“With West Texas Intermediate hovering around $30/ bbl. managing a successful supply chain can be extremely challenging but not impossible and to be successful the objective you must achieve 99% traceability, 99% visibility, 99% efficiency and 99% accountability. Reaching such goals is nearly impossible using a manual process and thus implementing an RFID/ GPS solution can enhance the organizational performance, specifically the expense line items on your P&L, especially in a down economy.”
When an RFID/ GPS platform is properly implemented (in conjunction with process improvement re-engineering) within an organization, it allows the supply chain team to witness those 4 key metric percentages rise, resulting in compressed costs and increased profits. These four metrics are not only relevant to the supply chain and logistics organizations but many other businesses as well. Due to the need for transparency within the supply chain, it is an ideal use case of where manual processes fall short and where RFID can positively have a direct impact on traceability, visibility, efficiency and accountability. It’s important to understand how these metrics are defined within the supply chain world so managers can understand how to achieve them.
Traceability: The ability to verify the history, location, or application of an item (rig mat, pipe spool, modules, etc.) by means of documented, recorded identification.
SC managers can increase traceability using RFID (passive or active tags) or GPS by tagging items and establishing RFID fixed reader zones at different locations on a project site, laydown yard or warehouse facility or implementing GPS on rolling stock (vehicles, equipment, etc.), giving managers the ability to track the movement and chain of custody that an item travels. This aids in conducting an audit trail of any potential recalls or warranty issues in the event the item is deemed to have been compromised. This reduces risk of stolen or lost items, which has a direct impact to an organization’s bottom line.
Visibility: The ability to accurately and completely view the processes, transactions, and other activities operating within an organization.
Empowering SC managers by increasing the visibility of items, assets or equipment with the use of RFID/ GPS accurately provides data and information to be obtained in a timely manner allowing critical decisions to be made and shared amongst multiple stakeholders (suppliers, customers, sales teams, etc.). Examples of being in the know:
- Know in real time the number of items (rig mats, etc.) are in production;
- Know in real time the number of items at various steps within a production process;
- Know in real time the amount of capital invested in equipment/ inventory (ROCE);
- Know in real time the exact forecasting dates for items being produced;
- Know in real time the raw materials required;
- Know in real time wear and tear details on equipment (predictive analytics);
The data collected can assist supply chain teams as well as other stakeholders, to manage out of stocks, manage over purchasing, equipment downtime/ failure, utilization, lead times to name just a few benefits.
Efficiency: The state of quality of being efficient, or able to accomplish something with the least amount of time and effort; competency in performance.
Not all business performance metrics build on one another, but efficiency is best accomplished with a high degree of visibility. Collecting and analyzing data collected from RFID tags and GPS modems allows SC managers and other stakeholders to make informed decisions about how to improve processes and workflows in order to be more efficient. Increased efficiency reduces money spent on wasted inventory or raw materials and enhances productivity by not having to spend time fixing errors.
Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them and to disclose results in a transparent manner.
The first objective in a supply chain is to increase its accountability by maintaining visibility over its assets and workforce. Examples:
- Item Level Tagging – Tagging either by RFID or GPS at the item level allows for traceability throughout the supply chain. A record of item movement provides a documented audit trail in case of defect or error and provides the ability to determine how best to take corrective action.
- Employee Level Tagging – If each employee is provided an RFID Badge or a tag within their hard hat, managers can then account for the safety of the employee. This information can be extremely beneficial in the event of a project site evacuation or fire within a warehouse.
Flowing all data collected from RFID and GPS into a backend repository allows for data analysis to occur specifically in the areas of Descriptive Analytics – “What Happened”, Diagnostic Analytics “Why Did it Happen”, Predictive Analytics – “What Will Happen” and Prescriptive Analytics – “What is the Best Outcome”.