Harley-Davidson - RFID-Enabled Supply Chain - Case Study Example

Harley-Davidson case Introduction It has been stated that super market brands such as Wal-Mart, Gillette and Target have committed themselves to implementing this technology into their supply chain information systems. According to Kinsella (2003) it has been suggested by logistics literature that RFID technology increases the agility of supply chain systems and gives companies a competitive advantage. RFID tags are analogues to barcodes that wirelessly transmit their serial number to in-store scanning machines. Vance (2005) states that this automatic self identification process is a great improvement over traditional bar codes, which would typically require employees or physically scan each item. RFID chips add a nominal cost to each item but enable supply chain information systems to easily scan items throughout the supply chain, potentially enabling managers to visualize exactly how much inventory exists in the supply chain, and therefore know much more inventory is to be purchased or produced. The discussion on the RFID debate (2003) put forward the claim that the technology can potentially enable supply chain managers to overcome problems caused by imperfect or insufficient information inherent in current inventory management systems. Harley Davidson: Implementation-Pros and Cons Harley Davidson was responsible for the implementation of the RFID enabled automated tracking system (also known as AVIS) on the assembly line in 2001.  the idea in this implementation was that there would be tag on every engine that would provide a singular method of recognition in terms of the single unit- thereby marking the respective parts with their serial numbers and would help the operations unit in the long run in ensuing that parts of the assembly chain wee correct, telling the operator exactly what to do. The basic help that the system gets from this is in the determination of whether or not the component is fit to pass to the next stage.  Advantages: 1. Harley Davidson supply chain with additional information that resulted from the usage of the technology was able to significantly lower the average of inventory stock out costs as well lower average inventory holding costs than its competitors with traditional barcode systems and limited inventory information 2. The supply chain enabled with the RFID technology was also able to negate the amplification of order information distortion, a phenomenon typical of the bull whip effect. 3. Finally by ensuring the application of an RFID enabled supply chain system that tracked and displayed inventory information ti member supply chain tiers, Harley Davidson was able to have lower mean inventory costs than traditional supply chain systems. 4. Harley-Davidson's RFID-enabled AVIS ensured that the company was able to reduce assembly mistakes by a margin of as much as 90 per cent. This in turn helped increase manufacturing competence. This also improved the plan based on feedback from tracking and refined the processes based on data collection.   Disadvantages: 1. While RFID-enabled supply chain or part of it can prove beneficial, the cost of tags and scanners remains prohibitive. 2. The technology is evolving and so are standards and systems supporting it. As the technology gains acceptance, adopters will face the daunting task of gathering and managing massive amounts of data. 3. Harley Davidson cost reduction strategies included reduction of suppliers and use of supply NET (intranet and EDI among the suppliers).But unlike barcodes, there is no global public body that governs the frequencies used for RFID. But Harley Davidson introduced common or standardized forms and procedures. This can be a hindrance to its EDI(Electronic Data Interchange)procedure(as different rules will be there for different areas suppliers). Issues faced in past implementation: checklist for Harley Davidson The primary issues that Wal-Mart’s has faced in the implementation of the RFID regime have included issues of clunky tag-read work-around and information filtering and analysis. There is the continuing problem of high costs and software incompatibility. Moreover, the biggest concern that the ones that have employed the system have voiced is with respect to RIFD as in investment. The problem here is that because of technological glitches, the return in this costly investment has been far from satisfactory. This has meant in some cases a hesitation in employing the technology right now and in others a backlash. Bigger brands such as Wal-Mart's have maintained that it is an ultimate objective to employ the usage of the RFID transversely through the entire supply chain so that the process of store inventory could be speeded up and the floors could find help in eliminating the out-of-stock things. In late spring, 2004, Weal-Mart appeared to be cutting back on the mandate that all its suppliers comply with RFID tracking of cases and pallets by the beginning of 2005. this happened due to the simple fact that the proliferation of the technology ha been slow given its high costs and the lack of general knowledge about the workings o the RFID systems. Few suppliers had the experience im implementing RFIUD technology; many had just the basic understanding and were working on the issues; the rest were just starting out and needed time to learn technologies. Myerson (2007) states that Proctor and Gamble on the other hand, in order to increase throughput and eliminate costly mistakes, developed an RFID based system to identify pallets allowing the plant to shift to direct loading, increase speed and reduce numbers of forklift drivers needed. Problems with RFID have been broad and widespread. According to Brown (2007) suppliers have experienced difficulties in achieving acceptable read rates. In case a significant portion of the tags fail to broadcast, the benefits of the technology are lost. Many of the problems center on cases with opaque materials such as metals. Other problems arose from ineffective adhesives. There have been those such as Gillette that have adapted a more target specific approach. In case of some items, like DVDs, there are those that have explored RFID-tagging only during the first couple of weeks or months after release, when sales are greatest. Meanwhile, logistics champs FedEx Corp. and UPS Inc. don't yet see a business case for widespread use of RFID, not when bar codes do a fine job tracking packages, for less money. Sullivan (2005) provides details of a case remarkably similar to Harley in terms of parts amalgamation. Bicycle maker Pacific Cycle LLC is a company that could be used as a case study where the integration a d logistics nightmarish problems with RFDI come in. the company made an attempt at merging RFID data into its SAP ERP system. The problems that cropped up were immediate, tangible and hardly negotiable-these included issues of data-formatting and software incompatibilities. Both of these would automatically make it tough import precise data. There were also added steps required for gaining the costly insights. The company had in fact at one point allotted a person with full time responsibilities of sifting through the 70,000 records it received on a weekly basis from the more than 50 RFID-tagged products that it had been shipping to the retailers. The person was also responsible for identifying inconsistencies that came up over and over again. These have included problems of duplicated data, such as the generation of multiple reads when a pallet of tagged bicycles was stalled near a reader at a distribution center. Plan for RFID implementation: Harley Davidson as it is well known functions on the backing of a small concentrated cluster of suppliers. This is where the first focus of RFID implementation would automatically have to be. The suppliers would have to be trained and software recognized and updated so that there is certain standardization where the process of RFID is concerned. The task could start from the smaller parts. These are the ones that are tougher to track in case of inefficiencies anyways. This process should then be moved upward. This, done comprehensively would take anywhere between six to eight months to effectively accomplish. The next step would be an R&D effort where the inconsistencies spotted in the plan would have to be recognized and dealt with in terms of adhesives, metal usage and other such factors. This would help rule out the possibility of last minute glitches and inventory pile up. Read rate issues would have to be fixed as well. RFID tags would then be applied at the sub-manufacture levsls to the various parts so in terms of the manufacturing process. There would be delays in terms of too many tags being read at once. Davidson would also have to contest that fact that metal reflects radio frequencies and liquid absorbs them, making it difficult to read an RFID tag signal on containers with either material. These would therefore be an issue of contention, one that would have to solved by the application of materials that would subdue the metal impact. Conclusion In conclusion therefore it may be stated that a choice on whether or not one adopts RFID is one that most companies would have to eventually make if they are to cash in on the competitive logistical cost saving RFID provides. This process needs investment in terms of time and resources and in overall a technological development that is promising in its own right. This however does not negate the problems that come attached with RFID. One could safely then state in conclusion that the idea of implementing RFID without a complete exploration of initiative specific to a company's environment would be a big mistake. References Emerging Signs of an RFID Payoff. Retrieved, February 21, 2010, http://www.cephas-library.com/nwo_emerging_signs_of_an_RFID_payoff.html Kinsella, B., (2003). The Wal-Mart Factor. The industrial Engineer . 35(11). Pp32-36 RFID Forum. (2003). Logistics and Transport Focus. 5(1). p49 Vance, A., (2005). IT Infrastructures Agility, in Business agility and information technology diffusion. (Eds.) Baskerville, R., Springer books. p147 Myerson, J., (2007). RFID in the supply chain: a guide to selection and implementation. CRC Press. p23 Brown, D., E., (2007). RFID implementation. CRC Press. p138 Sullivan, L., (2005). RFID Implementation Challenges Persist, All This Time Later. Retrieved on February 22, 2010, < http://www.informationweek.com/news/mobility/RFID/showArticle.jhtml?articleID=171203904> Read More