RFID And ERP ~ The Wave Of The Future

Radio frequency identification (RFID) is arguably one of the biggest catchphrases in the automatic identification and data collection (AIDC) market. The technology allows users to identify, track, sort, or detect almost any object. RFID is used in areas such as warehousing and distribution, access control, and asset tracking.

Because it is a "contactless technology," tags can be read without a direct line of sight. For example, a pallet can go through a warehouse on a forklift, and an RFID tag on that pallet can contain information on all of the items in boxes on the pallet. Another RFID tag attached to the forklift can contain information about the actual forklift itself, such as the driver and the vehicle number.

Enterprise resource planning (ERP) software, another technology catchphrase, is multi-module application software designed to help businesses manage and track important departmental aspects. This includes activities such as product planning, customer service, and order tracking. The goal of an ERP system is to help a company lower costs in the supply chain, shorten throughput times, and help different departments share information effectively and in real time.

Acsis, a Marlton, NJ-based systems integrator, provides a total solution to bring RFID and ERP technologies together. To say that Acsis has been successful would be an understatement. In 1996, company CEO Nate Konecky decided to sell ARMS, his $30 million information technology (IT) services company, and keep Acsis. The AIDC company has grown from $4 million and 20 employees in 1997 to a projected $18 million in sales and in excess of 100 employees this year.

Providing Benefits
Through its DataPass™ software, which integrates RFID hardware, as well as all other data collection hardware, with ERP systems, Acsis acts as the RFID bridge to ERP systems. According to Konecky, there are three major advantages to an RFID supply chain:

• providing real-time tracking of goods and materials
• the ability to dynamically update or change information fields on a package or label
• hands-free, rapid scanning of product information without operator intervention or line-of-sight requirements.

"We got involved in providing data collection solutions primarily to ERP vendor SAP," explains Konecky. "There was a big demand for data collection in warehouses, production facilities, and distribution centers, but there wasn't much in the way of good solutions to link these areas to ERP. We created DataPass while working with our first partner, BMW. Our AIDC-based solution went live in 1996, and things just snowballed from there. Today, we provide data collection-enabling software, wrapped in a turnkey solution."

"ERP systems, by nature, are written to handle any kind of customer need," he continues. "It makes them general, yet somewhat sophisticated at the same time. For data collection, end users need systems that work with the existing business processes in their warehouses. We provide the software link between AIDC and ERP, giving end users an easy way to collect data and transfer it into the required elements for the ERP. Without enabling software, many companies could not implement an ERP system in their warehouses. It just wouldn't be practical. There would be a whole warehouse full of products that would not be accounted for." Today, Acsis customers include: DuPont, Hershey, Sony, Proctor & Gamble, Starter, and Westinghouse. Acsis works with national and global companies.

Seeking End Users
According to Konecky, any company that uses AIDC technology is a candidate for RFID. "As the price in RFID technology comes down, it's easier to justify the implementation, and smaller companies will be able to benefit from the technology," he explains. "Right now, RFID installations aren't dependent on the size of the company as much as the company's willingness to be an early adopter of the technology. Some companies have specific needs that only RFID can fill, and some companies look at the adoption of an advanced technology as a competitive edge."

In 1998, Acsis had approximately 20 installations. This year, Konecky expects that number to climb above 100. Nearly 40 employees have been hired so far this year to keep up with the demand. Most of the company's installations are connected through an ERP system, but Acsis is able to integrate with legacy systems as well.

"We are a full-service company," explains Konecky. "We provide planning, implementation, and ongoing support. When we sign up a customer, we fully expect the company to be a customer forever. We want to be that company's data collection expert - no matter how the business changes."

Can You Work With ERP?
Konecky believes there is room for VARs and systems integrators in the AIDC/ERP industry. However, integration of this magnitude, he warns, requires a wide skill set.

"VARs must understand data collection and ERP technology, as well as the customers' business processes," he advises. "Because of this required knowledge, I think there will be a select group of companies that has the talent to provide the necessary solution."

Konecky also warns VARs not to expect to make much profit from selling the RFID tags necessary for installations. "Manufacturing costs are pretty high, based on what the market wants to pay," he says. "The problem is, a lot of tags are required. Let's say tags cost $3 each, and an end user needs to purchase 1 million tags. That means $3 million is spent just on tags for that installation. That's a significant initial investment. Prices will go down, but the margins will remain low on tags because of the volume needed."

Can VARs increase the margins? In general, yes. With tags, no. It's like anything else, explains Konecky. "The more qualified VARs are, the more jobs are available, and the more those VARs can demand."