Back in the day, only jumbo-sized companies could afford the latest in supply-chain technology.
But newer, scaled-down versions of radio-frequency identification (RFID) systems in addition to bar-coding and software are now available for smaller businesses. And they have scaled-down prices to match. Today, even a pest control company or a small manufacturer might afford them, and reap the benefits from the savings and efficiencies they bring.
This increased availability comes at a good time. With increased overseas manufacturing and tighter import/export controls come longer lead times, notes a December 2006 Forrester Research report, “forcing retailers and manufacturers to develop more creative ways to move product through the distribution channel and further streamline distribution center operations.” Cheaper product-identification products, wireless products, and software fill that bill.
RFID and bar-coding options
RFID, or “smart” tags, can greatly increase the speed and accuracy with which products or equipment are moved, since they do not need to be read one at a time or with line of sight of a reader, like barcodes. Wal-Mart Corp. has adopted RFID in its supply chain and has mandated that 300 of its top suppliers start adding smart tags to cases and pallets of goods so the retail giant can scan thousands of products into inventory in a matter of seconds. For Wal-Mart suppliers, it's become a cost of keeping the chain's business. But other small and medium-sized companies can also use RFID to track when something was removed from a shelf, which can aid in researching theft or misplacement of tools, machinery, or goods.
RFID tags also withstand dirt or dampness, so they can be placed on items as large as a railroad car. The data they carry can be changed with relative ease. Tags can cost anywhere from 50 cents each to $50 each. Tried-and-true barcodes, meanwhile, which do require one-at-a-time reading and constant replacement, have gotten even cheaper and easier to create and use.
For small businesses, the cost of running RFID or barcode systems once in place has come way down, in part because of enabling software and the advent of hand-held scanners and PDAs. “For $1,000, you can create a whole range of applications in 60 seconds,” notes Jay Steinmetz, president of Baltimore-based Barcoding Inc. The company’s Capturesoft software enables small companies to do everything from cycle counting, inventory control, receiving, and shop-floor data collection from a PC. These systems can have novel applications, like tracking patients in a hospital or taking restaurant orders in Wi-Fi hotspots.
Barcoding Inc. also offers a range of hardware products, including integrated wireless scanners in the $500-$700 range that can scan inventory, and low-cost desktop barcode printers.
The downside? RFID remains expensive at the front end, concedes Steinmetz. “It can cost $25,000 in up-front costs,” he says, but that it quickly pays for itself. While bar-coding is more labor-intensive over time, its start-up costs are quite low.
Meanwhile, other companies are offering supply-chain services as part of hosted enterprise resource planning (ERP) packages, notes Gary Chen, senior analyst with Boston-based Yankee Group. “With a hosted server, companies can get someone to manage their inventory, and they don’t have to buy the infrastructure or have staff to manage it,” he says.
Hosted providers include NetSuite, of San Mateo, Calif. NetSuite offers a small business inventory-management software package starting at $99/month per user, and a separate customer relations management (CRM) product for $79/month per user, according to Steve Jensen, NetSuite's public relations manager. Other companies offering lower-cost supply-chain solutions include IBM and SAP.
What business sectors could benefit most from these hosted offerings? According to NetSuite’s Jensen, businesses ranging from wholesalers, distributors, industrial, chemical, computer, and healthcare firms use the service.
But Yankee Group’s Chen points out that virtually any company that needs to track inventory can see a benefit. “These products are aimed at lots of verticals,” he says.