RFID for Business Intelligence

The Impact of RFID on the Data Warehouse

Fri, 02 Dec 2005 23:15:00 -0700

Here's an article I wrote on the impact of RFID to the Data Warehouse. An excerpt is below, with a link to the full article:

"Many RFID implementations have matured beyond a pilot stage and/or initial goals of compliance. The focus has now shifted to gaining internal efficiencies. RFID is already achieving operational benefits like process automation and increased accuracy. The next step will be to utilize the technology for strategic benefits. To do so will require introducing RFID data into the company's data warehouse (DW). This article takes a look at why and how the DW will be impacted by RFID."

http://www.dmreview.com/editorial/newsletter_article.cfm?articleId=1042095

RFID for Cheap Data Acquisition

Sat, 19 Nov 2005 00:45:00 -0700

"How many more boxes are in the stock room?", the supervisor asked me. I pushed the door of the stock room open just enough to get a quick glance. I positioned my body so that she couldn't see disaster area the stock room had become.

"I dunno... a lot?", I said letting the door close without letting her get a good glance.

It was 1986 and my fellow stock-boys and I spent the entire weekend doing an inventory cycle count. It was a semi-annual occasion where they actually shut down the entire store while we hand-counted every piece of merchandise in the store. And it wasn't just us stock boys that had to come in - all the sales people and managers had to come help as well. The "suits" - as we called them - were especially annoyed by these events. The sales folks normally relied on commissions as their primary income... but on stock day, they were here for the same lousy minimum wage as us. And the managers... well, they were salaried so they were essentially working for free. To make matters worse, they were managed against sales figures. With the store closed for inventory, they would have to work extra hard to recoup the lost revenue.

And us stock boys ... we didn't like it either. We actually got paid time and a half for coming in on the weekend. However, the sheer brainless monotony of a cycle count was enough to make one go insane. The only tools we had were clipboards, paper forms, and pencils. Our hands cramped from writing hundreds of 16-digit sku numbers. By midnight our eyes ached from reading the size 10 courier font packing labels. We had to move every box from one side of the stock room to the other to segregate the counted from the yet-to-be-counted. Most boxes had to be completely emptied to count its contents.

By 1am we were losing it and - I have to admit - our counting practices were getting pretty sloppy. We were tired and ready to go home. We began to lose count, so we started estimating. When estimating became too tedious, we guessed. Even the manager, who was notably spent, started getting sloppy. "Just count cases from now on", she said. "Assume they're all full." Finally at 3am we called it quits. A few things were not counted, but the manager declared it "good enough".

The output of this exercise was a stack of paper forms that listed sku numbers and the quantities of product on-hand. What would this be used for? To this day, I don't know. While no one doubts the value of good inventory data, this was not yet "data"... it was just paper. And the cost of data entry to input the contents of the paper forms into - what I suppose at the time would have been a mainframe - seemed prohibitive. And, even if it were entered into a system, I don't think anyone that participated in the cycle count would have considered it "good" data.

19 years later, I found myself standing in the distribution center of a large garment manufacturer. It's cycle count weekend - a once-per-quarter event for this company. As in 1986, the operations of this facility are halted for the weekend so the employees can record every bit of inventory in this 100,000 square foot warehouse. However, each warehouse clerk is equipped with a handheld barcode scanner. The clerks go up and down the warehouse racks scanning every box. Each box has to be touched, and most moved entirely to get to those behind it. Often it takes 2-3 scans before a barcode reads. Then employees wear knee pads as they are constantly kneeling down to reach for boxes in the backs of the bins. Another team stands on top of pallets lifted by forklifts so that they can scan the boxes on the upper racks.

So what has changed since 1987? Well, the handheld barcode scanners eliminated the need manually write down skus and counts, saving hours or days of time. And the accuracy is no doubt much improved over the hand scribed sku numbers. And, all the scans are instantly transformed to data the moment the handhelds are placed back in their docking stations where they can synchronize their contents to a central database.

These are huge gains, to be sure. However, operations still had to be stopped, and employees still had to come in on the weekend, and every piece of inventory had to be touched. And therefore the cost of acquiring the inventory information is still high enough to warrant only a once-per-quarter draw.

But I was called to this facility to do a feasibility study on using RFID for inventory management. The idea is to mount RFID readers throughout the warehouse. With tags affixed to every unit of inventory, an accurate count can be obtained automatically. No disruption to operations, no weekend overtime, no inaccurate counts due to dwindling employee attention. Effectively, the cost of obtaining inventory information is free. With cost out of the equation, how often will inventory counts be taken? What new analyses can be done to track product movement throughout every process in the warehouse and DC? What hidden bottlenecks will be uncovered by the abundance of new data? The doors are opening wide for new uses of BI as the cost of data acquisition is falling thanks to RFID.

RFID Opens the Doors for new uses of Information

Mon, 31 Oct 2005 02:00:00 -0700

For the true Business Intelligence enthusiast, RFID is a dream come true. For those that are new to the technology, I�ll give you the 20 second intro. RFID stands for Radio Frequency Identification. In a nutshell, its the ability for products (or any other object of interest) to identify itself without human intervention. An RFID tag (composed of a tiny chip and antenna) can be affixed to a product for identification purposes, much like a UPC on a barcode. However, unlike the barcode, the RFID tag can announce its presence remotely and automatically (requires no line-of-site and hundreds of tags can be read simultaneously and instantly). That is, it does not require a human to scan it. Rather, the tag can transmit information to Readers that are in the general vicinity - say 10-30 feet (or longer depending on the type of tag). This means that collection of product information and events can be automatic.

The classic example is a warehouse distribution center where pallets of product move in and out. If the products are equipped with RFID tags, then a full account of what products enter and exit the warehouse can be collected automatically by simply placing RFID readers at the dock door. Supply Chain Optimization analysts are thrilled because RFID will speed up the processes for Shipping, Receiving, Picking, Packing, ... etc., resulting in reduced costs and increased production.

However, us BI geeks recognize the value RFID brings beyond the operational efficiencies. We see it as the silver bullet to detailed event information, giving us new visibility into every product movement. Because RFID reduces the cost to collect product events, more events will be recorded and recorded more frequently. What was once only inferred, or studied based on a limited sample, can now be analyzed regularly on a second-by-second basis.

How long did the product sit on the shelf?

What was the dwell time at the distribution center?

How fast did the stock boys move inventory to the sales floor?

Was this product ever returned? Removed from the shelf? Brought to the dressing rooms?

What employee assembled the product?

With RFID, information that can answer these and other questions can be collected automatically. The potential analyses are endless. The doors are wide open for new insights into how to run our business more efficiently.

So, this blog ... its a forum to chat about any use of RFID-enabled information. It does not necessarily have to be about the strategic use of information that us BI-ers love to tout. Most of the RFID implementation have not gotten there yet. Operational initiatives generally come first (such is life). Thus, comments and discussion about challenges in read rates, tag costs, and vendor selection are all welcome. In the long-run, it is my hope that this blog will foster ideas for innovative uses of this new data collection technology.