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Are You Ready for RFID? THe promise and challenges of ...

  1. 1. Are you ready for RFID? The promise and challenges of implementing Radio Frequency Identification (RFID) systems across the extended supply chain A SAS White Paper
  2. 2. Table of Contents Executive summary ....................................................................................................... 1 Tracking the elusive object........................................................................................... 2 RFID 101 – A quick tutorial ........................................................................................... 3 What’s so great about RFID and EPC, when UPC bar codes are everywhere? ..... 4 Not just a mandate, but a merit .................................................................................... 6 The data challenges of RFID — trouble with petabytes ............................................ 6 SAS solutions for RFID applications ........................................................................... 8 Manage exponential increases in new data................................................................. 9 Validate what you want, filter out what you don’t ......................................................... 9 Integrate with existing systems .................................................................................. 10 Find the business value in the data ........................................................................... 10 Share data among diverse users and organizations ................................................. 12 Advantages of an end-to-end RFID business intelligence solution ....................... 12 What companies can gain from RFID data................................................................ 13 Closing thoughts ......................................................................................................... 14 About SAS .................................................................................................................... 14
  3. 3. The primary content provider for Are You Ready for RFID? The promise and challenges of implementing Radio Frequency Identification (RFID) systems across the extended supply chain was Wayne Embry, technical architect at SAS. Wayne can be reached at
  4. 4. Are You Ready for RFID? Executive summary While still in the very early stages of adoption and rollout, radio frequency identification (RFID) — touted as the new bar code — holds great promise for retailers, manufacturers, third-party logistics providers and many other organizations. RFID, which enables wireless tracking of virtually An RFID system consists of an RFID tag on each object to be tracked — carton, pallet, vehicle, any kind of object, is animal, etc. — and fixed or handheld readers to scan those tags. These components use radio revolutionizing supply chain frequency waves to exchange data, such as product code, manufacturer, destination and more. management, but it also The data can be transmitted over typical network interfaces to company databases — or it can be introduces enormous data used to notify a programmable logic controller to trigger an action, such as raising an access gate management challenges. Are you ready for it? or interfacing with a transaction database to complete a sale. For all of the expense and preliminary technical glitches of the new technology, RFID holds great promise for all parties in the extended supply chain. For example: • For manufacturers, RFID enables detailed, automated monitoring of parts as they move through a facility, and quickly identifies the origin of defective components or products, even after they have been sold. • For distributors, RFID manages inventories and fleets so effectively that manual tasks can be eliminated, processes can be dramatically accelerated and shipping errors can be reduced. • For retailers, RFID ensures appropriate stocking levels, tracks the origin and history of products, prevent theft or misplacement of goods and speeds up checkout lines. Where traditional bar coding requires one-by-one scanning of a visible bar code label, RFID readers can simultaneously scan hundreds of tagged items, whether or not the tag is visible. And whereas traditional bar coding can only tell you what type of product is being scanned, RFID can be used to uniquely identify each individual item. As you can imagine, all this detailed data will give companies unprecedented visibility into the extended supply chain, from originating source to consumer. Companies can reduce inventory control issues, increase efficiency, make better use of corporate resources, improve customer service and get a broader and more complete view of their internal operations. Yet major challenges remain. RFID systems will ultimately generate a staggering amount of data — perhaps 100 to 1000 times the data of conventional bar coding systems. As the technology becomes more and more widespread, adopters will be challenged just gathering and managing these massive amounts of data, much less finding the nuggets of knowledge amidst all the “noise.” For nearly 30 years, the fundamental mission of SAS has been to help companies organize, harness, analyze and exploit data from any external or internal source. To SAS solutions, RFID data is just another resource — a potential goldmine of business intelligence that can be integrated into the flexible, extensible SAS information infrastructure. 1
  5. 5. Are You Ready for RFID? All SAS solutions can be configured to accept, analyze and deliver business value from RFID data. Furthermore, all SAS solutions are built on a solid framework of data management and analytic technology that can scale to handle databases of any size — even the petabytes of data that RFID systems are expected to generate for large retailers and government agencies. Tracking the elusive object After the December 2003 discovery of bovine spongiform encephalopathy — commonly known as “mad cow” disease — in western Canada and Washington State, agricultural authorities in both countries were grim. The disease, which attacks the animal’s central nervous system, can be harmful or fatal to humans who eat infected beef. Would North America witness a repeat of the outbreaks and deaths that plagued Britain and Europe in the previous decade? The disease had to be stopped in its tracks. To do that, cattlemen and government agencies needed to be able to track the origin, movements and destination of every animal likely to enter the food chain. As a result, neither country wanted cattle crossing its borders, even though the ban represented a huge loss of market for Canadian producers and a huge loss of grazing land for American producers. In mid-2005, the bilateral ban was lifted, thanks to a tiny chip — a radio frequency identification (RFID) tag. Under nationally regulated programs, cattle crossing international borders are marked with ear tags embedded with RFID chips. These tags trigger access to valuable information about each animal — information that could potentially be used to stop the deadly disease right at the source. RFID technology isn’t new. During World War II, RFID technology enabled the British Air Force to uniquely identify their planes. When you cruise through a toll booth and auto-pay on the fly, you’re using active RFID technology. You’ll even find RFID microchips implanted under the skin of millions of household pets, identifying their owners. What is new is the rapid and imminent spread of RFID technology into a host of new commercial applications. Already, the U.S. Department of Defense and Wal-Mart are requiring their top suppliers to implement RFID technology in their supply chains. Target, Albertsons, Best Buy, Tesco of the United Kingdom and the Metro Group of Germany are following suit. Wal-Mart, the world’s largest retailer, has been the undisputed leader of the RFID revolution. As of January 2005, RFID was already in use in 104 Wal-Mart stores, 36 Sam's Clubs, and three distribution centers. The company had installed more than 14,000 pieces of hardware and run 230 miles of cable to support RFID initiatives. More than half of the 100 suppliers who were tasked to implement RFID were already shipping tagged cases and pallets — and Wal-Mart had already scanned more than 7,000 pallets, 200,000 cases and 1.5 million individual tags. Best Buy has gone public with its RFID plans, pledging to have its suppliers start delivering RFID- tagged product cases and pallets by January 2006. 2
  6. 6. Are You Ready for RFID? However, retail applications are just the beginning. For example: • Manufacturers are using RFID technology to track the movement of parts through their facilities and through distribution centers and delivery fleets. • Airports are deploying RFID systems to track passenger baggage. • The new Airbus A380, the world’s largest passenger airplane, contains more than 10,000 RFID tags on removable pieces and those requiring periodic maintenance or replacement. • Healthcare facilities are investigating the potential of RFID tags to protect patients from medical errors and protect babies from abduction. • Pharmaceutical companies embed RFID tags in drug containers to prevent counterfeiting and abuse of regulated substances. • Libraries are tagging books with RFID tags to quickly located misplaced books on the shelf and enable self-service checkout. • One tool manufacturer is hoping RFID tags built into its power tools will stem contractors’ multimillion-dollar losses from workplace theft. As more manufacturers of RFID tags, readers and software solutions enter the market, the price of the technology will continue to decline and practical applications will continue to grow. Sales of RFID tags are expected to increase dramatically in the next few years, mostly for shipping carton tags, as major retailers and suppliers adopt the technology. In fact, sales of RFID tags are forecast to jump from $300,000 million in 2004 to $2.8 billion in 2009. RFID 101 – A quick tutorial Radio frequency identification (RFID) refers to the process of using radio signals to exchange data between ID tags and readers. The technology is used primarily to locate, identify and track objects — products, containers, vehicles, animals... just about anything. An RFID system includes several primary components: tags, tag readers and data. RFID tags consist of an integrated circuit and an antenna, which are either enclosed in a protective housing, laminated on a surface or embedded in label material. A tag is applied to or embedded in every object to be tracked (product, carton, pallet, etc.). • Active RFID tags contain an internal battery and can transmit their own information to a reader. Active tags can be read from a great distance (hundreds of feet), but the internal battery increases the size and cost of the tag — and limits its service life. • Passive tags get their power from the reader, just enough to give up their information to the reader. Passive tags have a much smaller readable range (20 inches to 20 feet, depending on the radio wave frequency used), but they can be economical, very small — as small as a grain of rice — and have a virtually unlimited service life. 3
  7. 7. Are You Ready for RFID? Tags can be read-only, read-write, or a combination of both, where some data (such as a serial number) is permanent, and additional memory is available for data to be added or updated later. RFID readers or “interrogators” use radio waves to retrieve information stored on a tag. The reader might trigger the tag to transmit its information, or the tag might automatically broadcast its signals continuously or at set intervals. Readers can be mobile or fixed — integrated into handheld terminals or mounted on forklifts or at strategic locations in a facility. Encryption protects the privacy of data passing between tags and readers. The RFID reader then passes the tag data to a computer or local application system known as the Object Name Service (ONS), which identifies where information about that specific product can be found on the network. This information can be transmitted over company intranets or the Internet in the usual fashion. An RFID tag stores an electronic product code (EPC), the RFID equivalent of a UPC code. The Auto-ID Center at Massachusetts Institute of Technology (MIT) created the current EPC standard, which contains a 96-bit “smart label” that designates the product manufacturer, product name and a 40-bit serial number. This information in this smart label is written in a Product Markup Language (PML) based on the The EPC differs from the eXtensible Markup Language (XML), a standard that enables computers to easily share EPC UPC in that it can uniquely information. The new EPCglobal Inc. organization ( was formed to identify every single item, commercialize and support this EPC coding system. even though several items have the same UPC. The EPC also identifies non- consumer products, such as components, cartons What’s so great about RFID and EPC, when UPC bar codes and pallets that don’t have UPC codes. are everywhere? Created in the early 1970s and printed on most everything you buy from retailers, universal product code (UPC) labels provide valuable information about products. These striped bar codes help organizations understand how much of a part or product is moved or sold, and to some extent, where or to whom. This information help manufacturers and retailers track inventory and speed up the check-out process. However, bar codes have a few shortcomings: • For inventory purposes, you have to physically scan every bar code on every box/product. • Going through the checkout line, every item must also be individually scanned. • The UPC code must be visible — not obscured or hidden inside vehicles or packaging. • Bar coding is a read-only technology; it cannot record any information on the label itself. RFID overcomes these limitations, but it is not expected to replace UPC bar coding. It will complement that established technology by providing greater flexibility and information-carrying capacity than bar codes can offer. 4
  8. 8. Are You Ready for RFID? Specifically, RFID offers the following advantages: No line of sight required. Being a radio technology, RFID does not require a line of sight between tag and reader. Tags can be read through cardboard containers and plastic pallet wrap. They can be read through mud, oil and ink that would render bar codes unreadable. RFID tags can be read even if items are inside a truck or facing in all different directions on a pallet or conveyer. If RFID tags are on every item inside every carton, you can read them, too, if you have a powerful enough system. High-speed, simultaneous processing. If you have ever dabbled with self-service checkout at your local grocery store or Wal-Mart, you can appreciate that bar code scanning can be slow. You scan the items, one by one. In contrast, RFID readers can simultaneously read all the tags within their range, up to 800 tags per second, depending on the equipment and environment. Transmission speed and range are determined by the frequency used, antenna size, power and interference, but always far surpass bar code and manual processes. This processing capacity makes RFID ideal for high-speed material-handling, packaging, receiving and sorting operations. In a futuristic in-building deployment, stationary tag readers could automatically scan tagged items as they pass key points in your facility. Greater data capacity. RFID tags can carry all the same information as bar codes and more. The tags come in different sizes and with different encoding options, so you can choose the right combination of price/capabilities for the application. Moreover, bar codes are read-only, but read/write RFID tags can accept and store new and updated information that they receive as they are used. Unique individual identifiers. A bar code can only tell you that an item of a certain type from a certain manufacturer or source was moved or purchased, but not exactly which one. If you need to trace a manufacturing defect, a shipping error or a passenger’s suitcase, it might not be enough to know the category and type. You need to be able to identify and track the specific, individual item. That one. The EPC supplies not only basic UPC-type information, such as company/entity and object class (similar to stock-keeping unit, SKU), but also a unique serial number that identifies the specific instance of the object class being tagged. You can determine not just that the object is a “black rolling suitcase,” but that it is “John Smith’s checked bag one of two that was screened through security in Salt Lake City at 1:11pm, destination Chicago on flight 1337.” You’ll be able to identify a box not just as “Candygram Crunchies-24 oz,” but “Candygram Crunchies from Grand Rapids production line A422 between 8:20am and 8:40am on 04-10-05” or cattle not just as “2003 Angus heifer,” but “Heifer #US42287101WYO012103, born 01-21-03 in holding area C at the Lazy UR Cattle Co. and shipped into Canada on July 14, 2005.” 5
  9. 9. Are You Ready for RFID? Not just a mandate, but a merit When the world’s largest retailer issues an edict to its top suppliers, they listen. Among the first suppliers to deliver RFID-tagged pallets to Wal-Mart were Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare, Procter & Gamble and Unilever. “Most enterprises are going to RFID because their distributors or customers require it, but the RFID technology has benefits can be substantial internally,” wrote George Spohrer, Jr., PE, an executive with the enormous potential for accounting and consulting firm, Crowe Chizek and Company LLC. (Network Computing, “Get greatly enhancing ready for the RFID Wave, June 2005). Early adopters say that RFID technology will save transparency, optimizing countless millions of dollars by eliminating inefficiencies in the supply chain. No more manual business processes and pointing the way toward counting, no driving around, no question of mispicks, no order number mistakes. opportunities that otherwise would never have been Monitoring and reporting can be automatic and unattended. For instance, RFID readers can be recognized. strategically placed to create security zones within facilities. Supervisors can be notified if someone attempts to remove a tagged item. Improved visibility across an extended supply chain, enabled by RFID, could trim $2 to $4 billion in costs from the consumer packaged goods and retail industries, according to Yankee Group research. An Accenture study suggests that manufacturers can reduce working capital requirements 2-8 percent and reduce inventory shrink by 10 percent. Supply chain experts predict that RFID will For Wal-Mart, the business case is about improving customer satisfaction while maintaining low eventually provide much- prices for customers. With RFID, Wal-Mart can eliminate many manual processes in receiving, needed visibility into the retail supply chain, moving product in warehouses and distribution centers, shipping to stores and paying suppliers. providing product shipment For their suppliers, Wal-Mart promises that RFID will enable them to reduce inventory and and inventory views in improve sales, because Wal-Mart will handle their product more efficiently and always have their unprecedented detail. product in stock on store shelves. The data challenges of RFID — trouble with petabytes For all its promise, RFID still faces some technical constraints. Standards are still evolving, tags and readers are expensive and some products and environments have made tag-reading problematic. Second-generation standards and technology improvements are rapidly resolving these issues. However, some challenges remain for those who must capture and digest RFID data. Let’s take a look at some of these issues: Exponential increases in data volume. A typical RFID tag might contain just a few kilobytes of data, perhaps just a 96-bit EPC code that stores the most basic information about the tagged object. That’s a pittance. However, many tags can store much more information than that (such as movement among locations, pricing and ordering history, and environmental conditions). Furthermore, a single RFID reader can transmit data from up to 800 such tags per second. Data points can add up fast. 6
  10. 10. Are You Ready for RFID? If the company wants to track individual products at multiple checkpoints, RFID has the potential to generate 100 to 1000 times the data volume of conventional bar code technology. Wal-Mart is looking at generating some 7.5 terabytes of RFID data per day — a volume that could easily overwhelm some systems and data warehouses. Filtering out unwanted data. Many events tracked by RFID systems will be irrelevant to your operational and intelligence systems. For instance, it may be relevant that a chilled product passed a designated checkpoint at 30ºF on its way to the mixing station, but it doesn’t matter what temperature the empty container registered when it passed by the same reader on its way to recycling. Other events will be irrelevant at face value but essential for the hidden intelligence they will later reveal. When the system is capturing massive amounts of streaming data every second, how do you separate signal from noise? How do you filter through the information you really need to gather and keep for business systems and intelligence? Data management systems will require flexible rules to organize, filter and cleanse input, so systems won’t drown in nonessential data. Integration with existing systems. To reap the real benefits from RFID, companies must “RFID trials have effectively integrate RFID data into existing supply chain management (SCM), customer demonstrated how relationship management (CRM), and enterprise resource planning (ERP) applications. This will managing all this new entail new transaction types and data formats, and new correlations between EPC numbers and information can be a internal inventory numbers and UPCs — transmitted in real-time XML rather than batch EDI challenge. RFID can (electronic data interchange). Data management and integration processes will have to move swamp your network with more nimbly and flexibly than today’s bar coding systems require. real-time, streaming data related to the location and Finding the business value in the data. Companies are making a mistake if they implement contents of cartons, cases RFID as a “slap and ship” process, slapping labels on product and shipping it out the door just to and pallets. Make sure your servers and network meet downstream expectations. The real value of the technology, the real ROI, will be found in can handle this onslaught exploiting RFID data to optimize processes and relationships. of new data. And determine what you will do with the RFID makes it possible to gather new information from internal places and processes, faster and new data.” in greater detail. It provides visibility into the extended supply chain, from suppliers to manufacturers to distributors to retailers and even customers. It tracks items in more places, George A. Spohrer Jr., PE, Crowe Chizek and without human intervention, which makes it possible to deploy new features and applications. Company LLC Smart companies will use this information to run the business more efficiently and profitably. (In Network Computing, But how? June 2005) Data sharing among diverse users and organizations. The promise of RFID is that information about products can flow across the extended supply chain. Participating organizations will therefore face new requirements for creating and sharing detailed information for each EPC number, such as product identifiers, manufacturing data, expiration, lot tracking, pricing and customer order information. Data exchange will be more complex than the EDI interchange of UPC codes. Some organizations will use a central clearinghouse for this process; others will be so wary of privacy concerns that they’ll use peer-to-peer processes. Chances are, your IT systems will need to accommodate a variety of processes and protocols. There’s also the human factor to consider. Data won’t be very useful unless it is available where and when needed, presented in a format suitable for the needs of very different types of users. 7
  11. 11. Are You Ready for RFID? SAS solutions for RFID applications For nearly 30 years, the fundamental mission of SAS has been to help companies organize, harness, analyze and exploit data from any external or internal source. To SAS solutions, RFID data is just another source — a potential goldmine of business intelligence that can be integrated into the flexible, extensible SAS information infrastructure. All SAS solutions can be configured to accept, analyze and deliver value from RFID data. And all SAS solutions are built on a solid framework of data management and analytic technology that can scale to handle databases of any size — even those containing massive amounts of RFID data. The following solutions are likely to have the most relevance for organizations as they deploy RFID systems: • SAS data integration (ETL) capabilities bring together and organize RFID data in a way that makes it suitable for analysis and cross-functional (or inter-company) communication. • SAS data quality capabilities validate and cleanse that data, along with other types of data, to enable users to have confidence in the results of reporting and analysis. • Platform management solutions enable SAS administrators to define the information- management framework for RFID systems, such as business rules, data models and flows, authorized users and stored processes. • Business intelligence systems, including retail-specific solutions, transform RFID and other data into meaningful intelligence, uncover patterns and trends, and identify opportunities for continuous improvement. • Analytic intelligence solutions help you understand not only what was in the extended supply chain, but also “What if?” and “What will be?” In dynamic markets, predictive insight can be as valuable a competitive differentiator as product/service quality and price. • “Fit-to-task” interfaces deliver the right information in the right format to suit the diverse needs of business users, quantitative specialists and executives. • Strategic performance management enables the organization to analyze RFID data in context with overall performance management efforts. Each component of this “intelligence value chain” adds incremental value to the organization. Synergies among modules make the total solution truly greater than the sum of the parts, as each module offers functionality that affect all other components in the integrated, end-to-end intelligence architecture. Let’s take a look at how SAS solutions specifically address the key data challenges described earlier. 8
  12. 12. Are You Ready for RFID? Manage exponential increases in new data Data management. SAS provides the industry’s most powerful DATA INTEGRATION platform, which aggregates data from currently incompatible data silos on any platform and any format. Powerful, out-of-the-box data transformations eliminate the need to manage thousands of lines of custom code. An interactive interface makes it easy to manage ETL and data integration processes to support RFID data requirements across the enterprise. High-throughput, scalable processes. Grid computing and a high-throughput, multithreaded architecture enable SAS data processes to efficiently process the massive volumes of data that RFID systems are expected to create. RFID systems entail complex data-sharing scenarios that span platforms, applications and protocols. SAS provides the vehicle to bring this disparate data into a common data repository, where it can be integrated into existing or new intelligence applications. Validate what you want, filter out what you don’t Data quality. Data quality processes are fully integrated into the data integration platform, to transform and combine disparate data (such as RFID data from different types of tags and frequencies), remove inaccuracies, standardize on common values, parse values and cleanse dirty data to create consistent, trustworthy information. 9
  13. 13. Are You Ready for RFID? Information mapping. SAS analysts can design information flows with embedded analytics and strategic business rules that filter out “noise” and process only the valued data from RFID systems. Information architects can then translate technical warehouse and data structures into terms that business users can understand, and specify business rules that define how data can be used. With these “information maps” in place, business users can self-sufficiently conduct their own queries without being mired down in finding the meaningful nuggets among masses of cryptic and irrelevant data elements. They can transparently reuse SAS analytical procedures without needing advanced skills in statistics or support from IT. SAS therefore creates a collaborative domain that links previously isolated specialists in statistics, finance, marketing, and logistics — and provides the whole user community with access to company-standard analytic routines, cleansed data and user-appropriate presentation interfaces. Integrate with existing systems To gain value from your RFID data, you need to be able to use it within existing operational and analytical systems, even though they may all use different platforms and data definitions. The key to this integration is to establish consistency by means of metadata (the information about data: how it was derived, business rules, access authorizations and so on). SAS provides an open, centralized and integrated repository for managing metadata. Central management of metadata ensures that information is accurate and consistent, even though it may originate in and be shared among disparate systems within and outside your organization. Differences among platforms and applications are reconciled through unified definitions of data, locations, content and business rules that are accessed by all components of the business intelligence infrastructure. This common metadata environment provides for consistency and interoperability between applications. RFID data could significantly enhance the accuracy and value of your customer relationship management (CRM), supplier relationship management (SRM) and enterprise resource planning (ERP) systems. Find the business value in the data Business intelligence applications. SAS offers analytic applications that support enterprise intelligence, customer intelligence, supplier intelligence, supply chain intelligence and strategic performance management — as well as turnkey solutions for various vertical markets, such as retail, financial services, pharmaceuticals, health care, telecommunications, automotive and energy. All of these applications are RFID-compatible and can be applied to derive actionable business intelligence from RFID data. 10
  14. 14. Are You Ready for RFID? Retail-specific intelligence applications. SAS Retail Intelligence Solutions, like all SAS solutions, are RFID-compliant and can immediately handle all RFID data, from the supply chain to point-of-sale transactions. The software suite for retailers includes components for understanding and predicting customer behavior, determining net profitability of merchandise, assessing and improving promotions, and managing retail performance at a strategic level. Within this integrated software suite, two components are particularly relevant for RFID implementations: • SAS Supply Chain Costing for Retail combines advanced data management and a retail- specific costing methodology. Retailers gain financial visibility into supply chains by consistently measuring and analyzing true supply chain costs and net product profitability as products move through distribution centers, stores and customer checkouts. Incorporating RFID data into this solution, retailers can model the financial impact of merchandising and supply chain decisions with greater detail and accuracy than ever, and make timely, fact- based decisions about new process, product or promotional initiatives. • SAS Strategic Performance Management for Retail translates business strategy into Going beyond other actions that can be quickly measured and monitored throughout the organization. This business intelligence solution can glean data from across the enterprise, including RFID data, to monitor retail- vendors' talk of drill, sort, specific key performance indicators, perform scorecarding, and create maps and knowledge- filter and rank as base visualization that help decision makers set and monitor high-level performance targets. "analytics," SAS offers true Predictive analytics. Historical query and reporting tools tell an organization where it has been, analytical power that but companies really need to be able to predict and manage events, not just react to them after enables you to predict the fact. They need to understand how, where and why costs are being incurred to be able to future outcomes of interest; model the impact of planned changes to business processes. That’s why SAS offers advanced to explore and understand analytics that incorporate various types of predictive capabilities: complex relationships in data; and to model • Predictive modeling helps you set the best processes and policies, optimize dealings with behavior, systems and customers and suppliers, understand which initiatives are most effective and address many processes. other organizational issues, such as fraud detection, failure analysis, predictive maintenance and risk management. • Descriptive modeling helps you understand important relationships and the implications of those relationships over time, space and across new outlets, markets and processes. • Forecasting lets you accurately estimate future conditions and proactively prepare for them. SAS provides the only forecasting software that can be integrated into existing systems, access all kinds of data sources (including RFID data) and run on different platforms. • Optimization capabilities can identify the most effective combinations of factors (such as warehouse layout, pallet configuration, truck size and distribution route) to produce peak results within known budgets and constraints. In a manufacturing or distribution environment, for example, optimization can determine which procurement strategies make the most economic sense, select the distribution routes with the lowest transportation costs, or juggle multiple resources to keep production projects on track and under budget. The integration of RFID data into these systems enhances the knowledge base as well as the accuracy and timeliness of decisions that result. 11
  15. 15. Are You Ready for RFID? Share data among diverse users and organizations We recognize that all this business intelligence is only useful if it is shared and used. So, SAS provides a full range of “out-of-the-box” client interfaces to suit all user types, enabling users to select the tool that is most appropriate to their individual skills and analytic requirements. For example: • SAS Enterprise Guide enables business analysts, statisticians and programmers to publish dynamic results throughout the organization from within a Windows client application. • SAS Web Report Studio uses step-by-step “wizards” to enable non-technical business For nearly three decades, users throughout an organization to conduct their own Web-based query and reporting. SAS has been accomplishing the hard • SAS Add-In for Microsoft Office enables users across the company to take advantage of tasks: developing a SAS analytics within the comfort of Microsoft Office products such as Word and Excel. powerful, extensible, end- to-end business These query and reporting tools deliver the highest quality of information when and where it is intelligence architecture needed to improve decision making for all authorized users. You can save, share, publish and and the industry’s most distribute reports via multiple platforms and channels, including the Web, customized business robust analytic suite. Now portals, e-mail and wireless devices for better collaboration and shared intelligence. we have also done the easy part: making all that With these self-service interfaces, rich analytic information is available to a wide spectrum of power available to users who have little or no users, while IT staff is freed from the non-stop stream of ad hoc requests. Information quality statistical background. improves too, since more people are empowered with robust tools — able to get their own answers while IT retains control over the consistency and reliability of the data they use, and administrators retain control over access privileges. SAS offers a breadth of solutions for managing RFID data and data-flow processes, with fit-to- task interfaces for all types of users. SAS provides a range of client interfaces and Advantages of an end-to-end RFID business intelligence solution visualization techniques so that non-technical users, When formulating a strategy for converting RFID data into quality business intelligence, a analysts and statisticians company might be tempted to piece together technologies from different vendors. For example, a each have a workspace company could cherry-pick favorite software packages, tools and platforms. With this type of that is appropriate to their approach, you could potentially end up with a dozen or more vendors to supply all the role and find it easy to components of the total solution. interact with their data, model business scenarios, Even though the individual components might each be prime choices, this diversified, multi- and send the output to vendor strategy can be maintenance and integration nightmare. Integrating all those products is a hundreds of different time-consuming and non-value-adding activity. Furthermore, the whole platform is at the mercy of devices. the weakest link. If one supplier scales back R&D, gets acquired or merges, or goes out of business, it affects the entire intelligence value chain, the organization’s competitiveness and the bottom line. 12
  16. 16. Are You Ready for RFID? For that reason — and to control spiraling cost — many companies are consolidating their business intelligence portfolio around one or two strategic vendors. For that approach, SAS offers a broad portfolio of RFID-ready solutions (from data source to end user) plus the ability to integrate legacy systems and data into a unified intelligence architecture. In any business intelligence implementation, the biggest liability can be juggling vendor relationships. From integration to troubleshooting, multivendor architectures can be more costly and vulnerable than unified solutions — especially as mergers and acquisitions continue to reshape the vendor landscape. What companies can gain from RFID data In any business intelligence implementation, the biggest If organizations can effectively manage the huge volumes of RFID data and integrate the valued liability can be juggling subset of that data into business intelligence applications, there are tremendous benefits to be vendor relationships. From integration to gained. troubleshooting, multivendor architectures By providing much more information than bar codes can deliver — faster and more flexibly — can be more costly and RFID opens up options for new applications that wouldn’t be feasible with bar codes alone. For vulnerable than unified example, your RFID system could: solutions, especially as mergers and acquisitions • Continuously monitor inventory of an item and automatically reorder from an online continue to reshape the purchasing application when stock dips below a certain threshold. vendor landscape. • Automate manual processes, such as creation of shipping manifests and verification of incoming and outgoing shipments. • Identify when objects are misplaced — a patient is headed to the wrong operating suite, a library book is on the wrong shelf, or a pallet is loaded on the wrong truck. • Trigger alerts to pagers or PDAs when objects are mishandled — when an aircraft part becomes overdue for maintenance or replacement, a manufacturing component is delivered to the wrong line, a regulated drug is counterfeited, or a power tool is stolen off the job site. • Provide data inputs into the company’s quality improvement systems, such as Six Sigma and Lean applications. • Add greater insight to the total flow of corporate information, to continuously reduce inventory and distribution costs, optimize internal processes, and increase the value of relationships with suppliers and customers. A business case study by the MIT Auto-ID Center found that RFID systems can improve demand planning forecast accuracy for consumer packaged goods manufacturers by 10 to 20 percent, reduce required inventory levels by 10 to 30 percent, and improve sales by 1 to 2 percent by reducing out-of-stock conditions. A June 2005 research report released by Bear Stearns noted that two early adopters of RFID had reported a 37 percent increase in efficiency in loading sea containers, 9 to 14 percent reductions in out-of-stock conditions and an 18 percent drop in wastage. 13
  17. 17. Are You Ready for RFID? Even small incremental improvements can yield substantial cumulative savings, suggesting that RFID will soon be seen as much more than an unavoidable mandate. Closing thoughts In the 1970s, many companies grudgingly accepted bar coding and electronic data interchange systems, because they were pressured into it by industry forces. Today, it would be hard to imagine doing business without the advantages of UPC codes and electronic commerce — the speedier and more accurate merchandise tracking, faster store checkouts, supply chain efficiencies and insights about product movement. RFID technology will not replace bar coding, but it holds even greater promise to improve operations and reduce costs for all parties. “The biggest issue is for companies to focus on what the broad and enterprise-wide repercussions could be as new information flows and unexpected insights drive improvements in processes and create new opportunities,” writes Bob Evans, editorial director of CMP ( in an Information Week special edition on RFID. There are data challenges, to be sure, but the technology exists today to address those challenges in a way that brings real business benefit. With the right data management and business intelligence infrastructure to manage and use RFID data, this emerging technology could soon be as indispensable as, and more valued than, the humble bar codes that we now take for granted. About SAS SAS is the market leader in providing a new generation of business intelligence software and services. SAS solutions are used at more than 40,000 sites — including 96 of the top 100 companies on the FORTUNE Global 500® — to develop more profitable relationships with customers and suppliers; to enable more confident decision-making; and to drive organizations forward. SAS solutions leverage the investments you’ve already made in existing systems and applications, adding a layer of intelligence you can’t get anywhere else. For nearly three decades, SAS has been giving customers around the world The Power to Know®. For more information, visit us on the Web at 14
  18. 18. World Headquarters SAS International and SAS Americas PO Box 10 53 40 SAS Campus Drive Neuenheimer Landsr. 28-30 Cary, NC 27513 USA D-69043 Heidelberg, Germany Tel: (1) 919 677 8000 Tel: (49) 6221 4160 Fax: (1) 919 677 4444 Fax: (49) 6221 474850 U.S. & Canada sales: (1) 800 727 0025 SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. Copyright © 2005, SAS Institute Inc. All rights reserved. 102274US_325683.0905