building your rfid business case · harold boeck& ygalbendavid(esg uqam; academia rfid),...
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Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Building Your RFID Business Case
Evaluating RFID's marginal impacts and benefits over existing technologies
Harold Boeck,Ygal Bendavid
(UQAM, Academia RFID)
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Your presenter
Harold Boeck
Ygal Bendavid
� BAA, MSc.A., Ph.D.
� Professors at the UQAM
� Co-Founders of ACADEMIA RFID
� RFID certified
Preconference seminar Agenda“Warehouse & Inventory Mgt in the RFID Supply Chain”
• 11:30 Linking RFID to Inventory Management Best Practices
• 12:15 Targeting the Correct RFID Technology for the Right Project
• 13:45 Key Steps in Building an Inventory-Management RFID Solution: Build Your Own RFID Portal
• 14:30 Designing Your RFID Solution
• 15:30 Building Your RFID Business Case
• 16:15 Preconference Seminar Ends
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Objective of the presentation
• How to develop an RFID business case and justify your investment (Qualitatively /Quantifiably)
– Assess the financial impact (costs & benefits) of your RFID project
– Build an RFID “Business case” based on the selected technologies and solution design
– Assess & Monitor your performance
Start Your Business case!
Unlock the Business Case for RFID
RFID
Don’t sell RFID as a
technology but as a
solution to business
problems or as a
mean to leverage
on new
opportunities!
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Project Front
end
Project definition
& Planning
RFID BPR
(As-Is)
RFID BPR
(To Be)
Project follow up
& Operations
Source: Ygal Bendavid, Academia
RFID, RFID PRO 2010
POC & Pilot
Design
development
Implementation
RFID Business Case in the Project life cycle
•High level Business
case / value
•Business cases & scenarios
sensitivity analysis based on
different designs
•Revision of the Business case: Assess
realistic financial impact based on
experimentation (Lab & pilot) &
Procurement process
•Measuring performance and continuous case
assessment (TCO)
Methods & tools for ROI analysisExplored in section 2
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Quantifying the opportunities/ problemsClassic - Costs of inventory
• Carrying Costs– Facility storage
• rent, depreciation, power, heat, cooling, lighting, security, taxes, insurances, etc.
– Material handling • Equipment
– Labor
– Record Keeping
– Borrowing to purchase inventory
– Product deterioration • Spoilage, breakage,
obsolescence,B
• Ordering costs– Replenishment ($/order)
– Requisition, PO, transportation, shipping, receiving, handling, accounting, auditing, etc.
• Shortage costs– Stockouts costs – loss of sales
& relaitve loss of profits
– Customer dissatisfaction
– ReputationsB
Quantifying the opportunities/ problemslinking the business case to the Project Goals
Source: Adapted from GS1 Canada, 2007 & IBM & EPC Global
Increase Operating efficiency
Increase Capital
Efficiency
Shareholder Value
Reduce Operating Costs
Reduce Working Capital
Increase Volume
�Reduced retailer claims (overages/ shortages)
�Reduced labor costs (e.g. receiving, put away, picking, shipping, assembling, reworkingB)
�Reduced inventory
�Reduction in returns/ unsaleable
� Increased in asset utilization
Increase 2
� Improved on-shelf availability
�Reduced counterfeiting
� Improved customization options2
Increase RevenueIncrease Market
Share
2
� Improved promotional planning and execution
� Improved shrink management
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Cost impacts & ROI Analysis Operations/business process performance assessment
Source: Bendavid, 2007– adapted from Aris Toolset
Source
material
& services
Make
Assemble
material
& services
Enterprise Management processes
Core Business Processes
Supply chain management
Plan
Material &
services
Return
Dispose
Material
& services
Product Life cycle management
Deliver
material
& services
.. .. .. ..
Customer services
Data analysis & Sol. DevelopmentAssess the “As Is” performance
Source: Bendavid Y. (2011) Academia RFID – RFID PRO
Source
material
& services
Make
Assemble
material
& services
Supply chain management
Plan
Material &
services
Return
Dispose
Material
& services
Deliver
material
& services
Unload products Employee A
Products Unloaded
Verify BOL vs.
delivered products
Supplier sys.
ERP
OK
Enter data to compare
With the PO
electronic
data
Employee A
BOL
Signed
BOL
Mismatch
De
live
r
Pla
n
So
urc
e
•On time parts delivery percentage
•% of receipt authorized by PO
•% of orders released with full lead time
•Put away accuracy
•Put away cycle time
•Average picking time
•Etc.
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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De
live
r
Data analysis & Sol. DevelopmentAssess the “to Be” business performance
Source: Bendavid Y. (2011) Academia RFID – RFID PRO
Source
material
& services
Make
Assemble
material
& services
Supply chain management
Plan
Material &
services
Return
Dispose
Material
& services
Deliver
material
& servicesP
lan
So
urc
eUnload products Employee A
Products
Unloaded
Automatically Read RFID&EPC tags
Middleware
ERP/WMS
Tags Automatically
Read
Automatically
Transfer
Info. Into ERP
RFID&EPC
data
RFID&EPC
data
Reader
Tags
•For any business case, ‘‘measures and metrics are needed to test and reveal the viability of strategies without which a clear direction for improvement and realization of goals would be highly difficult’’ Gunasekaranand Ngai (2005), JOM 23(5):423–451
Data analysis & Sol. DevelopmentKPIs in the RFID Maturity Framework
AREA ACTION Assessment Criteria
Process
Organisation
Knowledge
Technology
Performance
Aberdeen Group, Winning RFID Strategies for 2008
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Data analysis & Sol. DevelopmentKPIs and RFID impact assessment
• With respect to previous experience on the impact
of RFID in supply chain contexts, multiple KPIs are
used, such as
– level of inventory (reduction),
– service level (improvement),
– (out-of) stock level, storage,
– space (minimum), handling costs,
– process improvement (automation, cancellation), etc.
Data analysis & Sol. DevelopmentKPIs for RFID impact assessment
� On time parts delivery percentage
� Percentage of receipt authorized by PO
� Percentage of orders released with full lead time
� Put away accuracy
� Put away cycle time
� Average picking time
� Shipping accuracy
� Inventory availability
� Average back order length
� Inventory accuracy
� Inventory turnover
� Obsolete inventory percentage
� Benefits. How will your company benefit from RFID-driven visibility across the supply chain?
� Costs. How will your company pay, both in hard costs and resources, for RFID-driven visibility?
Source: 2008, Forrester Research
Source: Adapted from Bragg S. (2004), Inventory best practices
•What are your Priorities?
•How RFID can help you in addressing these challenges and opportunities
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Project/Infrastructure Cost AnalysisCost of RFID project (1 of 2)
� Project Preparation
� Opportunity Assessment
� Business Case Development
� RFID Strategy Development
� Use Case Generation
� Procurement Management (planning and sourcing)
� Solution Architecture Development
� System Integration Assessment
� Business Process Assessment
� Experimentation/Testing (validation of the business case)
� Installation Costs� Initial Site Survey
� Design selection
� Hardware installation
� Testing and trouble shoot…
� RFID Infrastructure (hardware)
� RFID Tags (Pallet, case, item, medical devices, staff, patients…)
� Readers and Antennas
� Mounting Accessories
� RFID printers and label Applicators
� Ancillary devices (motions sensors, horns, lights, …)
� Other Infrastructure Costs (new servers and computers, infrastructure upgrade, additional points based on required location accuracy)
Source: Adapted from EPC Global
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Project/Infrastructure Cost AnalysisCost of RFID project (2 of 2)
Other expenses
� Physical Shop floor/warehouse Modification/Expense
� Other labor related to RFID adoption:
� requirement for new resources: e.g.
business analysts
� Training for all employees including
workers (shop floor clerks,
security…)
� RFID Software Costs
� RFID Middleware Solution
� Middleware System Integration (with WMS, ERP, Track& trace sol.)
� Interface Customization
� Engineering/Business Process Change including Implementation of New business processes
� New Information flow, Staff & patient flow…
� Ongoing System Maintenance/Admin.
� Network Management System
� Reader Firmware Upgrades
� Damaged Readers/Antennas
� Performance Monitoring
� Etc.
Source: Adapted from EPC Global
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Project Preparation
RFID Tags
RFID Hardware
Other infrastructure costs
Installation costs
Tag Application Costs (labor)
RFID Software Costs
Business Process Change
Physical Plant Modification
Ongoing System Maintenance/Admin.
Misc. Costs
Etc.
4 Assess the
Financial Impact:
RFID cost: Building
a simple tool
Source: EPC Global Canada
Assess & Monitor your performance
Supply chain frameworks to assess the performance
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Data analysis & Sol. DevelopmentSupply chain frameworks to assess the performance
http://supply-chain.org/
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Data analysis & Sol. DevelopmentSupply chain frameworks to assess the performance
• Some Reference Model– Supply Chain Operation
Reference Model (SCOR)(Supply chain Council, 2007 )
– Global Supply Chain Forum(Lambert et al., 2005 )
– Balanced ScoreCard (Kaplan
et Norton,1992 )
See for instance the SCOR model on http://supply-chain.org/
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
12
“SCOR is a management tool. It is a process reference
model for supply-chain management, spanning from the
supplier’s supplier to the customer’s customer”
Source: Supply Chain Council
Plan
Develop a course of
action that best
meets sourcing,
production and
delivery
requirements
Source
Procure goods
and services to
meet planned
or actual
demand
Make
Transform
product to a
finished state to
meet planned
or actual
demand
Deliver
Provide products
to meet demand,
including order
management,
transportation
and distribution
Return
Return
products,
post-delivery
customer
support
Data analysis & Sol. DevelopmentSupply chain frameworks to assess the performance
SCOR MetricsPerformance Attribute
Performance Attribute Definition Level 1 Metric
Delivery Performance Fill Rates
Supply Chain Delivery Reliability
The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer.
Perfect Order Fulfillment
Supply Chain Responsiveness
The velocity at which a supply chain provides products to the customer.
Order Fulfillment Lead Times
Supply Chain Response Time Supply Chain Flexibility
The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage.
Production Flexibility
Cost of Goods Sold Total Supply Chain Management Costs Value-Added Productivity
Supply Chain Costs The costs associated with operating the supply chain.
Warranty / Returns Processing Costs Cash-to-Cash Cycle Time Inventory Days of Supply
Supply Chain Asset Management Efficiency
The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.
Asset Turns
See for instance the SCOR model on http://supply-chain.org/
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Supply chain members
Data analysis & Sol. Development in the SCPerformance measures and RFID impact assessment
1st
leve
l K
PIs
Vertical KPIse.g. days of inventory, inventory carrying cost (raw material in storage
capacity utilization,forecast accuracy,
frequency and qualityof delivery, etc.
Vertical KPIs
e.g. days of inventory, inventory
carrying cost; replenishment cycle time, purchase order
cycle, put away cycle time, B
Vertical KPIs
e.g. replenishment cycle time, inventory carrying cost, product availability, OOS, etc.
Vertical KPIs
e.g. XXX.
Horizontal KPIs (Collective performance optimization)Reliability (e.g. quality of deliveries), responsiveness to urgent deliveries, (e.g. order fulfillment lead time); flexibility (e.g. Supply chain response time); asset management efficiency (e.g. cash-to-cash cycle time)
Manufacturer
ActivitiesAssembling
Distributors
ActivitiesStorage & distribution
Retailers
ActivitiesStorage & distribution
XXX
Source: Adapted from Bendavid et al., “Key Performance Indicators for the evaluation of RFID enabled B-to-
B eCommerce applications..” Information Systems and E-Business Management, Vol. 7, No 1, pp. 1-20, 2009.
“manufacturers, distributors, and retailers have markedly different perspectives
— as well as mutual dependence — on the value from the RFID-enabled
visibility. These varying perspectives can make the financial outlook of each
organization’s individual costs, benefits, and risks very blurry”. (Forrester, 2008)
Forrester (2oo8) The ROI Of RFID For Supply Chain Visibility,
Data analysis & Sol. DevelopmentKPIs for RFID impact assessment- leverage on existing
cases
The case of American Apparel
Source: ABI Research RFID Item-Level Tagging in Fashion Apparel and Footwear
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
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Conclusion
• An RFID business case should be a living, breathing document
• Continuous RFID developments (↓price, ↑performance)
– “ Implementing RFID is just the start3 ”
Source: GS1 Canada
Preconference seminar Agenda“Warehouse & Inventory Mgt in the RFID
Supply Chain”
• 11:30 Linking RFID to Inventory Management Best Practices
• 12:15 Targeting the Correct RFID Technology for the Right Project
• 13:45 Key Steps in Building an Inventory-Management RFID Solution: Build Your Own RFID Portal
• 14:30 Designing Your RFID Solution
• 15:30 Building Your RFID Business Case
• 16:15 Preconference Seminar Ends
Harold Boeck & Ygal Bendavid (ESG UQAM; Academia RFID), Building Your RFID Business Case@ RFID Journal live Tenth
Annual Conf. - Preconf. seminar Warehouse & Inventory Management in the RFID Supply Chain, April 03 2012, Orlando, FLA.
15
Thank you!
UQAM, School of business
315 Ste-Catherine est Local R-3570
Montréal (Québec) Canada H2X 3X2
Tel: 514-987 3000 (x 2429)
Web site: www.mantech.uqam.ca
Academia RFID9916 Côte de liesse,
Montréal QC Canada
H8T 1A1
Tel: 514 631 8282 – Fax: 631 9696
Web site: http://www.rfidacademia.com
Ygal Bendavid
Harold Boeck
Boeck. [email protected]
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