A Canadian research centre has set up a lab to simulate the kind of business environments that could make use of radio-frequency identification technology to streamline supply chains and improve staff productivity.
Montreal’s ePoly, the e-commerce arm of Ecole Polytechnique, shared some of the first results of its experiments at IDS Scheer’s ProcessWorld 2006 conference in Miami this week. The institute has been working closely with HP to build a business case for using RFID at Hydro Quebec, but its techniques may also benefit aerospace manufacturer Bombardier, cosmetics firm L’Oreal and even a casino that has contemplated putting RFID tags in poker chips.
The lab uses IDS Scheer’s ARIS software to model various business processes using RFID, then simulates how data would move from RFID tags on products to a server running SAP’s R3 and another running SAP middleware. A series of monitors stationed around the lab then show the impact on an organization’s overall supply chain. The work has been underway for two years.
“It’s not like you can open up a cookbook and find out how to do an RFID implementation,” said ePoly director Louis Andre Lefebvre. “We wanted to create a Lego-type of thing where you could see every piece of what you’re doing.”
The Hydro Quebec simulation explored how the utility could use RFID tags to eliminate some of the manual, paper-based processes that take place during the transportation of transformers from Siemens to its own warehouse and to various customer locations.
Despite the hype around RFID, Lefebvre said the experiment showed why implementations can’t be based on generic products and why tags, readers, middleware and business rules depend a lot on the type of product being tagged. Electrical transformers, for example, are composed of both metal and liquid, which cannot be read by every RFID tag reader. It also showed why successful RFID projects need to determine the “level” of the product to be tagged – in this case, on the transformer itself, on the pallet or simply on the truck which transports them. In some scenarios tagging the pallets would work, Lefebvre said, but not in “mixed” pallets that contained different types of transformers.
The wireless RFID tags would, based on the simulations, allow data about the shipment of transformers to be sent directly into SAP’s enterprise resource planning product, which would assist the tracking and delivery of those transformers to Hydro Quebec’s 250 stocking locations, Lefebvre said. Even once they are deployed, however, there are ways the technology could create better processes, he added.
“No one knows the status of transformers once they’re on the pole,” he said. “You could have a heat-seeking RFID reader that would, once you’re near a pole, give you the complete genealogy of that transformer to people in the field.”
John Keogh, an HP Canada executive who assisted on the ePoly project, said the simulation could help speed up the way in which shipping discrepancies are eliminated. Right now some of the paperwork involved in tracking shipments can sit on a desk for 30 days, he said. RFID could mean replenishment of some warehouse inventory begins in minutes.
“This is allowing real-time database updates,” he said. “In what we’ve seen so far, that would translate into a 30 per cent productivity improvement.”
IDS Scheer Canada president Jason Mausberg called ePoly’s research in RFID a revolutionary example of how simulation can be used to improve business process management.
“Everyone talks about the potential around RFID, but no one’s been able to tackle the analysis of it,” he said.
Lefebvre said ePoly’s research included several on-site visits to Hydro Quebec, where employees grew concerned about how RFID could affect their job security.
“We had the labour unions following us around the warehouse floor to find out what the hell we were doing in there,” he said. In the end, however, they saw the benefits. “We asked them, ‘Is this (paperwork) the kind of thing you like to do?’ and they said ‘No, take it away from me.’ This would mean they could do more of the work they’ve signed on to do under their collective agreements.”
Hydro Quebec has not yet implemented RFID, however. Lefebvre said the last two years have been spent in the scenario planning and simulation. A pilot project would be the next step, he said.