Sep
27
RFID is it living up to its promise?
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A decade ago the hype around RFID was palpable – RFID vendors were unanimous – the technology was a game changer – RFID would be commonplace in businesses across the globe in every market delivering significant cost savings and process efficiencies. Ten years on commentators suggests that while RFID growth has been steady, demand is still low. So with the benefit of hindsight why hasn’t the market exploded as previously predicted?
What is RFID?
RFID is a tracking system that is used to monitor and report on inventory both within the confines of a factory/warehouse and in some cases externally. Contrary to many an executives thoughts on the matter – RFID is not just a tag – a typical RFID system will comprise three parts
• Tags
• Readers
• A server based solution that interprets the returning data.
Benefits of RFID
The key purpose of RFID is too meet the data capture and tracking needs of inventory and assets for the operating company. Like any other piece of technology RFID was designed to solve specific challenges that couldn’t be met through traditional methods. The primary advantage to RFID over legacy methods is that unlike traditional barcodes there is no line of sight required to the object, multiple items can be read in one instance, considered deployment and selection over the type of tag and location of the readers used can bring significant improvements in inventory management data.
Multiple tags can be used within a single product family enabling individual components within a family/palette to be tracked providing greater accuracy. With the resultant data reporting opportunities can be leveraged to support real time tracking and facilitate decision making and problem solving.
Barriers to RFID deployment
So given these benefits why haven’t we seen the rapid growth of RFID that was expected? Whilst RFID does have the potential to turn supply chains on their head – as with any initiative the usual business rules apply – how much will it cost, do we need it, what will it do for us when we have it. These careful considerations need to be undertaken to weigh up the pro’s and con’s of deployment – for example:
1/ Is there a robust business case to deploy RFID
2/ How will RFID fit into your processes? Will substantial process re-engineering be required when migrating from legacy systems
3/ What is the optimum technology mix and will you retain any legacy technology such as bar-coding to work alongside RFID?
3/ How will RFID “fit in” with your suppliers – will there be barriers to roll out.
Whilst undoubtedly RFID offers many benefits – lots of businesses remain to be convinced on how it could be applied with fears over the resultant process re-engineering that is undoubtedly required.
Many businesses have wrongly assumed that RFID becomes the sole provider of inventory management data. Clearly RFID can happily co-exist – it doesn’t have to be the barcode killer.
The key challenge for RFID (as with any other innovation) is that it requires capital expenditure to deploy – and to obtain the budget you need to be able to convey the benefits effectively – this has been a clear challenge for many executives – resellers must deliver examples of similar, and successful, deployments. Low cost high return systems will always gain respect and whilst the humble barcode has been around for sometime, ROI needs to be tangible for decision makers to risk the expenditure.
The key issue is that businesses have to look beyond the clever technology and understand the problem which they are trying to solve.
Tracking the growth of RFID
Luckily then – in some markets, where this problem solving ethos has been utilized, take up of RFID solutions has been positive – specifically in the medical and pharmaceutical arena – RFID has been deployed to solve real business problems such as asset and patient, pharmaceutical companies are using RFID to help combat counterfeit drugs. Parco Merged Media (www.parcomergedmedia.com), a RFID seller, claim that improved asset tracking can greatly reduce the number of assets required by a given hospital and lead to significant equipment savings.
For other businesses – large firms and market leaders (such as Wal Mart) are now beginning to mandate the use of RFID within its supply chain to facilitate palette tracking – growth in these areas has been led by companies that have the leverage to dictate to their supplier base and have Inventory sizes large enough in order that RFID equals efficiency bringing suitable benefits and returns on investment.
Benchmarking RFID usage
Whilst we haven’t exactly seen the explosion promised we have seen a steady growth in RFID deployment and some really clever uses – as resellers seek to capitalize on the marketing opportunities these bring, senior executives should begin to see and understand what challenges RFID can help solve and how it can be applied to their business – perhaps then growth in RFID will match the original expectation.
Sep
22
Purchasing process key steps – supplier payment
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Completing our step through the key steps of the purchasing process is the final activity – that of the supplier payment and the processing of the supplier invoice.
The invoice is a document (or electronic message) that conveys the charges being levied by the supplier and acts as a trigger to request payment (even if payment takes place sometime after the invoice arrives at the buying organization).
Typically the supplier will issue their invoice at one of the following three stages
1/ At the time that the goods ship
2/ Subsequent to the goods shipping but relating solely to that shipment/order
3/ Subsequent to the goods shipping and as part as a consolidated invoice (i.e. part of a single monthly invoice)
A fourth stage exists where the supplier may issue an invoice in advance of goods shipment – a pro-forma invoice such as this will typically be issued under the following circumstances
1/ The buying organization is new and does not have an account
2/ Credit problems necessitate payment before shipment.
Processing the invoice
Under usual circumstances, a three way match occurs between the:
• Invoice which should match the quantity delivered on the
• Goods in receipt Note which should match the cost / quantity on the
• Purchase Order
Processing
In many organizations this activity is automated (where the Order and Goods receipt note data is held electronically). However in many SME’s especially where finance and ordering systems are not integrated this three way verification/matching exercise will be carried out manually. Where it is carried out manually and there is substantial volumes of material being ordered this can add a considerable level of administration to the purchasing function (as it is often the purchasing function who are asked to approve / sign off the Invoice).
Payment terms
Most suppliers will dictate the payment terms i.e. when is the invoice due for payment from the date of submittal? Most organizations will pay their suppliers electronically – i.e. through a BACS payment
Electronic Invoicing & Purchase to Pay (P2P)
Traditional invoicing can be a very paper driven process–where matching does not occur electronically the level of overhead to administer the process can be considerable – as a result – many organizations are increasingly looking to use automated solutions whether through implementing Electronic Invoicing solutions, where an electronic message takes the place of the paper document, or through innovative use of procurement cards, in both cases the new solution removes paper from the process and automates many steps.
Invoicing – a forgotten part of the purchasing process
All too often when people document the purchasing process the payment element can be forgotten. The invoice process, however can be particularly bureaucratic and wasteful and represents a key improvement opportunity. As such when looking to map your procurement activity be sure to include supplier payments.