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The High Definition EnterpriseTM

An Xterprise White Paper

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The High Definition EnterpriseTM

RFID Solutions for Business TransformationAn Xterprise White Paper | Jim Caudill, SVP Marketing & Strategy, Xterprise

The first wave of UHF RFID implementations 5 years ago proved the technology was limited, experimental deployments, often relying on manual tuning, custom middleware, and consulting help to get the job done. Most of these early projects overcame their challenges to demonstrate RFID solutions that tracked products, accelerate inventory flows, and boost productivity for big-box retailers, world-class manufacturers, logistics providers and others up and down the supply chain.

But the early need to get the technology running in limited deployments postponed the full impact of what RFID could bring to a new enterprise process innovation revolution. Those early RFID implementations lacked the operational framework and rich software applications needed to turn raw information into actionable business intelligence—limiting the technology’s contribution to ERP and other legacy information systems.

The second phase of UHF RFID is now underway. RFID solutions are maturing into a new generation of enterprise applications capable of managing the accelerated, higher fidelity, real-time needs that companies are demanding. Incorporating enterprise-spanning collaboration, analytic, and platform architectures, these applications are driving the emergence of what Xterprise calls the High-Definition Enterprise™ (HDE). The high-definition transformation occurs when an enterprise begins to capture granular data and use it to control and innovate critical processes in real time. By innovating business processes that extract maximum value from up-to-the-minute information, the High-Definition Enterprise creates, sustains, and continuously improves its efficiency and performance.

There are dozens of examples of players in various market segments that are applying technology to achieve HDE results; here are some that are using Xterprise technology, its Clarity™ suite of solutions, to achieve this new level of competitiveness:

• A plastic pallet pooling company can now can deliver a revolutionary option for pallet pooling for the largest CPG and Retail brands in North America

• A CPG company now can verify that high cost promotional displays made it onto the store floor at “big box” retail customers

• An automotive electronics manufacturer now able coordinate the inbound material flow more efficiently

• A leading financial services company that is now able to manage its large, distributed inventory of IT assets resulting in significant savings of resources

New data-collection technologies help these companies collect granular, real-time data across the enterprise. New Service-Oriented Architecture (SOA) and Business Process Management (BPM) platforms help them create, bundle, and orchestrate components into applications that meet market-specific needs. To fully appreciate the capabilities of the High-Definition Enterprise, let’s review the recent past and near future of RFID.

Today’s Enterprise LandscapeRFID seemed to lose momentum after the first wave of retail and government mandates. The Warehouse Management System (WMS), Transportation Management System (TMS), Enterprise Resource Planning (ERP) and other applications available at the time were overwhelmed by the granularity and volume of data RFID systems produced. Nor could these solutions work fast enough to accelerate business processes and workflows to breakthrough levels.

Middleware used in these early pilots did little more than route data to a database. Costly and hand-coded, they were designed to meet deadlines, not enterprise-wide strategic business requirements. They did little to address performance and scalability requirements and often isolated these pilot systems from enterprise-spanning applications and forced companies to realize little value from the innovation RFID can enable.

When enterprise applications are injected with real-time information from RFID line-of-business (LOB) solutions, they can experience enhanced functionality and execution. Without these, critical control processes march one step behind—frustrating growth and revenue initiatives, and driving up inventory, fulfillment, and customer service costs. Poor data collection and analysis introduce error and latency into order processing, tracking, and expediting and lead to inconsistent compliance, dissatisfied customers, and lost sales. Limitations of last-generation systems also contribute to organizational problems from slow order cycles, inefficient, costly high-touch logistics, high inventories to protect against demand uncertainty, and business decision-making based on old, inaccurate data.

Caught between shareholder expectations and global competition, many companies are approaching an inflection point—ready to transform their businesses using disruptive technologies that create new operational possibilities. The opportunity requires change across multiple disciplines, and some—entrenched in the status quo or lacking the necessary vision or resources—will miss it entirely.

How do companies meet the challenge? With comprehensive solutions: RFID tags and readers, innovative RFID focused LOB software applications, physical infrastructure and pre- and post-deployment support. And the High-Definition Enterprise adds more than technology: these leaders combine advanced supply chain execution with lean manufacturing capabilities, asset management capabilities and continuous improvement of innovative process design, collaboration and execution.

Defining a New EnterpriseWhat distinguishes the High-Definition Enterprise vision from its low-resolution predecessors? Older-generation systems - ERP, WMS, and TMS in particular- view the world as a “sea of items”, none of which have a unique identity, that are moving through the enterprise over time. In addition, these low-resolution enterprises only monitor, measure and manage processes where the cost of an operator to capture data can be acceptable. For example, these systems might provide daily summaries of inventory by stocking location, to the pallet level. In contrast, high-definition solutions provide a granular, serialized, real-time and highly accurate view of products, assets and other enterprise resources: item-level point-in-time

tracking through the enterprise. They create additional value by wrapping the raw RFID event data with a contextual “shell” of process detail. The new data-in-context is then transformed into information by combining with other information objects in workflows inside SOA/BPM based business applications.

Older, lower-resolution systems relied on operators to collect and process data, exposing themselves to waste, errors, and faulty or incomplete information. Many of them, limited to line-of-sight readings, place severe constraints on data collection in today’s complex, fast-paced supply chains. And because they typically processed data at the end of the business day, they forced managers to wait for critical information on their business activities.

The High Definition Enterprise replaces these processes with automated efficiencies that provide a precise, current, zone-based view of the organization. Using RFID technologies for greater range and flexibility, advanced RFID solutions replace “best guess” estimates with zero-latency data, reporting and business intelligence. And new RFID enabled LOB applications deliver the information needed to make informed, timely business decisions. Compared to traditional systems’ snapshot image of a single process stage, today’s high-definition solutions produce a “movie” with movement, immediacy and product-level detail—unlocking dramatic, step-function improvements in processes, execution performance and collaboration among enterprise partners.

Elements of the High-Definition EnterpriseHow do organizations secure the power and benefits of this new approach? Let’s look first at the business and technology components that make up the solution. The High Definition Enterprise “technology stack” consists of:

• Automated, process-driven sensor data capture systems

• An operating framework that provides connectivity, interoperability and RFID device connectivity functionality

• Components to manage process and event flows, data services, business rules and the user experience

• A business intelligence suite to help users extract actionable information about their enterprise from the rich data collected

A new and more capable generation of data-capture tools includes passive and active RFID, real-time locator systems (RTLS), global location systems (GLS), Wi-Fi and advanced bar code systems. High-volume low-cost tagging makes a granular, serialized view of operations economically realistic.

Recent advances in tagging solutions accelerate manufacturers’ retail and DOD compliance, and improve their operations management, validation and quality assurance. Good solutions contribute value to existing infrastructures by supporting industry EDI standards and a wide range of enterprise system adapters (e.g., for SAP, Oracle, Dynamics, RedPrairie and others). The best of this generation optimize performance and efficiency using Web services and standards-based interfaces.

High-Definition solutions go a step beyond, with an RFID Service-Oriented Architectures and advanced SOA applications and data analytics such as the new Microsoft BizTalk Server 2006 R2. BizTalk Server helps organizations integrate systems and automate processes across global supply chains. And with native support for EDI and RFID, it gathers data from the enterprise edge, supporting visibility across RFID-enabled and legacy business processes and trading partners in real time.

Once the operating framework and components are in place, specific line-of-business applications deliver the value of HD performance to retail store operations, asset management processes, supply chain networks, and perishable-product cold-chain management. These solutions help companies automate key processes within their ERP and other legacy environments to manage transactions and inventories in a networked supply chain and build measurable process improvements.

To turn data into better business decisions, HD solutions include a robust analytical component. Analysis closes the loop between planning and execution, so that execution can be measured against established targets. Look for solutions that include Key Performance Indicators (KPIs) and other process-improvement metrics, and incorporate an RFID-based business intelligence component. Of course, a total solution includes implementation services, professional consulting services throughout the deployment cycle, and technical support in addition to hardware and software elements. Seek partners with proven experience in the complexities of RFID technologies and expertise in your specific process and execution requirements: for manufacturing, distribution, supply chain management, retail operations, or any other specialty. The best sources will bring their own partner ecosystem, and the ability to scale a solution to meet global enterprise requirements.

High-Definition BenefitsWhat should you expect from your new High-Definition Enterprise? More revenue, to start: high-definition RFID raises service levels and unlocks new offerings, improving order commitments and fill rates, for better customer satisfaction and more new business—look for a long-term net revenue boost in the neighborhood of 10%. Better still, it’s not “empty” revenue—effective automation helps cut manual errors and delays, accelerate cycle times and strengthen processes. By streamlining material handling and other processes, a newly minted High-Definition Enterprise should expect productivity and gross margins improvements that can produce 30% improvements in material handling at loading docks.

Better inventory management and visibility reduces out-of-stocks, write-offs, and overall inventory levels. Better visibility and control of key assets can double utilization rates while dramatically reducing asset shrinkage and increasing asset utilization by as much as 2x. Flexible, HD-driven inventory strategies improve partner collaboration, help partners and customers grow without adding resources, and lead to better management of strategic assets. These are real, measurable, achievable benefits. RFID has already revolutionized retail, manufacturing and other asset- and product-driven businesses. But the limitations of first-generation RFID technologies denied companies the promise of real-time supply chain and enterprise management. These new RFID tools and capabilities establish the foundation for a new, High Definition Enterprise, through which companies can complete the process improvements they have already begun, to achieve measurable, lasting value.