An Assessment of Technologies with Wide Range of ...

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ScienceDirect Procedia Manufacturing 3 (2015) 1966 – 1973

6th International Conference on Applied Human Factors and Ergonomics (AHFE 2015) and the Affiliated Conferences, AHFE 2015

An assessment of technologies with wide range of impact. A case of RFID Bartlomiej Gladysz*, Krzysztof Santarek Institute of Organization of Production Systems,Warsaw University of Technology, Narbutta Str. 86, 02-523Warsaw, Poland

Abstract Starting from the general concepts of communication, communication in organizations and in supply chains authors specified problem of distortions and noise that affects effective decision making in supply chains. Authors selected RFID technology as one of possible ways to eliminate discussed problems. Implementation of a new technology and RFID specifically, is problematic, because it disrupts status quo. Even if implementation is local, its effects are global and affect whole organization or even network of organizations. Organization should assess the scale of changes before making decision on implementation. An assessment and rationale for RFID implementation is difficult, so companies are aware. They are sometimes mandated by partners or governments, but always must rely on consultants. RFID is a technology that leads to automation of processes and limitation of simple human task. Authors proposed expert-analytic approach to challenge described issues. The approach was applied in several European manufacturing companies. It was confirmed that the scale of technology impact is exceeding pure area of RFID implementation. The approach is quick and constitutes a rationale of RFID implementation. The approach called ART (Assessment of RFID Technology) was positively verified. Results are satisfactory for rough comparison of pros and cons of RFID implemented in supply chain. Basing on achieved results, decision about further detailed analysis and design of RFID system, which is usually costly and time-consuming, could be made. The approach generates signposts for companies, if RFID should be considered. Assumptions of the approach are general and could be easily adjusted for other technologies. It is especially important when discussing technologies that are hardly comparable to other or reported case studies are very different, so company cannot rely on experiences of other organizations or fields of application. It is also a use case for evolved approach, when the scale of an impact of technology implementation is wide and not narrowed to the area of its physical implementation. © 2015 2015 The The Authors. Published © Published by by Elsevier ElsevierB.V. B.V.This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of AHFE Conference. Peer-review under responsibility of AHFE Conference Keywords: Strategic technology management; Innovation; RFID

* Corresponding author. Tel.: +48-22-234-81-26; fax: +48-22-849-93-90. E-mail address: [email protected]

2351-9789 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of AHFE Conference doi:10.1016/j.promfg.2015.07.242

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1. Introduction The term of communication is used by authors in the meaning of all processes related to the transfer of messages or signals. Communications relates to interactions between humans, group of humans, organizations and machines (devices). The model of triad: speaker, message and audience presented by Aristotle [1] is said to be the first model of human communication. The most basic and generic models of a communication process are linear and descriptive Lasswell [2], Schramm [3,4], Shannon and Weaver [5,6]. There are much more models of communication, but they are in some sense modifications of a classical Lasswell model. Harold Dwight Lasswell [2] in 1948, basing on Aristotelian triad [1], stated that: „convenient way to describe an act of communication is to answer the following questions: who? says what? in which channel? to whom? with what effect?”. Shannon [5] defined fundamental problem of communication as “reproducing at one point, either exactly or approximately, a message selected at another point.”. Shannon’s and Weaver’s model consists of 6 elements. Context can be of physical (surrounding), historic, psychological, cultural nature. Participants are senders and recipients. Message has a meaning, is encoded and decoded and has a form. Channel is a way that a message is transmitted. Feedback is reaction of recipient after decoding a message. Noise is all that influences and deforms a message. Messages are transferred from sender to recipient through the channel. The sender is the one who encodes message, while the recipient is the one who decodes message. The process is exposed to noises that can affect or distract messages. Typology of noises distinguishes internal (e.g. characteristics of participants, channel) and external (surroundings), physical (e.g. noise of street), technical (e.g. defect of a channel), social (e.g. cultural differences) and psychological (e.g. emotions) types of a noise. Communication models (e.g. [2-6]) emphasize exposure of a communication to a risk of delays and deformation of a message. Communication process is present in every organization. Humans are communicating, groups of people are communicating and whole organization is communicating (with its environment). Communication between machines is present (M2M – machine to machine) as well. Barnard [7] points at providing a knowledge of communication channels (formal and informal), presence of unequivocal and formal communication channels (related to a hierarchy), direct and short flow of a message as rules of effective communication. There is horizontal and vertical type of communication in organization and both of them have several dysfunctions. Dysfunctions of communication are presented in table 1. Table 1. Dysfunctions of communication. Vertical communication

Horizontal communication

delays of messages’ transmission effecting with delays of execution of tasks

lack of coordination of messages’ flow and lack of facilitation that message reaches every stakeholder,

increase of transmission cycles of messages tendency to formalization of communication channels what can facilitate encoding and decoding, but also effects with decrease of flexibility and increase of communication cycle overload of formalized communication channels and overload of management personnel that aggregates, processes and transmits received messages, faults related to aggregation and disaggregation of messages

lack of responsibility what is the effect of using informal channels, occurrence of distortion from: a/ using informal channels b/ long communication chains that reflects flow of processes between organizational units c/ problems with encoding and decoding of messages

Basic communication problems listed by Shannon and Weaver [6] are (1) technical – what is possible accuracy of transmission? (2) semantic – what is possible accuracy of coding? and (3) effective – what is the chance that received message will lead to expected behavior? Risks related to these problems are inappropriate message (structure, missing or extra data), wrong encoding/decoding, distortion in a channel, sending/transmission/receiving failed, wrong interpretation of a message. An application of accurate technical and technological means could lead to automation and formalization of a communication (also horizontal) and eliminate listed dysfunctions. If considering supply chains main flows are flow of objects, data, money and ownership. Lack of integration of data and objects’ flows leads to delays, faults and loss of data. Messages about flow of objects reach recipient with

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delay, so they are not able to make decisions and act on a basis of real and actual data. Data could also be distorted (wrong encoding/decoding). Identification of objects in supply chain is essential from informatics, organizational and economy point of view in relation to processes in supply chains, what particularly concerns manufacturing companies and essential part of communication process in supply chain, especially in terms of reliable encoding and decoding object’s data. Information flow should be possibly accurate with objects flow (without delays and errors). Identification of objects and consecutive information flow could be performed manually, but they are exposed for numerous noises that can distort object’s data and would lead to previously discussed problems in communication. In industrial environment usually technology is used to automate identification tasks, as they are time-consuming and do not create value added. Most commonly used technology is bar coding, but radio frequency identification is also getting more and more popular especially among industry leaders and companies that face problems of high intensity objects’ flow and objects’ variability. The basic question is how to facilitate data flow exactly in a moment when object flows. It is possible if objects in supply chain are used as data carrier. Such approach enables automated identification (autoID) of objects in supply chain and consecutively automated data transfer. AutoID leads to formalization of communication channels and eliminates dysfunctions of horizontal communication. One of available and rapidly evolving autoID technologies is Radio Frequency Identification (RFID) that will be discussed in chapter 3. 2. Technology impact assessment RFID is a good example of technology with wide range of impact. Effects of RFID application are not local, but global (enterprise-wide or supply chain). They are not only visible in a place where technology was implemented. Decision on RFID application has strategic importance for a company, because it determines its strategic advantages, based on expected benefits, essential for it from informatics, organizational and economy point of view in relation to processes in supply chains, what particularly concerns manufacturing companies, in such categories as: increase transparency of the supply chain, through increase of data reliability and on-line accessibility leading to better management of the supply chain and stocks, acceleration of processes flow in supply chains, acceleration of objects' identification and faults' elimination, etc. It has also a significant impact on technological infrastructure as it needs integration with other technologies (including internal transport, IT, machine tools, etc.), is directly linked with processes redesign or reengineering and frequently needs significant investments. The desirability of RFID applications in the enterprise is not obvious and requires finding answers to several questions: x x x x

whether to deploy RFID? which processes need to be improved primarily using RFID? how to change existing processes using RFID? what is the efficiency of processes after changes and what will be efficiency of the entire production system (supply chain)?

The answers to these questions are not easy to get especially in the pre-design phase, when there is no detailed analyzes and results of projects and a lack of number of basic information. On the other hand, the execution of the system design, the construction of the simulation model, and the execution of a detailed techno-economic analysis requires a lot of time and considerable effort and what's more it is uncertain whether we get the proof confirming desirability of the implementation of RFID. The decision on the desirability and the implementation of RFID (and any other new technology) is related to the assessment of the impact of technology on the organization, its business processes, competitive position, etc., and is about the future. Such an assessment is important and sometimes necessary in the case of many emerging technologies and is made at the global, regional, national and businesses level. Technology impact assessment is derived from the technology forecasting (the direction, pace, level, opportunities, etc.), taking into account, inter alia, ethical criteria, the opinions of the society, impact of technology on social and the natural environment, and others [8,9].

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Technology assessment is an interactive, based on scientific principles, process of communication, the purpose of which is to participate in shaping opinion on broadly defined social aspects of science and technology. This is based on the belief that new discoveries and technologies are important for society, not just for scientists and engineers and that technological progress entails ethical dilemmas. In order to assess the technology it is not only to solve current problems but also to counteract potential negative consequences that may arise as a result of indiscriminate use and dissemination of new technologies [10,11]. In such cases, the classical methods of technology assessment of the type costs-benefits analysis may be difficult or even impossible to use, not only because of the small amount of information available in the early stages of technology development, but also because such an assessment requires a number of subjective decisions concerning: x the range (scale) of an assessment (impact area of assessed technology), x the selection and application of appropriate metrics for the assessment of both positive and negative effects of new technologies, x the method of economic valuation of immeasurable effects, x the need to take into account the ethical criteria in the evaluation of technology. It is worth to mention a methodological issue called Collindridge dilemma [12]. Trying to control the development of technology faces the twin problems: x an information problem: it is difficult to assess the impact of technology in the early stages of its development, before will not appear a sufficient number of applications, allowing gathering data for objective and comprehensive examination of the impact of technology, x a feasibility problem: control or change in technology becomes difficult or even impossible when the technology is mature and already has numerous applications. Technology assessment is particularly important especially in the case of emerging technologies, which direction of development and the effect on the environment are not known yet. New technologies are essential not only for the companies that use them to improve the attractiveness of products, reduce costs, improve productivity, but also for customers - buyers of products manufactured with the use of these technologies and, more broadly, to the public. This applies in particular to emerging and breakthrough technologies, with a high, but not always well known and anticipated extent and impact strength. Method of evaluating the desirability of implementing RFID technology presented in this paper uses a multiple attribute group decision making, requiring the participation of experts in the technology as well as representatives of the future users of technology (employees of the company representing the key areas of concern the impact of RFID). The evaluation process is carried out in several steps corresponding to the following levels of decision: strategic, tactical, operational and level of verification solutions. Technology impact assessment is associated with building scenarios predicting future events and the possible effects of these events. Experts’ evaluation (qualitative assessment) is converted into quantitative evaluation using linguistic scales for expert evaluations, fuzzy sets for mathematical representation of the results and multi attribute group decision making technique based on expert linguistic evaluations of alternatives. To answer research questions related to RFID technology will require to use specific methods, including Pfeiffer’s technology matrix, SCOR modeling and simulation tools. 3. Assessment of RFID Technology 3.1. RFID and its applications Every time when radio frequencies (RF) are used to identify and/or locate tagged object, authors use the term “RFID”. Basically there are hardware components and software components necessary to implement RFID solution. Hardware components are elements used to tag object (RFID tags, labels, inlays) and elements used to identify tagged objects (readers, antennas). Tags are data carriers. Unique identifier is encoded in RFID tag. Readers and antennas are used to read identifier from RFID tag. Software components of RFID solution cover areas of

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management, control and maintenance of hardware components, and data collection, filtering and grouping readouts into transactions (logic messages later passed to back-end systems), integration and data exchange with enterprise back-end systems (such as ERP or WMS). There is rich literature on detailed description of physics, standards related to radio waves and communication protocols, and applications of RFID [13-16]. RFID is dynamically developing and innovative, especially considering the economy of Poland [17,18]. RFID offers applications that are not limited to predefined use cases and it is not only next, faster, more efficient autoidentification technology. RFID is not just better and faster barcodes. Some call it radio barcodes, what is true only to some extent. Kevin Ashton, a co-founder of the Auto-ID Center at Massachusetts Institute of Technology said: “Calling RFID a radio bar code is like calling a car a motorized horse”. RFID offers new ways of execution of processes and it enables dramatic changes in business processes. Processes could be performed in a way previously impossible due to technology limitations. Numerous authors reported on details of RFID deployments and benefits achieved in many areas e.g. production logistics, warehousing and external supply chains [19-21]. At the same time authors reported difficulties in return on investment calculations and high costs of RFID implementation. It means that RFID implementation needs to be preceded by detailed analysis. Radio Frequency Identification (RFID) is the technology that could eliminate inefficiencies and delays in communication process, but RFID applications could not effect with expected benefits and be economically ineffective [22]. The obstacles, which companies face with, are mostly costs of hardware, especially tags, if they cannot be used in a closed loop. All considerations lead to the conclusion that RFID implementation needs to be preceded by detailed analysis, what is typical for every innovative technology. RFID is an example of such technology. A review of literature on design, implementation and evaluation of RFID solutions for logistics processes was conducted and results were published in [23-26]. There were no papers found that treat about strategic decisions indicating: if RFID should be considered, which and how processes should be improved and what will be the expected effect of changes. There are approaches allowing for evaluation of specific solutions, classification of benefits in different application areas (especially in supply chains), indication of relations of qualitative benefits and measurable factors, evaluation in terms of characteristics of specific economies, branches and markets. All authors conclude that RFID is emerging technology that eliminates numerous dysfunctions of communication processes in supply chains and is implemented successfully for logistics processes in many branches. At the same time authors emphasized the need of detailed pre-implementation analysis and calculations of investment profitability. In literature lacks of research and synthetic, simple and easy for use methods to solve problems related to design of RFID systems on consecutive levels of strategy, tactics, operations and evaluation. 3.2. Methodology Assessment of RFID Technology (ART) is the method to rationalize decision making in early phases of RFID application manufacturing companies (see fig. 1a). Its positive output is green light for assigning resources to detailed analysis. It is also an input and an assumption for further detailed economic analysis and system engineering. Choice of more than one process is possible, but the number of processes should be limited for transparency of method. ART output is the ranking of processes based on RFID-based improvement potential. Outputs of the method are inputs for further economic effectiveness analysis (e.g. ROI). Areas of ART application are both internal and external supply chains. It uses holistic and synthetic approach, but reference models for logistics are needed. This is developed using SCOR reference model. ART (see fig. 1b) uses hierarchical approach and algorithm as a sequence of modules: from strategy ART-S through tactics ART-T and operations ART-O to evaluation ART-E. Problems are addressed with specific tools: x technology portfolio method for strategic evaluation of RFID [27,28] – ART-S, x reference model [29] of business processes (or company specific model, if available and preferred) for as-is modeling and a base for defining possible applications – ART-T, x multiple attribute group decision making (MADM) [30,31] based on expert linguistic evaluations of alternatives for ranking of possible RFID applications for logistics processes of a company – ART-T,

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Fig. 1. (a) General algorithm of ART; (b) Research questions and structure of ART.

x linguistic scales for expert evaluations [31,32] and fuzzy sets for mathematical representation of scales [33,34] – ART-S and ART-T, x software for business process modeling and simulation – ART-O and ART-E, x interviews and questionnaires to gather data, x approach for initial classification of RFID benefits [35] – ART-E. 3.3. Industrial case study Assessment of RFID Technology (ART) method was applied in environment of manufacturer of medical goods, but it is designed in a way to be applicable in any manufacturing company. Details of ART-S module and its application were presented in [23-25]. ART-S research question is answered using technology portfolio method. Namely Pfeiffer matrix [27,28] is applied, as Eversheim [36] proved its usefulness for evaluation of innovative technologies. Linguistics scale and related fuzzy sets [25] were used to assess criteria from Pfeiffer matrix. A guidebook for expert was prepared with guides on assignment of value depending on answers for listed questions [23]. Output of ART-S was positive, so RFID is worth to be considered as it can generate strategic advantage if applied in a supply chain of a considered company. Consecutively ART-T module was executed. Details of ART-T with illustrative computational example can be found in [26]. Source, deliver, make to order (MTO) and make to stock (MTS) processes (see [29]) are in place. Three possible areas of RFID were defined and assessed. Those areas were source, make and deliver processes from the first level of SCOR model (see [29]). Fuzzy and group extension (4 experts) of technique for ordering preference by similarity to ideal solution (TOPSIS) [30,31] was applied. Analogically to ART-S, linguistic scale and fuzzy sets were used to gather expert opinions. Possible RFID application for area of “make” got the highest score of relative

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closeness for all considered alternatives in fuzzy TOPSIS, so it is the solution that is promoted to the next ART module (ART-O). „Make” process was later considered within ART-O module. Models of processes were prepared using BPMN notation that is de-facto standard for representing in a graphical way the processes occurring in any organization [37]. Make process flows through five departments. Totally 10 models were constructed: separate as-is and to-be model for each department. One of critical issues in the study was an application of open source software for business process modeling. Small and medium companies, which are not possessing sophisticated modeling tools and are not willing to invest in such software, are addressees of ART. BOS [38] software tool was chosen as possible software solution. Basing on the models prepared in ART-O module, simulations were executed in ART-E module. First, list of potential benefits was developed, including key indicators and description of their calculation. Potential benefits were divided into three main groups: decrease of inventory, increase of labor effectiveness and accuracy [35]. Then data concerning processes was gathered including: assignment of resources, costs of resources, inventories, unit times, delays in communication. Basing on this data total cost per simulated period for each model was estimated using BOS software. Then cost for as-is and to-be scenarios for each department was compared to calculate tangible benefits. Total cost consisted of cost of labor of workers and managers and cost of inventory. Five scenarios were examined: very pessimistic, pessimistic, realistic, optimistic and very optimistic. Scenarios inputs were discussed with managers of analyzed departments. Results presented in table 2 are input for decision makers who have to decide if engage time and money into more detailed analysis and detailed design of RFID system. ART algorithm allows answering all formulated research questions (see fig. 1b and table 3). Table 2. ART-E – results of a simulation of tangible benefits. Scenario

Very pessimistic

Pessimistic

Realistic

Optimistic

Very optimistic

Benefits [USD/year]

6,887

21,662

47,448

65,793

73,135

Table 3. ART – answer for research question. Module

Answer

ART-S

Application of RFID in a supply chain of a company could generate strategic advantage and is worth analyzing

ART-T

Application of RFID for make process has the biggest potential for improvement of three discussed alternatives

ART-O

Business process models are depicting possible application of RFID in make process

ART-E

Tangible benefits were calculated (see table 2)

4. Conclusion The paper presents a method for evaluating RFID technology, in order to decide whether or not it has been implemented in the enterprise. At this stage of the decision-making process, there is a lack of basic information, especially of a quantitative nature, relating both to the concept of the architecture of the system, its integration with other subsystems of the company as well as estimates of costs and benefits of RFID implementation. These difficulties are also related to the fact that it is not too obvious place of RFID implementation and the scope of the impact of this technology - there are many areas (processes) in which it is possible to implement RFID. After minor modifications, the method can also be used to evaluate other technologies in the enterprise. It can be useful especially in the case of new technologies when there are no comparable examples (benchmarks) of its implementation, and technology with a large scope of impact. Acknowledgements The paper presents some results of research carried out at the Institute of Organization of Production Systems of the Warsaw University of Technology. The research was partly funded by the Warsaw University of Technology. Practical verification of RFID technology assessment method was carried out in a number of manufacturing

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enterprises in Poland. Many of them are foreign companies. Assessment of suitability for particular applications of RFID technology is the focus of the PhD project prepared by MSc. Bartlomiej Gladysz under the supervision of Prof. Krzysztof Santarek. References [1] Aristotle, The Rhetoric and The Poetics of Aristotle, W.R. Roberts, I. Bywater (Transl.), McGraw-Hill, New York, 1984. [2] H. Lasswell, The Structure and Function of Communication in Society, in: L. Bryson (Ed.), The Communication of Ideas, Inst. for Religious and Social Stud., New York, 1948, pp. 37-51. [3] W. Schramm, How Communication Works, in: W. Schramm (Ed.), The Process and Effects of Mass Communication, University of Illinois Press, Urbana (IL), 1954, pp. 3-10. [4] W. Schramm, Mass Communication and American Empire, Beacon Press, Boston, 1969. [5] C. Shannon, A Mathematical Theory of Communication, Bell Syst. Tech. J., 27 (1948) 379-423. [6] W. Weaver, C. 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