A Big Hit with SMEs

RFID development is in full swing and the EPC (Electronic Product Code), a number that ensures clear tagging and subsequent identification of goods in the supply chain, is already emerging as a generally accepted standard. At present, the frontrunners when it comes to utilizing and developing the new technology are still mainly major retailers such as Metro and Wal Mart, operator companies like Fraport that carry out technical maintenance work, and packaging manufacturers like Rexam.

Theory and practice

At present, the burning question is how small and midsize enterprises (SMEs) will benefit from using RFID in the future. In theory, the same potential open to major (retailing) companies is also open to SMEs. However, in practical terms, there are still a few hurdles that have to be overcome. In order to process and analyze the immense quantities of data stored on the chips, SMEs require the right IT systems and a suitable IT infrastructure. Yet smaller companies are often found wanting, particularly as regards technical equipment, as their IT systems are either not suitably scaled to handle these tasks or are even outdated. Companies therefore not only have to invest in the chip technology, but also need to “modernize” their IT systems, i.e. adapt these to processes changing as a result of RFID. As early as 2002, analysts from market research company AMR Research described the requirements linked to financially successful RFID implementations.
The key to successfully mastering the initial stages of an RFID implementation is an up-to-the-minute infrastructure, and companies first have to assess their requirements before adapting their IT infrastructure and applications to changed business conditions.
RFID applications should be implemented in stages. This means investments remain manageable, guarantees faster payback, and also avoids disruptions during live operation. The IT systems have to be compatible with RFID applications, i.e. provide support for collecting, storing and processing tasks.
The analysts at AMR Research conclude that an RFID implementation can be said to have fulfilled its objective if efficient supply chains are in place to ensure processes are more effective and there is evidence of a quantifiable improvement in business results, e.g. in the form of a high ROI (Return on Investment).

Requirements act as an inventive

Following this line of argument, technology providers also face a number of requirements. To ensure that SMEs can utilize RFID across the board, they require modular, scalable solutions that are as cost-effective as possible and can be operated without large IT departments. That’s why SAP began tackling RFID early on and developed the SAP Radio Frequency Identification (SAP RFID) solution that ensures correct product information and automates all processes.
The SAP Auto-ID-Infrastructure (SAP AII) solution, a component of SAP NetWeaver, is at the heart of the communication process. It combines various automatic ID technologies (e.g. RFID and barcodes) under one roof. This enables (various different) readers and tags to be linked up. According to Forrester analyst Sharyn Leaver, the fact that SAP RFID is based on the SAP NetWeaver open technology platform means the solution can be easily integrated in a heterogeneous system landscape comprising SAP and non-SAP applications, thereby facilitating data exchange with trading partners. In addition, the solution combines (e.g. in a data warehouse), filters and manages all RFID data.

Detailed overview of processes

Once a finished product has left the production plant, RFID and SAP AII enable seamless automated tracking, i.e. no manual scanning, of all subsequent processes such as packaging, warehousing and dispatch. SAP AII captures and processes the electronic data from communication and sensing devices (e.g. RFID readers and printers) in real time and connects it directly to the underlying SAP system (e.g. mySAP ERP), thereby creating a link between the read-in data and business processes. The result is a detailed overview of operational processes in real time. A further benefit is that SAP AII is scalable and is therefore particularly suitable for companies new to RFID that are looking to develop the technology over the long term. To ensure the fullest possible coverage of the topic, SAP also promotes discussion of RFID through an open community.

Targeting SMEs

SAP and qualified SAP partners develop and market tailor-made RFID solutions specifically for small and midsize (supply) companies. One example is the RFID Starter Kit developed in conjunction with hardware partner Intermec. The package comprises the preconfigured “goods issue” business process and features all necessary software and hardware including all consulting services. The Starter Kit is principally geared to companies who supply the retail group Metro as it corresponds exactly to the company’s requirements for suppliers. The central technological component underpinning the solution is SAP AII, which enables the predefined “goods issue” business process to be implemented within just a few days. There are also additional reporting functions that support tasks such as searching for certain objects by creating links between virtual documents like the delivery note and RFID information.
Intermec provided the extensive hardware components, comprising the PM4i RFID and barcode printer and the stationary IF5 Ultra High Frequency reader (UHF reader) for loading the RFID data. Specialists from SAP Consulting examine the local conditions and draw up documentation for the infrastructure required for the RFID implementation. Business processes are then defined, and SAP AII and Business Intelligence reports set up. The business process is then implemented in close cooperation with the customer. According to Uwe Hennig, Global Alliance Manager SAP at Intermec, the package offers “a strategic opportunity for the future at low initial costs.”

Integration required

SAP Business Partner Artefact4you has developed an RFID order-picking solution for SAP Business One specially designed for small and midsize foodstuffs businesses with their own storage management system who carry out order-picking operations for goods or materials. What’s more, the company also offers an all-inclusive RFID framework solution and is involved in developing the appropriate hardware. “Many smaller SMEs are already looking for solutions that will enable them to integrate their order-picking processes directly into their business software,” explains Riccardo Sachse, CEO of the SAP Business Partner Artefact4you. This can only really be achieved by means of integrated processes which combine materials management and goods management, says Sachse. Therefore, he says, the SAP standard software proved to be the ideal platform for developing an RFID add-on solution as “it is not only future-focused, but also a safe investment.”
Intermec is following a similar route with its EasyADC (Automatic Data Collection) solution for SAP Business One. According to Intermec, the integrated software and hardware package is the perfect entry-level solution for SMEs to collect and manage data, automate processes relating to goods tracking and make these more transparent. Moreover, Intermec hopes the solution will remove the widespread anxiety among SMEs new to RFID who are fearful of the complexity of the technology, extensive changes to corporate processes, a lack of IT staff, and high costs.

Taking off

The examples above show that SAP and its partners are already meeting the call from Steve Banker, an analyst at consultants ARC Advisory Group, to offer SMEs cost-effective solutions and a clear plan of action for successful implementation. This enables SMEs to make more intelligent use of information, react more flexibly to market changes, cut costs and ultimately boost their competitiveness. It also means that the book “Das Internet der Dinge” is also having a much faster impact among SMEs than was previously thought.

For further information:

General: www.amrresearch.com/Content/View.asp?pmillid=15184&docid=1075, www.arcweb.com, www.forrester.com, www.epcglobalinc.org (Information and news on EPC technology, how it works and its usage)
Books: Claus Heinrich, RFID and beyond. Growing your Business with Real World Awareness (Wiley Publishing, ISBN 0-7645-8335-2)
Edgar Fleisch, Friedemann Mattern (Ed.), Das Internet der Dinge. Ubiquitous Computing und RFID in der Praxis: Visionen, Technologien, Anwendungen, Handlungsanleitungen (Springer Verlag, ISBN 3-54024-003-9)
SAP: www.sap.com/rfid
SAP partners:
Artefact4you AG: www.a4u.ag/rfid
Infineon: www.infineon.com
Intermec Technologies: www.intermec.com

Dr. Andreas Schaffry
Dr. Andreas Schaffry