Challenges and possibilities

guineanscarletElectronics - Devices

Nov 27, 2013 (3 years and 8 months ago)

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Integration of RFID and ERP

Challenges and possibilities















Humberto Moran

Research Fellow

Judge Institute of Management

University of Cambridge





June 2004

h.moran@jims.cam.ac.uk


© Humberto Moran

© Humberto Moran

What is RFID?


an invention

RFID is an old invention that became less expensive



The reader ‘queries’ the chip with a radio wave






The chip replies with its identification (EPC) and
other optional data




© Humberto Moran

What is RFID?


an innovation

Degree of coupling with environment

Low/
Passive

High/
Active

Depth of the impact

Support of
operational
processes

Low

High

Support of
business
processes

Generation of
new business
models

Restructuring of
the supply chain

Reshape the
consumer
experience

Transformation of
society (lifestyle)

Barcode substitute

Tool for
automation

Mass
customizatio
n enabler

Data
gathering
device

Productivity
tool

Extension of
information
systems

Building
block of a
modern
supply
network

Physical
extension of
the Internet

Supply chain
productivity
tool

Intelligent
interoperable
products

Labor substitution tool

Technology as
production network

Way of
increasing
product
quality

Manufacturing tool

Way of
developing
new products

Information
processing tool

Productivity
tool

Technology as
perception

Technology as
embedded system

© Humberto Moran

RFID from a ERP perspective


A set of inter
-
organisational standards


Identify physical objects


Trace information on products


A powerful tool for automation


Provides computers with new senses, new
data (and new possibilities…)


A Revolution in the SW area ??

© Humberto Moran

Integration of RFID/ERP: there is a gap
between both worlds

Physical world

Information world

Low
-
level
interface

Readers

Manufacturing

Inventory

Logistics and
distribution

Financial

ERP and related

Sales and
marketing

Business
intelligence

?

Physical
meaning

Business
meaning

© Humberto Moran

Why is it important to integrate both worlds?


Both worlds complement each other creating
important complementarities


To allow/ease the adoption of RFID applications


To provide RFID
-
generated data with useful
meaning


To provide ERP systems with accurate, timely
and reliable information about physical objects


To make the best possible usage of the new
information from a business point of view


© Humberto Moran

What are the challenges posed by this
integration?

1.
RFID
-
Generated data are dispersed, fragmented,
duplicated, inaccurate and lack business meaning

2.
Interpretation is context
-

and information
-
dependent

3.
Interpretation requires sharing inter
-
organisational
information

4.
RFID
-
Generated data might generate business
transactions targeting different systems/modules

5.
Duplicity of Information and functionality of RFID
-
enhanced systems and that of existing ERPs

6.
Amount of new data is stunning

© Humberto Moran

(1) RFID data are dispersed,
fragmented, duplicated, inaccurate
and lack business meaning


Readers can detect the same objects
many times, with random gaps


Some tags can be missed


Reading order is random


Logically related and unrelated objects are
read all together


The data consist on identification numbers
(EPC) and other optional data, which lack
business meaning

© Humberto Moran

(2) Interpretation is context
-

and
knowledge
-
dependent


Business meaning depends on:


Location of the object


Whether the object is static or moving


Direction/speed of movement


Detection intervals


Aggregation information (e.g. compound
products, batches, tools etc.)


Business transactions (e.g. ASN, warehouse
transfers, sales etc.)


Previous status of the object (e.g. location etc.)

© Humberto Moran

Illustration
-

characteristics of the data
and its interpretation

Products are often
handled in groups

Some tags might not be
read

Low
-
level
interface

Readers

The information about the
products is in the
inventory module

The information about the
employee and/or
equipment is in the HR
and Fixed Assets
modules respectively

EPC

EPC

EPC

EPC

EPC

EPC

?

EPC

Reader 1

EPC

EPC

?

EPC

EPC

EPC

EPC

EPC

Reader 2

o

o

o

o o o o

Data comes fragmented
and dispersed

There is a need for
location and aggregation
information

Some transactions are
duplicated

© Humberto Moran

Implications
-

characteristics of
the data and its interpretation


The integration layer must combine data from
many different sources


some degree of
centralisation is required


Hence, there is a need for interoperability


A GIS must be incorporated or linked to the
interface


These data requires sorting
-

a grammar
-
like
processor is required


Since data may be incomplete or contradictory,
the integrator may incorporate “fuzzy” logic or
artificial intelligence

© Humberto Moran

(3) Interpretation requires sharing
inter
-
organisational information


Most of the value of RFID comes from inter
-
organisational applications


Information about products


Communicating/tracing shipments


Vendor managed inventory (VMI)


Anti
-
counterfeit, anti
-
smuggling etc.


However, these exchanges cannot be easily
done at ERP level


Heterogeneity of vendors and versions


Limited funcionality

© Humberto Moran

RFID
-
enhanced and non
-
RFID
-
enhanced
systems must coexist

Physical world

Information world

INTERNET

INTERNET

Interface

Readers

Integrator

Non
-
RFID
-
enhanced ERP

Interface

Readers

Integrator

RFID
-
enhanced
ERP

Interface

Readers

Integrator

RFID
-
enhanced
ERP

Company A

Company C

Company B

© Humberto Moran

Implications


sharing of
information


There is a need for inter
-
organisational
interoperability at the integration level


As ERPs cannot be replaced overnight, the
integration layer must perform the exchange
of inter
-
organisational information


In the future, traditional e
-
commerce
transactions must be expanded to include
information about physical objects

© Humberto Moran

(4) RFID
-
Generated business
transactions may target many
different systems/modules



RFID is very versatile and allows for many
business applications, hereby affecting many
IS and ERP modules


RFID infrastructure can be shared among
applications


A single physical transaction may generate
multiple business transactions


even inter
-
organisational ones




© Humberto Moran

Inventory
:


shrinkage control


stock failures


product recalls


perishables mgmt

Financial
:


payment conciliation


item
-
level costing


Item
-
level taxing


Stock recount

Control
:


tracking


locating


sensing


RFID transactions target many different
systems/modules

Physical world


RFID
-
transactions

Order entry:


build to order

Automation
:


mass customisation

Manufacturing
systems

ERP systems

SCM systems

Shipment
:


loses


damaged products


anti
-
counterfeit

SC design:


mass customisation

Material
management:


supplier upstream
tracking

Other systems

Security:


theft prevention

Sales and mktng
:


online product
information


product returns


self checkout

Business
Intelligence

© Humberto Moran

Implications


multiplicity of targets


RFID devices cannot be directly integrated
into existing ERPs


The integration RFID/ERP must be multipoint
and generate consistent transactions


The inter
-
organisational layer must convey
not only information about products, but also
about business transactions


There is a need for interoperability between
ERPs from different vendors (again!)



© Humberto Moran

(5) Duplicity of Information and
functionality of RFID
-
enhanced
systems and that of existing ERPs



Most existing ERP already include
information on physical entities


Product description at SKU level


Product location and stock levels


Inter
-
organisational transactions


Functionality also overlaps


Use of barcodes


Human
-
fed transactions

© Humberto Moran

RFID
-
generated information statically
relate to many existing ERP entities

RFID entities

Existing ERP
entities

Database




Present

Non
-
RFID
-
enhanced
information systems

RFID entities

Existing ERP
entities

Database


Future

RFID
-
enhanced information
systems

© Humberto Moran

Implications


data and
functionality overlap


Need for a separate storage for the new
physical information


Need for logical links with existing ERP
entities


Need for combined functionality


Need for bidirectional transactions to keep
both worlds “synchronised”

© Humberto Moran

(6) The new amount of data is
stunning


Tracking mass
-
produced goods such as cans
of soda will generate millions of transactions
every second


Most of these transactions are redundant;
others have meaning only to specific modules,
whole ERP or other IS; whilst others should be
shared beyond the organisation


Transactions will come not only from relevant
objects, but also from many other tagged
objects scanned by chance

© Humberto Moran

Reach of data/transactions

Company A

Company B

Physical world

© Humberto Moran

Implications


amount of data


This requires many filtering and interpretation layers: RFID
-
Generated data and their related business transactions should
be transmitted to the lowest meaningful possible level only


The integration should be flexible to adapt to different
configurations


All data


Exceptions only


Expectations (cache)


Different levels of trust among SC partners


The integration layer should then allow not only for data
transmission, but also for mobile business logic


This requires the creation of a new entity: the “Physical
Business Language” (PBL), providing business knowledge with
physical cognition and scope

© Humberto Moran

Integration

layer

Holistic integration layer

Physical world

Information world

Low
-
level
interface

Readers

Inventory

Logistics and
distribution

Financial

Information Systems

Sales and
marketing

INTERNET

Physical
meaning

Business
meaning

BI + AID
functionality

Manufacturing +
AID functionality

X

Logistics and Ds +
AID functionality

© Humberto Moran


Standard
-
based


Multidirectional


Flexible and interoperable


Independent from ERP


Allow anticipation of events


Centralised decisions

RFID/ERP Integration layer


characteristics
and general architecture

INTERNET

Inter
-
organisational
transactions

INTERNET

Inter
-
organisational
transactions

Transaction
interpreter /
generator and entity
linker

Business world

Database with
information about
physical objects

Low
-
level interface
with readers

Physical world

ERP Modules

Bespoke
Systems


Intelligent


Comprehensive


Automatic, reliable, transparent


Mobile business logic


Programmable and configurable


Distributed processing

© Humberto Moran

Remote database
with information
about physical
objects

INTERNET

Inter
-
organisational
transactions

Expectation
engine

INTERNET

Inter
-
organisational
transactions

Database with information
about physical objects

Expected events

Alarms

Industrial Control


Generator





BIS Transactions

ERP Modules

Bespoke
Systems

Configurable
business data
/ events
interface


Physical data / status

Transactio
n
interpreter
and entity
linker

Expectatio
n engine

Aggregatio
n /
Location
engine

Location /
routing
interface

Low
-
level interface with readers

GIS

RFID/ERP Holistic Integration Layer

Detailed Architecture

Business world

Physical world

© Humberto Moran

Summary


advantages of a holistic model


Clearly separates layer functions and relationships


Enhances interoperability at many different levels


Allows for incremental implementations


Makes possible reusing existing infrastructure


Maximises strategic value from expansion
possibilities


Accounts for both dynamic and static integration


Has clear
-
cut interfaces and functions per layer


Completely strips out business logic from the lower
levels


Provides business value by complementing the
RFID infrastructure


Maximises scalability

© Humberto Moran

Conclusions


The RFID revolution is incomplete and cannot
take place without the evolution of existing
business software, particularly the middleware


The integration of RFID and ERP is unique in
nature and different from other integration
approaches


Integrating RFID and ERP requires an
independent and autonomous integration layer
with very specific characteristics


ERP systems need to undergo a major
transformation to make the most of RFID

© Humberto Moran

Integration of RFID and ERP

Challenges and possibilities





Questions?




Humberto Moran

Research Fellow

Judge Institute of Management

University of Cambridge






June 2004

h.moran@jims.cam.ac.uk