Looking at case studies on the use of RFID in organisations similar to yours is a good way of gaining a general picture of the benefits and advantages that the technologies could bring to your organisation.
Savings will vary dramatically from one organisation to another but can broadly be categorised as tangible and intangible – such as improved customer service through faster turnaround of orders or improved company image. Users of automatic data capture systems are seen as progressive and efficient. It is impossible to put a monetary value on systems that improve safety and security (though insurance premiums might be reduced significantly). Some companies under-estimate potential savings by 50-60%. A common oversight is that in most cases some form of manual system already exists, and of course costs money, however rudimentary it may be. This should be taken into account wherever savings are being identified.
Benefits are accrued across the board, but can usually be identified in individual departments. They include:
The example of the warehouse data collection system described in Table 1 demonstrates the savings to be made capture operation. In this example, the benefits of instant availability of data, elimination of manual data entry costs and the cost of possible errors have not been included: when these additional savings are taken into account, the payback period could well be less than a year. Before looking at individual areas in detail, you are strongly advised to seek the assistance of people in the following departments in order to be able to quantify the cost savings.
To give you the true hourly cost of labour. This is a major area because the new system will doubtless save people’s time. In addition, Accounts can advise on the cost per square metre of warehouses and office space - which may help calculate the value of improvements, plus the costs of stockholding, overheads,accounting costs and the cost of capital and consumables.
To give you the cost of IT equipment, data entry time and IT support. As the new system will be much faster than manual data input, you can put a value on the release of computing facilities. This is especially true where portable terminals are used. This must be balanced against the costs of new equipment, software, installation and maintenance cost (generally very low) for the AIDC system.
To give you the true cost of correcting mistakes (or the price of non-conformance). This is a much higher cost than most people realise. In the worst cases, it may involve a total recall of product from the market.
It is also helpful to involve those who work in the area where the system would be installed, because their insight into day-to-day inefficiencies may be significant. Armed with this information, you can examine the various operations that would be affected by the new system, and identify savings under the following improvement opportunity headings.