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.
Ask yourself:
- How much did I waste on extra physical inventory counts last year? Probably enough to buy another forklift or two or upgrade the dock doors or pay out a holiday bonus.
- How many transactions do I process? 1000 a day? That’s about $50K a year to collect data. How much more product could you make and sell if you put that $50K back into operations?
- How many workers have been diverted from production to “searching” for materials or finished goods that are lost and need to ship? Probably one or two. How much double ordering or spoilage do you deal with? Warehouse efficiency can probably increase profitability by over $100K.
- What is the cost of bad or missing data? You paid six figures for your ERP system. How are you generating an ROI if you are not feeding it data? Were you promised 2-3 points of improved profit margin? That’s about $500K/yr for a typical manufacturer using ERP in the US and you are probably missing out on most of it because you have missing or bad data.
Together, that’s probably over $500K/year in additional profit for a typical manufacturer.
The necessity of a direct line-of-sight between the scanner and tag in barcode systems can often lead to frustration. Think about that can of soup at the supermarket checkout that the cashier waves over and over and you’ll better understand how your warehouse or production line workers feel searching for the barcode on a pallet or trying to get it to read through the shrink wrap once they’ve found it.
While that wasted time may see miniscule compared to total time of production and distribution, most managers can agree that when added up, those seconds could lead to a major time inefficiency. At 30-45 seconds per transaction, you are probably spending a lot of money to read barcodes each quarter. An even bigger risk is that the frustration may build to the point where workers just stop scanning and your six figure ERP system has no data going into it!
RFID eliminates the line-of-sight requirement and makes taking inventory seamless and hassle-free. RFID can also read multiple tags at a time whereas barcode scanners can only read a single tag at a time. This allows you to read tagged “each’s” inside a case without unpacking it. Or read a pallet without getting off the forklift. You can cycle count an area without pulling out all the pallets. And don’t forget the times the barcode is unreadable because it gets ripped, smudged, or fell off. RFID tag durability and the ability to reuse RFID tags make it more reliable option for the manufacturing and warehouse environment.
So now, with RFID, transaction time becomes 10-15 seconds instead of 30-45. Employees are more likely to scan consistently. Better yet, moving from a hand scanner to an automated RFID read station or portal allows for the scanning to occur with no human intervention. That means you are eliminating the human element in your data and you are freeing up worker time to produce instead of capture data.
Addressing our profitability points:
- Using RFID will make it quicker and easier to scan items in the warehouse. This means employees are more likely to scan so you have more complete and better data. Adding an automated RFID portal allows you to audit the “put-aways” and provides the means to enforce scanning and correct errors as they happen. RFID therefore reduces the number of physical counts required and reduces the time required to complete them since line of sight is no longer required and not every item needs to be pulled from the racks during the count.
- Eliminating line of sight requirements by using RFID speeds scanning time from 30-45 to 10-15 seconds per transaction. Easier scanning increases the likelihood that every item will be scanned. Transactions cost less and employees are freed up to produce more.
- As in #1, better scanning and the ability to monitor and enforce it using automated RFID portals means your inventory data will be correct and you will know what you have and where it is. No more “searchers” and no more double ordering or spoilage because you can’t find it.
- RFID clearly helps in the warehouse as we’ve described above. But those same benefits apply in production by using RFID portals and RFID read stations to automatically issue materials and production track with no human intervention. For ERP systems to deliver on their promises, they need accurate data fed to them and automated RFID scanning allows this to occur. Not only do you unlock the benefits of your ERP system, your ongoing cost of data capture in production becomes nearly zero since the scanning is automatic. In addition to the profitability boost, you are also improving your traceability and bringing down cost of compliance!
Inventory data is some of the most important information you have powering your business. Knowing what product you have and where you have it is essential to keeping your company working at its highest potential. That’s why it is essential to have the most up-to-date, accurate information in order to make the best decisions for your company.
The age old method of taking inventory included employees individually identifying, counting, and writing down the information about each piece of merchandise in the warehouse. This tedious process takes time, money and man power away from other important tasks that the employee could be performing.
This method also provides numerous touch points for human error to occur. The fees and costs associated with inaccurate packing and shipping quickly add up when inventory data is unreliable as a result of human error. Using barcodes is a huge improvement. Now data can be scanned and directly entered into an inventory tracking system. Now more passing the slip of paper down the line and having someone type it it hours or, typically, days later. Scanning reduces the data acquisition cost, increases your sales and profitability by freeing up employee time to produce instead of capture data, and lowers the amount of missing and incorrect data. RFID takes this one step further and eliminates the need for employees to stop working at all because there is no need to pick up a scanner and search for the barcode. With contactless tag reading capabilities, RFID technology automates and streamlines the inventory process. This results in reduced time, money, and man power required to keep inventory data up to date. That means higher profits and higher sales with the same resources!
The increasing migration towards RFID technology is putting more pressure on manufacturers than ever before to reduce processing time. The less time employees spend taking inventory, the more time they can spend performing other tasks. This redistribution of attention will make the supply chain more efficient. Here is a great example from retail. According to Leslie Hand, Research Director of IDC Retail insights, “[with RFID] 96% reduction in amount of time to cycle count, enabling more frequent and more valuable insight into real physical inventory”*. A 96% reduction in the time required to take inventory could mean big savings for your company! Manufacturers and warehouse operators should expect the same level of improvement.
Regardless of whether you choose barcode (good) or RFID (best), getting away from pen and paper tracking will have immediate impact on increasing your profitability. Move away from the pen – it’s time to make more money!
*(IDC Community RFID for Better Store Level Inventory Replenishment and Other Retail Use Cases)
The Sage X3 platform is a powerful tool that allows you to track inventory and production data in addition to the core finance functions customers typically roll out first. When you use X3 to its full potential, you get traceability/tracking, better production cost data, and the ability to create manufacturing metrics that should result in improved efficiency.
We typically see customers start with the standard X3 install, then add the manufacturing and ADC tools. However, simply enabling these features won’t help you if you are not feeding the system good data on a consistent basis. So what is missing? How do you increase the ROI of your project?
You will generate the highest ROI for your project when you simultaneously implement both the data housing (manufacturing, ADC) features in X3 with the data capture tools (Barcode, RFID, Sensor Appliances, Labor Tracking Appliances) on your production floor and warehouse.
We’ve talked about ADC in the past and the 8 components you need for a successful implementation. ADC is a great first step and should create immediate benefits whether you choose barcode or RFID. But adding better data capture tools will reduce your cost of data collection, can remove the human element (errors, forgetting), and generally improves the quality and amount of data you collect. Better data at a lower price! Essentially, having the right tools allows you to stop paying employees to collect data and instead pay them to produce — what you originally hired them for.
What are some of these tools?:
- Fixed RFID: Whether deployed at a dock door to automatically track pallets in/out or at a piece of equipment to automatically issue raw materials or create new WIP, fixed RFID offers tremendous value because data capture is fully automated. You can also deploy RFID portals between your production floor and your warehouse so you can reconcile the human-dependent put-aways with the actual flow of product in your facility. This gives you the data to enforce policies and correct mistakes immediately, rather than at the dreaded physical count once or twice a year!
- Sensor Appliances: Did you know you can connect just about any machine or sensor in your facility to X3? Sensor appliances allow you to automatically capture machine health, process temperature, metal detector output, flow gauge data, and just about anything else you would like to capture and associate with a work order running in X3.
- Labor Tracking Appliances: Need an easy way to track which employees are in a particular work cell and for how long? Want to scan a work order and have an easy way to enter piece count or defects? Touch screen appliances can be deployed on the production floor to easily capture this information and send it to X3.
X3 does so much more than simply tracking your finances. The integrated manufacturing and warehouse manufacturing capabilities are powerful tools. But these tools are only as good as the data you feed them. Whether it is the increased need for traceability data, the desire to improve profitability in the warehouse by reducing chargebacks or increasing inventory turns, or the need to increase sales at a higher profit by increasing efficiency and capacity on the production floor, customers are increasingly accelerating deployment of these data capture tools to be used with X3. By reducing the cost to acquire production and warehouse data, manufacturers are able to feed X3 more data and more accurate data. This unlocks the full power of the Sage X3 platform and delivers the highest ROI.
RFID technology is no longer the new kid on the block.
With the technological landscape constantly changing, it seems like everyday there’s some new gadget that promises cost savings and a higher level of efficiency. With appropriate skepticism, manufacturers are asking themselves “Is it worth it?”
The answer is YES… RFID technology has come a long way since its introduction into the identification market place so many years ago. Over 10 years after Wal-Mart mandated RFID tagging for its suppliers, development teams have been working on the problems that have hindered RFID adoption in the past. Manufacturer concerns such as reliability, profitability, and stable international standards have been addressed and made adoption much more financially feasible and desirable.
The benefits of RFID implementation are no longer disputed, in one of many studies that compares manufacturing companies with and without RFID, it was concluded that “RFID technology offers significant benefits for firms through improved inventory ratios and sales efficiency, which translates into higher profit for the firms”*. These higher profits stem from a combination of lower days-in-inventory and lower per-employee costs which can both be achieved by RFID implementation. We have moved from asking “does it work?” which is no longer in question, to looking at the specific business problem and asking “does it make financial sense for my business?”. If you are in manufacturing or warehousing and trying to improve efficiency, enhance traceability compliance at a lower cost, cut shipping fines, and reduce stock outs, the answer is usually not only yes, but yes with a payback period of less than a year!
Enhancements in reliability and efficiency have had a direct effect on demand. According to Enu Waktola at SMARTRAC, with an estimated 3-4 Billion RFID-tagged items in 2013 (UHF only), and a 35%-40% YoY growth, it is easy to see the level of market penetration that RFID technology has achieved**. As a result of an increase in demand and decreasing tag and equipment prices, RFID system integration is now offered by more market players than ever.
*Chang Does RFID improve firms’ financial performance?)
**(SMARTRAC Internet of Things Offers Huge RFID Growth)
Join fellow manufacturers who are enjoying an 80% improvement in shipping and packing accuracy*.
Your company’s products constitute the core of your it’s success. Units that go unaccounted for and unsold hold back your company from reaching its full potential. We encounter so many companies that have “searchers” or “seekers” looking for raw materials that are holding up production, looking for WIP that needs get to final packaging and is holding up an important customer order, and looking for finished goods that need to ship today to be on time. Keep doing this wrong and you start double ordering and double producing, gradually hacking away at profitability. Probably more important are the stories of upset or lost customers due to consistently late or incorrect shipments. The profitability problem is solvable in the future, the lost customers often don’t come back. There are proven solutions to help you address this now.
A question that every manufacturer should be asking themselves is “Would I bet money on my inventory data?” This is an important self-assessing question seeing as every unit of merchandise your company produces and every piece of inventory your company owns represents an investment and potential profit for your company. Effective warehouse management is the key to increasing your return on investment. The best way to increase ROI is by shifting the attention of your workers away from scouring the warehouse looking for product and back to what they do best, producing. This can be done by continuously identifying and tracking everything that comes in and out of your facility. A hybrid barcode/RFID data collection system allows you to do this efficiently, effectively, and accurately. Barcode/RFID implementation leads to lower days-in-inventory and lower per-employee costs which result in higher sales efficiency.
The first step is getting away from manual and paper tracking. It just doesn’t work well because of the labor cost and the errors. Simply adding barcode scanning can be a huge leap forward. The next level increases efficiency by adding RFID tags. Not only can you accelerate the scanning process, but you can automate the data capture and remove the human element. This means no more forgotten scans and your ongoing labor cost of data capture goes to zero after the initial investment. By deploying a hybrid solution that uses both barcode and RFID, you minimize your ongoing consumable (label/tag) expense while getting as much automation as possible to free up worker’s time, increase the amount of data you collect, and reduce/eliminate bad data.
The leaders in the industry have implemented these systems and are seeing an 80% improvement in accuracy. Your business can reach that level of management and visibility too. The abilities that barcode/RFID technology can offer your business do not stop at the warehouse, the technology can improve product traceability and increase your management team’s understanding of what’s going on at all levels of the supply chain.
*GS1 US Standards Usage Survey, 2014
The Sage X3 platform is powerful and contains a basic warehouse management system (WMS) in the standard offering. To unlock these features, customers often choose to enable the automated data capture (ADC) screens. Let’s take a brief look at what is required to make an ADC expansion a success.
- Barcode/RFID scanner mobile computers. The key to data capture efficiency is the ability to quickly capture the product data you need. The choice of barcode, RFID, or a combination of both are specific to the application, but interchangeable hardware to support all three cases are readily available.
- Client-side software to run on the scanners. The X3 ADC screens runs in VT100 terminal emulation mode, so any VT100 emulator will work. However, to enable ADC enhancements like accelerated login and automated menu navigation and the ability to seamlessly transition between barcode and RFID, a basic emulator is not enough and more advanced software is required.
- ADC licensing and setup. All the basic ADC functionality is included with the X3 software you already have. There is a license fee for each device that will communicate with X3. Additionally, you will likely want to configure and possibly customize ADC to your business process.
- WiFi System. You will likely need to install or upgrade your existing WiFi system. The mobile scanners send their data back to the host server running X3 over a wireless network. The design of a WiFi network in a warehouse or manufacturing facility is a specialty that creates the need not only for adequate coverage, but special design techniques to avoid data loss, dropped connections, and prevent unwanted noise traffic on your wired network as inventory levels change.
- Printers (either barcode, or barcode/RFID combo). You will need to attach identification labels to the each, cases, pallets, or other standard unit of measure you want to track. Most customers choose to print these on demand.
- Consumable labels. See above. These are the barcode or RFID tags that will be affixed to the items you wish to track. They can be barcode-only or barcode with RFID.
- Reusable labels. These more durable labels are affixed to reusable containers used in manufacturing for WIP tracking. They are often applied to trays, totes, or bins to allow track and trace.
- Address plates. Your WMS functionality requires you to “put away” items in specific address locations. This is best accomplished with barcode and/or RFID address plates that allow you to easily scan the address into the correct ADC field.
It is important to know that your chosen RFID/barcode vendor can work with your SAGE reseller/consultant to help you every step of the way. When you consider the various stages from design through implementation, training, and support, you see the necessity in having an RFID/barcode expert that knows how to maximize your system and goals. It is key to find a company that offers scanners, proprietary, proven X3 ADC compatible software for the scanners, WiFi system (design, hardware, install, support), printers, and any barcode/RFID labels/plates you will need for your project. With that expertise and knowledge, your project will surpass expectations and give you a new level of information and insight into your operations.