A Crystal Clear Picture

With China quickly becoming a world factory, companies there are challenged to adopt RFID in their supply chains to meet the demands and requirements of their retail partners. If suppliers start outfitting products with EPC-enabled tags now at manufacturing sites in China, they will ultimately have a better chance of gaining visibility into the entire logistics process, further enhancing the level customer service they provide to retail customers in the United States and elsewhere.

An example to follow

At the request of one if its largest retail customers, Best Buy Co., a manufacturer of computer monitors and televisions, Proview International Holdings Limited, set out to find an RFID solution for its Shenzhen, China manufacturing plant. "Providing excellent customer service is always part of our business strategy," says Morris Wang, president and vice CEO, Proview International. "We expect the successful launch of the RFID Solutions at our Shenzhen facility will further enhance our partnership with our retail partners."

With globally recognized house brands such as Proview and EMC, Proview International commands a global retail-sales and distribution network covering 50 countries with strong leverage of its facilities in China, Taiwan and Brazil. It has an annual production capacity of 12 million units of CRT monitors, 11.4 million LCD monitors and 780,000 flat panel TVs.

When confronted with Best Buy's RFID mandate, Proview realized its legacy material requirements planning (MRP) data and tracking system couldn't handle RFID generated data and EPC functionality. However. it was important that the implementation of RFID solutions imposed only a minimal impact on existing operations. Hence, Proview's ideal RFID solution would allow it to continue using its legacy system.

Additional requirements included low total cost of ownership and the ability to easily scale the solution to support additional RFID equipment and production lines.

An impressive Feat

After approaching several international supply chain vendors, Proview chose Manhattan Associates' RFID solutions to support compliance at its Shenzhen facility, where it manufactures the two products that are required to be RFID-tagged at this time.

By providing a solid, yet flexible foundation for RFID integration with its Integration Manager and EPC Manager solutions, Manhattan Associates helped Proview to meet Best Buy's RFID mandate one month ahead of schedule in December 2005. An impressive feat considering this was the first RFID solution that Manhattan Associates implemented in China.

According to Wang, Manhattan Associates' professional services team in China has hands-on implementation experience in the United States with high-tech companies similar to Proview. "Our experience working with Manhattan Associates is very pleasant," says Wang. "Even though they are headquartered in America, their Asia Pacific headquarters is located in Shanghai, China, where the implementation team is based. In addition, their Account Manager is originally from Taiwan where Proview is headquartered so there is never a challenge in language or culture."

Satisfying the Customer

Currently, the scope of RFID operations is relatively small as Proview is only required to tag two products -- both of which are manufactured at the Shenzhen facility. Manhattan Associates' solutions integrate with Proview's legacy system to provide complete visibility at a serial number level. Serial numbers and EPC numbers are stored in the system so that the user can easily cross-reference a serial number to its EPC number. The data is also integrated back to the legacy system to generate reports for internal use or Advance Shipment Notices for the retailer.

In order to minimize the impact on current process, new processes allow incorporating the current shipping label with the RFID smart label, so no additional work is required to apply RFID labels. Additionally, the RFID-tagged process is portable to any production line in the facility, allowing the flexibility to conduct RFID-tagging at any available line.

Wang says that Proview is also leveraging a RFID reader from Symbol Technologies and a RFID printer from Zebra Technologies. The installation and training of the hardware took only two days, and integrating them to the Manhattan Associates solution took only one day thanks to prior testing done remotely.

A Matter of Product

Rolling out RFID solutions to additional facilities depends on the specific products that retail partners require to be tagged as not all facilities manufacture the same products. "However, our current solution is a portable one so it is not limited to one production line," says Wang. "If tomorrow another production line (in the same facility) is making RFID-tagged products we can easily move the hardware around to achieve the goal."

China's RFID Market

While media attention focuses on mandate-driven RFID deployments across United States and Europe, sales in China's RFID market crossed 1.6 billion RMB Yuan in the year 2005, according to the Research and Markets report, "RFID - Outlook China". What's more, China is expected to use more than five trillion tags annually in supplies to Wal-Mart. In the foreseeable future, China's swiftly swelling RFID market will be mainly driven by the manufacturing, government and transportation industries. ABI Research Asia Analyst Junmei He identifies the export market as a major force driving the article-oriented RFID market in China. "As a result...mandates from foreigner clients is the strongest momentum to drive small and medium size Chinese manufactures to adopt RFID, but most likely only the last step to apply RFID tags onto the outside of article or case."

While the adoption of RFID is gaining momentum, China's RFID applications face some of the same obstructions as RFID applications in the Unites States. For one, RFID vendors face the lack of demand from domestic manufacturing to deploy RFID because of its high cost, technology immaturity and unclear ROI, says He. Analyst Zhao Yazhou from Analysys International -- whose own research revealed an 8.62 percent increase in Q4 2005 RFID sales over Q3 -- supports this point. ''Lack of unified material measurement unit, lack of using of standard vessels, diversified material forms, and high RFID application cost are major factors that inhibit the rapid development of RFID market in China." In fact, the use of UHF frequency is not yet in full flow because of the Chinese government's desire to develop its own standards, which would be free of royalty fees.