Itvr by eyadema simplisse research on rfid

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Itvr by eyadema simplisse research on rfid

  1. 1. THE BUSINESS CASE FOR INVESTING IN RFIDInformation Technology value realization1/13/2012Bangalore Management AcademyEyadema Simplisse Iyanos -10258454
  2. 2. Table of Contents1.0 BACKGROUND OF INFORMATION ....................................................................................... 32.0 EXECUTIVE SUMMARY .......................................................................................................... 43.0 ANALYSIS OF INVESTMENT OF RFID .................................................................................. 5 3.1 Financial benefits and costs ...................................................................................................... 5 3.1.1 Profits centre ..................................................................................................................... 5 3.1.2 Investment centre .............................................................................................................. 5 3.1.3 Service centre.................................................................................................................... 6 3.1.4 Costs centre....................................................................................................................... 6 3.1.5 Fixed costs ........................................................................................................................ 6 3.1.6 Variable costs.................................................................................................................... 6 3.2 Non-financial benefit and cost .................................................................................................. 7 3.3 RISKS involved ....................................................................................................................... 8 3.4 Organisation change impacts .................................................................................................... 8 3.5 Impact of not doing anything ................................................................................................... 94.0 RECOMMENDATIONS ............................................................................................................. 95.0 LIMITATIONS ......................................................................................................................... 106.0 REFERENCES .......................................................................................................................... 11
  3. 3. 1.0 BACKGROUND OF INFORMATIONCity healthcare is service oriented, manufacturing medical device supporting hospital. Cityhealthcare is amongst big company in New Zealand on top tenth with 830 employees, isoperating globally in four continents (Australia, USA, Europe and Asia) company salesproducts to 90 markets across the world, their products was only identified by barcode, butmanagement want to use RFID because IT value realization, company foray in innovationtechnologies of medical devices and other accessories required by hospitals managementsuch as respiratory modifier system, neonatal care, operating rooms etc. Company has beenachieved sales of $ 241 million per year. City healthcare approximately uses 7 % of revenuein R&D which helping them boost up product improvement and come up with new productmainly focusing in new technology medical applications in order to expand network sales aswell as gain IT realization.The lack of integration supportiveness as barcode company decided to shift to RFIDimplementation but there are some issues related to RFID such as standards of (FDA) rulesand regulatory of selling their products, and cost perspective, moreover the functionality ofRFID and potential benefits, technology realization the company decided adaptation of RFIDcompetitive advantages of using RFID can be found in supply chain business process (Singh& Lai, 2007)Treatment medical device is high value product as result must be manufacturedcarefully in adequate manner followed by traceability, tracking across three tied supply chainall these activities are involved RFID supportive. By manufacturing product with UniqueIdentified records have been makes easily for tracking and tracing the products and test datarecord in the supply chain. This tracking and tracing helps to control, manage and monitoringthe flow of material, RFID helps identify and correct error as well as increase businessoperational efficiency with error free
  4. 4. 2.0 EXECUTIVE SUMMARYCity healthcare is manufacturer medical device treatment is based in New Zealand and hasoffices of sales almost across the world about five continents the company wants toimplement new technology shift from barcode to RFID system the reason is being ablemanaging its high value product at the same time for tracking and tracing that product. Theybelieve that the IT strategy and business process strategy can increase business benefits frominvestment while gives an opportunity improve operation efficient while decreasing costs,brings more IT innovation, matching IT alignment with business strategy in order to meetbusiness objective and vision.RFID system implementation City healthcare found that is costly compare to barcode but dueIT value realization the company decided to replace barcode with RFID system in order ofmanaging inventory, tracking and traceability high value products, assets management, testruncard, disseminate information with suppliers and customers as well as across entire Cityhealthcare and many more tangible and intangible benefits from IT realization. Cost benefitsanalyses was conducted due to analysis return investments when RFID adopted, there aresome issues of RFID system but much more are benefits from it, consider the medical devicestreatment which is more important due to take care person‘s life. Based in financialinvestment perspective City healthcare analysed what business analyst called” high Risk andrewards investment”.The problem involved in the city healthcare medical devices is that the barcode was notmeeting the requirement based that facts was negative IT value realization, the negativeeffect caused dissatisfaction of customer and lost quality of products, negative businessoperation items of efficiency and effectiveness of business operation during assetsmanagement, manufacturing treatment, and performance of company’s software applications,after integrating the RFID the supply chain management in the factory, IT strategy andbusiness strategy met the city healthcare expectations. (Journal of Cases on informationTechnology, 2008)Value of RFID system is only realized when IT solutions and businessservice oriented implemented strategically; business process automation brings more benefits,high productivity in such way that efficiency and effectiveness is major key performanceindicator of business process optimization.
  5. 5. 3.0 ANALYSIS OF INVESTMENT OF RFIDCity healthcare, have been realized the benefits which can gain out of investment inautomation and data collection “RFID realization” even though there are some issues ofimplementation and adaptation of RFID some are standards and procedures, costs andsecurity moreover the project is straightforward to understand that matching business strategyand IT alignment is key success criteria for achieve organisation vision, mission andobjectives. RFID realization is the processes of changing the way of supply chainmanagement operate which can be initialized in daily basis operation such as IT enablingprocesses information faster, reliable, efficiency and effectiveness at lower costs thanbarcode. To analyze RFID investment can be evaluated using RFID benefits frameworkwhich included, workflow management initialization of automation support, identificationasset location using automation identification, portability asset management, patient safetyapplication and quality assurance application of RFID.3.1 Financial benefits and costsCost/benefits analysis can give clear image of City healthcare by managing and scrutinizingwhat was going on the ground items of investment measured. RFID value can measuredusing IT scorecard which involved four dimensions such as; user orientation, operationalexcellence, business contribution, and criteria success factors. The RFID value realization inCity healthcare may came out positive benefits by increasing customer satisfaction, increasemarket share and improve operation efficiency and many more. There are 4 components of ITvalue centre which are costs, profits, investment and service centre.3.1.1 Profits centreIn the case scenario illustrate that there were a lots of functionalities which barcode was notdeliver service required in the City healthcare in order to improve productivity RFID was asolution to carry out the complexity and understand operations and functionalities required byCity healthcare items of business strategy alignment, this is typical good demonstration toclarify the IT benefits by maximizing opportunity while diminishing costs and enabler ofcreating new opportunity.3.1.2 Investment centreThe one most important is IT value realization of how much will spend and how long periodwill return on investment, City healthcare after realizing the value of RFID as IT based
  6. 6. business opportunity initialized to invest into innovation technology will help the business tohave more capacity of deliver the product to market at reasonable time, within budget at theright destination by using RFID and this will be long term of City healthcare beingsustainable by gaining core competency and competitive advantages to the market.3.1.3 Service centreIT enabled business capacity to support current business strategy, City healthcare whenimplemented RFID met product quality, process and checking to ensure safety of the productand efficiency furthermore met standardization of (FDA) and ensure flexibility value of ITinfrastructure platform, in order to validate equipments, secure retention of products, and tounderstand the varieties of IT business security issues within City healthcare, satisfy thestakeholders and meeting shareholders expectations.3.1.4 Costs centreInvestments and costs in city healthcare system happened one of the whole life such costsincluded machinery, IT infrastructure, setup networking ,installation of software packagesincluding supply chain, testing which must be accurate in order to increase operation efficientwhile minimizing cost, therefore will enabling to increase profitability of City healthcare.3.1.5 Fixed costsThese kinds of cost can be described as Total cost ownership processes such as applying tagsto the assets of City healthcare other examples are machinery, and programming code, whichwill be purchase, implementation, maintenance and operations costs “end life costs”3.1.6 Variable costsThe cost can be seen as labour, material, and other related RFID technology developmentchange over time, in this can be elaborated as software integration and testing, updatingsoftware and network into each new system which varies depend upon tracking andtraceability which must be applicable in a certain products.
  7. 7. 3.2 Non-financial benefit and costThe non-financial benefits in City healthcare measured in items of qualitative as intangiblebenefits related organisation and customer perspective as whole. Non financial benefits andindicating as adding value into City healthcare such way that the customer being satisfied,high value delivery product/ services to the end user, therefore customers services is moreaccurate in this case can be qualitative measured as improving customer service, reduce errorrate and improve City healthcare image at the same time reduce overhead cost. (Yahia, 2001)RFID technology is asset management solution, is being able to integrate some ofapplications in City healthcare being help to utilize supply chain application software. RFIDtagged data storage and is planned to extend technology and interoperability in a way of theglobal scale. The FRID is providing unique tagged items of tracking and tracingproducts/items which bring result of operation efficiency and effectiveness way ofmonitoring and controlling flow of product, (Yahia, 2001) furthermore works in real timerapidly capture data and has large data storage. The RFID system is demonstrating the vastarray of non-financial benefits through the organisation who willing to implement and adoptRFID. Healthcare manufacturer and largest retail have been established RFID integrationwith various application technologies to help them into laboratory test (Andrews, 2006)RFID system allow a large storage, tags which allowed for sales tracking and tracing,automating inventory replenishment and daily use inventory checkouts (Eduard, 2004) RFIDin healthcare continued to provide the abundance of non- financial benefits/costs such asreduce labours cost, simplify business procedures, improving inventory control andimproving productivity and turnover. The three core benefits uses RFID in city healthcaremanufacturer are; inventory accuracy, shelf replenishments and inventory visibility, trackingand traceability of portability assets. Furthermore non-financial costs/benefit involved timesaving, in such way that of increasing operation efficiencyRFID system in city healthcare manufacturer is considered as “top priority” based ontracking and tracing products and is being connected to the internet, and supply chain whichallowed the business function to work together and managing automation business process,and automation workflow management rules. RFID system can be considered as ITalignment with business process management strategy because RFID system and supplychain application should be able to transform of ways of business being contacted byimproving supply chain efficiency.
  8. 8. Trace and tracking capability of inventory by monitoring stock getting more informationrelated products stored date, serial number, date manufactured and date of expiration andmonitoring the movement of stock. Being able read and write, update the modification ofexisting information, RFID system in City healthcare considered as suitable devicesrealization which had many potential benefits than barcode like field reading, capability ofstoring many data summarized benefits such as (i) overhead cost reduction (ii) reduction andminimize errors rates (iii) improve customer services (IV) improve City healthcare imageinclude customer satisfaction and add value products /services (V) RFID is used inemergency of operation or lab test products (VI) RFID Detect damage of the product andexpiration date thus it can be removed from the stock using (FIFO) RFID is friendlyenvironment automation can read independently aggressive environment such as fire, ink,noise, and different temperatures (Journal of Cases on information Technology,, 2008)3.3 RISKS involvedPerson’s life is top priority important than anything else therefore there will be a great risks ifthere is any incident related City healthcare product which is not fully tested and thus givenan example from the case indicate that “obstructive sleep apnoea is life threatening disorder”this is great risk to end consumer.There are some risks associated with manufacturing product as catastrophic which mighthappened during manufacturing medical devices or when it’s involved in incident or anyother unwanted publicity therefore each medical device treatment manufactured must bereleased with individually label regulatory bodies (FDA)Lack of security, and also RFID system had problem of security itself.3.4 Organisation change impactsThe decision making of city healthcare was done in order to provide high quality standard ofmedical devices treatment and improve business process capability, such way that to attemptto deliver high value product. RFID system has potential benefit for conducting business, andenabler automation of the runcard as well as improving manufacturing line.The city healthcare expands IT/IS strategy alignment point of view the IT infrastructure andinternal supply chain connected together with manufacturing line which enabling“traceability upstream” suppliers and manufacturing department linked dynamically as well
  9. 9. as sales office and customers using high business service oriented technology by increasingworld class business process and competitiveness advantages.3.5 Impact of not doing anythingAccording to Jupiter research, bad service has resulted in 91% turn off in the IT service,without business process optimization City healthcare can’t survive in the competitivemarket, therefore to adopt the business service oriented is a way of maintain its corecompetency, since barcode has limit capability and need human intervention is not fair tokeep track of utilise it, RFID can perform business process in automation way its implement aclear insights of adopting IT strategy and business strategy is only way to compete andsurvive on the market otherwise the failure of innovation may make them close.4.0 RECOMMENDATIONSCity healthcare if decided to implementing new technology which enhance business processoperations and complex management has to choose right decision in order to match ITalignment strategy and business strategy so that organisation can make improvementresponsiveness to the customers both from externally and internally organization whileincrease efficiency by decrease cost in entire organisation stakeholders.Before taking action of implementing new technology like RFID is recommend that R&Dshould happen in order to identifying, and understanding failure and overcome failures in allaspect to make a successful value of technology, implementation must meet the requiredinnovation technology.Most wanted during implementing RFID system implementation must awareness withsecurity/privacy issue of the IT user and shareholders must be involved.Standardization of equipment treatment device must be on top of awareness this will makeorganization to respond quickly to market and gain lifespan of high value.
  10. 10. 5.0 LIMITATIONS  Lack of compatibility standards of treatment medical devices is an issue to the city healthcare manufacturer therefore need compatibility and interoperability standardization.  RFID implementation is highly cost and remains unclear this become disadvantages. For example RFID cost $ 0.30 per tag while compare to barcode $ 0.0024/ label.  RFID has scope items of reading tags unless there are some sensors placed around otherwise had range limit to cover during operation there will be needed to enhance RFID technology in future.  RFID still need to be connected to the backend system such application packages like ERP, CRM and DSS in order to collect information effectively and efficiency.  Due to the security and privacy RFID has some issues and has self problem which cannot adequately be sure integrity of data and confidentiality in the form of privacy system, information can be easily tracked any time if is needed.
  11. 11. 6.0 REFERENCESAnderson. (2007). Global Data Standards in the Healthcare supply Chain. The business case ,pp. 30-48.Andrews, J. (2006, January 17). The debate;. Retrieved December 30, 2011, fromwww.healthcare itnews.com.Journal of Cases on information Technology,. (2008). The care of City Healthcare. HersheyPA 17033-1240, USA: IGI Global.Mehjerdi, y. Z. (2001). RFID and its benefits. Assembly automation- Research paper , 251-261.Yahia, Z. M. (2001, March 31). RFID and its benefits: a multiples case analyses. ResearchArticle , 251-261.

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