Surprise! Switching to RFID can reduce your label costs by $100K+

Debunking  the myth that RFID tags always cost more than barcodes:

When comparing the consumable costs of an RFID solution relative to a barcode solution, it is very important to differentiate between “open” and “closed” loop applications. A closed loop application occurs when a tag is affixed to an asset or product carrier and used over and over again in the system.  Many manufacturing companies use some type of product carrier like totes, trays, and bins.

These customers print a new identifying barcode each time the carrier is reused. This results in a lot of barcode printing. While each individual barcode may be cheaper than a corresponding RFID tag, the total cost must be evaluated.

Total barcode cost = (cost of individual barcode) * (number of carriers in the system during the time period) * (number of cycles for each carrier in that time period)

The advantage of RFID tags is that they can be permanently affixed to these carriers. Special coatings and fasten- ers can be used to make sure they stay on. They don’t smudge, tear, or fade. They can withstand temperature extremes and still work when covered with grease and grime. Selecting the right RFID tag can mean a tag is affixed only once and reused over and over for five or even ten years.

Total RFID cost = (cost of RFID tag) * (number of carriers)

An Example:

A customer with 5000 totes used twice a day with $0.04 barcodes would pay ($0.04) * (5000) * (2) = $400/day or $100K over a 250 day work year or $500K over 5 years. Using a permanent RFID tag with polypropylene coating and aggressive adhesive would reduce the total cost to ($0.30) * (5000) = $1500 over the same five year period – a savings in excess of $499K!

Looked at another way, the $1500 in RFID tag costs would have a payback period of just over two days for this customer. A modest RFID deployment (tags + infrastructure) at this manufacturer would be paid for in less than 6 months by label savings alone without any other benefit from using the RFID data. Once other benefits are considered, this customer would reach breakeven in less than 3 months by switching to RFID and experience significant savings year after year.

Accelerating an X3 ADC Expansion Project for Automated WIP Tracking or WMS

Suppose you’ve been tracking production and inventory using pen and paper and you recently upgraded to a Sage X3 ERP system.  Sound familiar?  Imagine you are the warehouse manager or operations manager and you really want to get going with WIP (work in process) tracking or implementing the WMS (warehouse management system) features in X3.  A lot of things are going on in the setup and configuration of X3 and your X3 VAR and IT Manager may tell you that you just have to wait until the system is fully up and running before trying to turn on X3 ADC (automatic data collection).  Still with me?  We don’t disagree with that logic, but the good news is that you don’t necessarily have to wait for full implementation of X3 to start boosting your profits.

Rolling out ADC requires many steps and configuring ADC and setting it up is certainly a time consuming and important part.  Don’t forget, you need a WiFi site survey, design, and install.  You also need to select hardware and software, choose RFID or barcode for each process, select label or RFID tag type for each item you want, and label all your address locations.  Most importantly, you need to get your employees used to scanning the barcodes.   What if there was a way to get all that started and begin benefitting from the data immediately?

I’m suggesting that there is significant benefit to proving out all the non-X3 hardware and software in the system before you are ready to turn on ADC.  I will also share that the biggest impediment to success of these projects is the human component.  You need a person to pick up the scan gun and pull the trigger to read the barcode or none of this works.  Starting that process early allows you to hit the ground running when you are ready to turn on X3 ADC because the scanning is familiar and a habit.  The added bonus is that you can begin using all the scanned data before ADC is setup and then port it over when the rest of the team is ready! 

These goals can be accomplished by feeding your scanned data into a database outside of X3.  This can be SQL, MySQL, or a proprietary third party product (ideally subscription based since you only need it for weeks or months).  Be sure your barcode/RFID scanners are equipped with software that allows you to connect to the database and then reconfigured to work with X3 to avoid paying extra (this type of scanner software is available).  This solution is intended to be a temporary way to capture and manage the data during setup and test of X3 and/or the ADC screens.  You capture and use the data in the temporary system and then export it as soon as you are ready to cut over to X3 ADC.  This accelerates your project, reduces the time to breakeven because you are increasing profits in weeks instead of months, and, perhaps most importantly, increases project success rates by training your weakest link (the humans!) to scan the correct items at the right times.  Low cost solutions to big money problems are essential to find.  If you’re warehouse has no automated data collection, this is something to immediately consider.