Work-In-Process Is Top Objective

More than a third of the businesses using RFID are doing so to improve the cost, safety and reliability of managing work-in-process (WIP), according to a recent study.

But most companies are finding it difficult to quantify, or even estimate, a return on investment from their RFID deployments.

Nonetheless, for manufacturers and other process-intensive companies that follow "best-in-class" practices, RFID technology can reduce labor costs and improve production throughput.

The study included an online survey and follow-up phone interviews with CIOs or other chief officers (29 percent), VPs or directors (27 percent), managers (22 percent) and staff members or consultants (22 percent) from 220 companies in a diverse set of industries. These firms are using, or planning to use, RFID to manage assets with a focus on WIP.

The greatest number of respondents (28 percent) worked for manufacturing and assembly companies, with supply-chain companies accounting for 21 percent. Nine percent worked for health-care, automotive, energy or utilities firms, and the remaining 5 percent included retail, construction/engineering, aerospace and entertainment companies.

The expectation that RFID will help improve a company's bottom line is high: 93 percent of survey respondents said they expect the technology to help reduce the costs of doing business. And 72 percent said the first order of business in optimizing work-in-process is to determine how many items involved in the WIP are on hand. RFID can help them collect that information.

The ways in which companies have used RFID to reduce failures vary, depending on the specific business process and industry. In some cases, for instance, the firms have leveraged RFID to ensure they've set up their production machinery correctly, to avoid costly mistakes.

A large majority (81 percent) of companies that have implemented this technology to its strengths reported that RFID has saved them at least 15% in labor used to manage work-in-process. That said, some organizations are still struggling to quantify their return on investment (ROI) from RFID.

Only a few respondents indicated their companies had already attained a positive ROI from their deployments, with just 43 percent of firms able to estimate the time it would take to achieve a positive ROI. Furthermore, only 27 percent of industry-average companies, and 9 percent of laggards, could estimate the time to attaining a positive ROI.

Several factors make it difficult to achieve and measure an ROI. Most significantly, it can take a long time to integrate RFID with enterprise systems, which is critical to maximizing the payback from an RFID deployment. Additionally, it is often difficult to quantify the improvements RFID makes, and many companies do not have any pre-RFID benchmarks against which they can measure their returns.

If you are looking at implementing RFID technology within your organization, Tensor manufacture smart card clocking systems, which enable you to keep track of work-in-process and job costing tasks.