing” the possibilities for doing a task in a new way. It is a normal part of the human condition that any significant change actually reduces efficiency–at first. This is commonly known as the “learning curve.” However, the act of forcing changes to established procedures somehow brings out creativity in every entity’s greatest asset–its employees
This may sound like so much philosophy. In many ways it is. Entities that manage to “rise above the rest” are documented and written about every day. Every article I have read on this topic has a common theme: Reinvent yourself constantly or perish!
Simply put, study and discover how RFID can help your agency, or you may lose a competitive advantage that you may not be able to overcome. What has happened to those entities that did not adapt desktop computers, ignored the internet, or refused to get rid of their manual systems for material and resource management? Sure, the early implementations were difficult and many, unexpected issues seemed daunting. The same things were being said about bar coding.
Remember, they used to call bar coding a “disruptive technology.” But if we take a look backward, and find archives describing the “bar code mandates” that were implemented in the early 1970s, we can take many of the statements and predictions of that time, put them into our presentations about RFID deployments today, and the impression would be almost identical. This is very instructive to understand because bar coding has achieved the “ubiquity” that was predicted for it.
As I’ve mentioned, new technology does not, by itself, solve any of our problems. New technology, after we climb the learning curve, does stimulate new creative thinking–one of the most valuable commodities any entity needs and can’t buy at any price.
Before you dismiss RFID as just a “mandate with no ROI” or the “next big cost with no return,” ask yourself a few simple questions:
- “Why is Wal-Mart–the biggest retailer in the world–convinced that this thing called RFID can produce dramatic cost savings?
- What processes are they attempting to improve?
- Could my agency benefit if we focused on improving the same processes–with or without RFID?
These are crucial questions about survival in today’s business environment. The Wal-Mart motto is “Always the lowest prices–ALWAYS!”
How do they believe RFID is going to help them sustain this corporate culture? Understanding the assumptions that support this initiative is far more important than finding out what the lowest price is for an RFID tag or dismissing RFID out of hand because news reports insist the technology “isn’t mature yet.”
Of course it isn’t mature yet! If RFID were mature, like bar coding, then everyone would be using it, and there would not be the potential for a competitive advantage, only the chance to maintain your current position.
Technology in its early stages presents an opportunity to challenge how “things have always been done around here”, and by engaging in the challenge, it is possible to realize more of the collective creativity of employees. So the key question ultimately becomes, “How long can I wait to decide how to use RFID to my advantage?”
A government entity is a lot like an old house with many areas for improvement. How do you prioritize? How do you decide which areas have the most potential to improve the business performance and can justify new investment? Somebody in the line of fire has to ask the hard questions about “the thinking that has created today’s circumstances”, and find ways to implement continuous improvement, reduce waste, and improve productivity through a constant evaluation of internal processes.
So, don’t listen to me, listen to Einstein! What areas of your operations have become too routine? Too established? Dare I say it–TOO BORING!!
Take those on with some gusto, and see what happens with RFID.
Editor’s Note: Bill Arnold is chief strategist for Omron’s RFID division, responsible for worldwide sales of RFID inlays and strategic alliances with label converters and other partner companies.