Published on 11-Aug-2005
Validated on 01 Feb 2007
"With assistance from IBM, APC will not only gain a competitive advantage by being an early adopter of RFID technology, but we’re also developing potential new business opportunities in the RFID world. Rich Morrissey, APC’s director of eBusiness" - Rich Morrissey, APC’s director of eBusiness
American Power Conversion
Supply Chain Management
American Power Conversion., a leading provider of global, end-to-end infrastructure availability solutions, heard last year from some of its important customers that they would require some of APC’s products to carry RFID tags in the future. APC, headquartered in West Kingston, R.I., turned to IBM. IBM had 10 years of experience as a leading provider of RFID solutions.
American Power Conversion Corporation (APC) needed to comply with customers’ mandates related to radio frequency identification (RFID) technology, and explore opportunities to gain a competitive advantage for its own organization.
APC selected IBM to develop a business case, then to design and pilot a flexible, cost-effective RFID solution that will enable it to meet its customer mandates and understand the potential of this technology for its own supply chain management processes.
APC is better positioned with customers who have mandated the technology; Working with IBM has also helped the company to achieve a competitive advantage through business innovation and differentiation, and establish a foundation for the potential use of RFID within the company.
|IBM could provide a complete end-to-end RFID solution, including a business case, product testing and lab services, a non-production pilot program and RFID middleware, combined with an extensive knowledge-base in RFID technology|
The evolving supply chain
Companies with supply chains are beginning to explore how to apply RFID technology, with the goal of improving supply chain management and collaboration. Already, major retailers around the globe and national organizations are insisting that manufacturers and suppliers attach RFID tags to boxes and pallets of products before shipping them.
American Power Conversion., a leading provider of global, end-to-end infrastructure availability solutions, heard last year from some of its important customers that they would require some of APC’s products to carry RFID tags in the future. Both the U.S. Department of Defense and retail customers of APC’s products were implementing an RFID system in warehouses, distribution centers and stores. APC decided to become an early adopter and comply with mandates by placing passive RFID tags on their shipments.
Turns to IBM
APC, headquartered in West Kingston, R.I., turned to IBM. IBM had 10 years of experience as a leading provider of RFID solutions. We knew they were capable of helping us learn, experiment, evaluate and adopt an RFID strategy that both complies with our customer’s requirements and makes sense for expansion into future RFID business opportunities, recalls Rich Morrissey, APC’s director of eBusiness.
A Fortune 1000 company with $1.7 billion in revenues in 2004, APC wanted to protect its position with these customers. But it also saw a business opportunity in the RFID world: providing backup power to enterprises that deploy RFID solutions. Should tags and readers fail at any point, we have technology to protect the enterprise against downtime, Morrissey says. The potential of RFID as a new venture for us is compelling and the business alliance with IBM has helped us understand the nuances of this emerging customer need.
Real-time SCM ‘inevitable’
Morrissey explains that one of the key differences between RFID and bar coding, the more conventional tracking technology, is that RFID eliminates the need for line-of-sight reading required for bar code scanning. RFID scanning can also be done at greater distances than bar code technology, allowing overhead readers to instantly scan whole truckloads of products as they enter or exit warehouses through the dock doors.
|On Demand Business Benefits
These and other advantages are making the transformation to the RFID supply chain inevitable, Morrissey says. We figured if we didn’t do it now, we would have to do it later. By being an early adopter, we are in a strong position relative to our competition. Retailers are moving toward RFID and suppliers need to get ready or get left behind.
End-to-end RFID solution development
IBM worked closely with APC to develop an RFID program that complies with the U.S. Department of Defense and retailer mandates. To jumpstart the effort, an IBM Business Consulting Services team conducted an RFID Quick Start Value Assessment to evaluate the impact of RFID on APC’s business processes. The team identified possible RFID-related market opportunities for APC, located areas where RFID could improve inventory management, and estimated the investment required to deploy RFID regionally and globally. This included determining the required information technology infrastructure investments and architecture.
IBM helped us define a technological vision for RFID in our company’s future,Morrissey says. Aside from the compliance issues, IBM helped us identify business pressures driving RFID adoption, including tagging costs, regulatory pressures, and supply chain enhancements and how these issues impact our business.
No substitute for testing
An IBM Integrated Technology Services team also tested RFID readability on three of APC’s SKUs using the IBM RFID Test Center in Gaithersburg, MD. Testing helped validate the readability of RFID tags on APC products. The testing methodology focused on determining the optimum tag placement based on product characteristics, understanding the tag read rates and the evaluation of tag quality. It also allowed testing of different vendors RFID hardware, including antennas and readers, to support APC’s RFID program needs.
Pilot to gain experience
In the final stage of the engagement, the IBM team conducted a non-production pilot of APC’s RFID program at its West Warwick, R.I., facility. This consisted of configuring a dock door portal, a wrapping station and a simulated manufacturing conveyor line with RFID readers; affixing passive level tags to a limited number of finished-product SKUs; installing the network infrastructure required for readers and data collection; and deploying RFID middleware to collect, store and report on information collected in the process.
By initiating controlled pilots and trials, we learned from doing, Morrissey says. IBM helped create a ‘live’ environment that validated the business case before we took it into the real world.
Gaining business agility
With development, testing and trials completed in eight months, APC is now preparing to implement its RFID solution with the U.S. Department of Defense and with select retail customers. Once in place, this will enable greater supply chain visibility for APC, which in turn will allow the company to adapt faster to a market shift and customers’ demands. In so doing, it fosters or, as Morrissey states, invests in a longer term strategic relationship between APC and its customers.
As the adoption rate of RFID grows within the industry and the cost of the tags and technology declines, the industry is poised to benefit from this emerging technology. The challenge for APC will be staying ahead of the adoption curve and maintaining a technology leadership position for the benefit of its entire supply chain, he adds.
For more information
To learn more about IBM RFID solutions for the On Demand Business, contact your local IBM representative, e-mail us at email@example.com or visit:
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