Inventory Management

Transcription

1 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 1 PRECONFERENCE SEMINAR RFID for Warehouse and Inventory Management Building Your RFID Business Case (Professor UQAM, Co-founder Academia RFID) 2 1

2 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Preconference seminar Agenda RFID for Warehouse and Inventory Management 11h30 AM: Linking RFID to Inventory Management Best Practices 12h15 PM: Targeting g the Correct RFID Technology for the Right Project 1h00PM: Lunch 1h45 PM: Key Steps in Building an Inventory Mgt. RFID Solution: Build Your Own RFID Portal 2h30 PM: Designing Your RFID Solution 3h15 PM: Break 3h30 PM: Building Your RFID Business Case 4h15 PM: Preconference Seminar Conclude 3 Objective of the presentation How to develop an RFID business case and justify your investment (Qualitatively /Quantifiably) Assess the financial impact (costs & benefits) of your RFID project Build an RFID Business case based on the selected technologies and solution design Assess & Monitor your performance 2

3 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Start Your Business case! Unlock the Business Case for RFID RFID Don t sell RFID as a technology but as a solution to business problems or as a mean to leverage on new opportunities! Measuring performance and continuous case assessment (TCO) Revision of the Business case: Assess realistic financial impact based on experimentation (Lab & pilot) & Procurement process RFID Business Case in the RFID Project life cycle Project tfollow up & Operations Implementation POC & Pilot Design Dev. Project Front end High level Business case / value Project definition RFID BPR (To Be) & Planning RFID BPR (As Is) Business cases & scenarios sensitivity analysis based on different designs Source: Bendavid Y., Academia RFID, RFID PRO

4 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Methods & tools for ROI analysis Explored in section 2 of the seminar How to quantify & justify your RFID investment? Qualitatively ti l & quantifiably? Quantifying the opportunities/ problems Classic - Costs of inventory Carrying Costs Ordering costs Facility storage Replenishment ($/order) rent, depreciation, i power, heat, Requisition, i i PO, cooling, lighting, security, taxes, transportation, shipping, insurances, etc. receiving, handling, Material handling accounting, auditing, etc. Equipment Labor Record Keeping Borrowing i to t purchase h inventoryi t Product deterioration Spoilage, breakage, obsolescence, Shortage costs Stock outs costs loss of sales & relative loss of profits Customer dissatisfaction Reputations 4

5 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Quantifying the opportunities/ problems Using - Normative model of inventory carrying cost method Inventory carrying costs Capital costs Inventory Service costs Storage Space costs Inventory Risk costs Inventory investment Inventory insurances taxes. Company Owned warehouse Inventory obsolescence Inventory damage Inventory pilferage Inventory relocation costs Source: Source : Lambert D. and Stock J (2001). Strategic Logistics Management, chap 5. Financial Impact of Inventory Quantifying the opportunities/ problems linking the business case to the Project Goals Reduced claims (overages/ shortages) Reduced labor costs (e.g. receiving, i put away, picking, shipping, assembling, reworking ) Reduce Operating Costs Increase Operating efficiency Reduced inventory Reduced returns/ unsalable Increased asset utilization Reduce Working Capital Increase Capital Efficiency Shareholder Value Improved on-shelf availability Reduced counterfeiting Improved customization options Improved promotional planning and execution Improved shrink management Increase Market Share Increase Volume Increase Revenue Increase Source: Adapted from GS1 Canada, 2007 & IBM & EPC Global 5

6 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Quantifying the opportunities/ problems Inventory control questions & related KPIs Receiving What is the %oforders orders accurately received complete and on time? What is the percentage of orders accurately received against the ASN? Put Away What is the put-away accuracy (%)? What is the put-away cycle time? Picking What is the picking accuracy (% orders picked accurately)? What is the average picking time? Average picking cost? What is the number of pull-lists processed per day? Quantifying the opportunities/ problems Inventory control questions & related KPIs Shipping What is the average order turnaround time? What is the Order Lines Shipped /Labor Hr? What is the average back order length? What is the average lead time for an order? Inventory Control (Inbound) What is the Inventory Availability? What are the inventory carrying costs? What is the inventory turnover? What is the accuracy of inventory? Is there an inventory obsolescence costs? What is the shrinkage % (as a % of sales)? Return management What is the % of product returns (if any)? What is the average return management process time? What is the 6

7 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Objective of the presentation How to develop an RFID business case and justify your investment (Qualitatively /Quantifiably) Assess the financial impact (costs & benefits) of your RFID project Build an RFID Business case based on the selected technologies and solution design Assess & Monitor your performance Build an RFID Business case Based on the selected RFID technologies and solution design Enterprise Management processes Core Business Processes Product Life cycle management Plan Material & services Source material Supply chain management Make Assemble material Deliver material Return Dispose Material Customer services Source: Bendavid, 2007 adapted from Aris Toolset 7

8 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Build an RFID Business case Based on the selected RFID technologies and solution design Assess the As Is performance Plan Material & services Source material Make Assemble material il Deliver material Return Dispose Material material Unload products Employee A On time parts delivery percentage % of receipt authorized by PO % of orders released with full lead time Put away accuracy Put away cycle time Average picking time Etc. Plan Source Deliver BOL Signed BOL electronic data Mismatch Products Unloaded Verify BOL vs. delivered products Enter data to compare With the PO Employee A OK Supplier sys. ERP Source: Bendavid Y. (2011) Academia RFID RFID PRO Build an RFID Business case Based on the selected RFID technologies and solution design Assess the To Be performance Plan Material & services Source material Make Assemble material il Deliver material Return Unload Dispose products Material Products Unloaded Employee A Plan Source Deliver For any business case, measures and metrics are needed to test and reveal the viability of strategies without which a clear direction for improvement and realization of goals would be highly difficult Gunasekaran and Ngai (2005), JOM 23(5): RFID&EPC data RFID&EPC data Automatically Read RFID&EPC tags Tags Automatically Read Automatically Transfer Info. Into ERP Reader Tags Middleware ERP/WMS Source: Bendavid Y. (2011) Academia RFID RFID PRO 8

9 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Build an RFID Business case Project/Infrastructure Cost Analysis(1 of 2) Project Preparation Opportunity Assessment Business Case Development RFID Strategy Development Use Case Generation Procurement Management (planning and sourcing) Solution Architecture Development System Integration Assessment Business Process Assessment Experimentation/Testing (validation of the business case) RFID Infrastructure (hardware) RFID Tags (Pallet, case, item, medical devices, staff, patients ) Readers and Antennas Mounting Accessories RFID printers and label Applicators Ancillary devices (motions sensors, horns, lights, ) OtherInfrastructure Costs (new servers & computers, infrastructure upgrade, Etc. Build an RFID Business case Project/Infrastructure Cost Analysis(2 of 2) Installation Costs Initial Site Survey Design selection Hardware installation Testing and trouble shoot Ongoing System admin. Network Management System Reader Firmware Upgrades Damaged Readers/Antennas Performance Monitoring Maintenance RFID Software Costs RFID Middleware Solution Middleware System Integration (with WMS, ERP, Track& trace sol.) Interface Customization Engineering/Business Process Change Other expenses Physical warehouse modification New resources (business analysts) Training 9

10 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Objective of the presentation How to develop an RFID business case and justify your investment (Qualitatively /Quantifiably) Assess the financial impact (costs & benefits) of your RFID project Build an RFID Business case based on the selected technologies and solution design Assess & Monitor your performance Process Organisation Knowledge Technology Performance Assess & Monitor your performance KPIs in the RFID Maturity Framework AREA ACTION Assessment Criteria Aberdeen Group, Winning RFID Strategies for

11 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Assess & Monitor your performance KPIs and RFID impact assessment With respect to previous experience on the impact of RFID in Warehouse& inventory contexts, multiple KPIs are used, such as level of inventory (reduction), service level (improvement), (out-of) stock level, storage, space (minimum), handling costs, process improvement (automation, cancellation), etc. Assess & Monitor your performance KPIs for RFID impact assessment Benefits. How will your company benefit from RFID driven visibility across the supply chain? Costs. How will your company pay, both in hard costs and resources, for RFID driven visibility? On time parts delivery percentage Percentage of receipt authorized by PO Percentage of orders released with full lead time Put away accuracy Put away cycle time Average picking time Shipping accuracy Inventory availability Average back order length Inventory accuracy Inventory turnover Obsolete inventory percentage Source: 2008, Forrester Research What are your Priorities? How can RFID help you in addressing these challenges and opportunities Source: Adapted from Bragg S. (2004), Inventory best practices 11

12 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Assess & Monitor your performance Classics frameworks to assess the performance Financial How should we Objectives appear to our KPIS Shareholders? h Initiatives Customer How should we appear to our customers? Objectives KPIS Initiatives Vision & Strategy Internal Business Processes What business Objectives processes must KPIS we excel at? Initiatives Learning and growth How will we sustain our ability to change KPIS and improve? Objectives Initiatives Balanced ScoreCard (Kaplan et Norton,1992 ) Assess & Monitor your performance Supply chain frameworks to assess the performance the SCOR model provides a unique framework that links business process, metrics, best practices and technology features into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities 12

13 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Assess & Monitor your performance The SCOR Structure PLAN PLAN PLAN DELIVER SOURCE MAKE DELIVER SOURCE MAKE DELIVER SOURCE MAKE DELIVER SOURCE RETURN RETURN RETURN RETURN RETURN RETURN RETURN RETURN Supplier s Supplier SUPPLIER Internal or External YOUR ORGANIZATION CUSTOMER Internal or External Customer s customer SCORprocesses extend from your supplier ss supplier to your customer ss customer. Includes all customer interactions from order entry through paid invoice; all product (physical material and service) transactions, including equipment, supplies, spare parts, software, etc.; and all market interactions, from understanding aggregate demand to the fulfillment of each order. Source: chain.org/f/scor Overview Web.pdf Reliability Responsi- veness Agility Costs Assets Assess & Monitor your performance SC Performance Attributes the ability of a SC in delivering: the correct product / place/ time/ packaging/ quantity/ doc. /customer the velocity at which a SC provides a products to the customer the ability to respond to market place change (e.g. Non-forecasted increases; partners going out of business; natural disasters; terrorism; labor issues) the cost of operating the supply chain processes (labor costs, material costs, and transportation costs) the ability to efficiently utilize asset (fixed & working capital) E.g. inventory reduction and in-sourcing vs. outsourcing Perfect Order Fulfillment Delivery performance Order Fulfillment Cycle Time Supply chain response time Production flexibility Cost of goods sold Total SC Mgt. Costs Value added productivity Warranty/return t proces. costs Cash to cash cycle time Inventory days of supply Capacity utilization See for instance the SCOR model on 13

14 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Assess s & Monitor your SCOR Metric performance cs SCOR model on Conclusion An RFID business case should be a living, i breathing document Continuous RFID developments ( price, performance) Implementing RFID is just the start Source: GS1 Canada 14

15 (ESG UQAM; Academia RFID), Building Your RFID Business RFID Journal live 11 Thank you! YBendavid@RFIDacademia.comcom UQAM, School of business 315 Ste Catherine est Local R 3570 Montréal (Québec) Canada H2X 3X2 Tel: (x 2429) Web site: Academia RFID 9916 Côte de liesse, Montréal QC Canada H8T 1A1 Tel: Fax: Web site: