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Matakuliah
Tahun
: M0594 / Enterprise System
: 2007
The Next Frontier in Technology and in
Supply Chain Management: Automatic
Identification
Pertemuan 15-16
The Next Frontier in Technology and in
Supply Chain Management: Automatic
Identification
• The Concept of Identification in a Physical World is in
Full Evolution
• Identification Is Key to Introducing Smart Technology into
the Supply Chain
• Goals to be Achieved Through Automatic Identification
• Why Automatic Identification Means Major Changes in
Business Partnerships
• The Need for a Sound Policy Regarding Technical
Standards
• Bit-Level Standards and Infrastructural Developments
Bina Nusantara
Introduction
• Nobody will dispute the need for identification in human
society. Everyone has a name and identification (ID)
card. Many of us who travel internationally have a
passport with name, vital vitae, and a photo. But this
concept of accurate identification, article-by-article abd
entity-by-entity, has not yet taken hold in the physical
world in a universal manner
• Microchips have started to be used as identifiers.
• Some experts think there may come a day when chips
are not just worn around the neck, but are actually
implanted under human skin.
• Industry will essentially be endowed with a sort of global
positioning systems (GPS) that will allow companies to
track their assets at all the times through the use of ID
tags and satellites.
Bina Nusantara
Introduction
• Automatic Identification (Auto ID) becomes more important as
one begins to appreciate that people live in a physical world
with physical objects that need to be uniquely identified to
face the challenge of connecting the physical world to the
virtual (data) world
• The next wave of change in the supply chain will see to it that
the notion of handling inanimate objects will evolve as
radically as it did with Henry Ford’s assembly line at the
beginning of the twentieth century
• The revolution currently under way in merchandising and
distribution parallels that of the assembly line in terms of
depth and the likelihood of its being widespread
• At its roots us a unique identification code for each individual
item that is embedded in products, printed in packages, and
used to store transmit, and receive information to or from a
reader.
Bina Nusantara
The Concept of Identification in a Physical
World is in Full Evolution
• In its first 100 years, and until the advent of computers, the Industrial
Revolution did not particularly benefit the handling of information.
Even after the commercialization of computing machine in 1954, the
old bookkeeping methodology was retained.
• Any to any automatic linkages to all key nodes of the supply chain
did not happen until the advent of the Internet that provided a total
transformation
• There is an aftermath from four decades of delay (1954-1994),
which can be summed up by:
– As long as old concept dominated, information about current
status and future trend, therefore visibility, has not greatly
improved – and this lasted during the first 50 years of computer
usage
– To the contrary, there has been a kind of reduced visibilility – if
not outright lack of reliable information – about future demand as
the complexity of business increased with deregulation,
globalization, and innovation
Bina Nusantara
The Concept of Identification in a Physical
World is in Full Evolution
• A key reason for this persistent deficiency in visibility has been the
latency in feedback from consumers and small business toward the
main suppliers of goods. The Internet changed this perspective.
• To appreciate the impact of this vendor-to-client connection
executed in real-time, and client-to-vendor online feedback, one
must keep in mind the negatives from lack of informationm, and
even more so from misinformation.
• Reduced visibility at the sales end affects production planning and
inventory control by creating uncertainties that lead to volatility in
production schedules.
• The hope is that smart materials will add to the Internet effect,
increasing the ability to keep the information pipeline open, smooth
the ups and downs of production planning, and allow for efficient
management of inventories.
• It needs no explaining that smoother production and distribution
schedules have a multiple effect; they lead to greater customer
satisfaction, improve a company’s competitiveness, help to swamp
costs, and improve quality assurance
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• The concept of using smart technology in the supply
chain for identification purposes is new. Yet, practical
applications are not that far down the line.
• Some companies, such as Gillette, plan to start
implementation of chip-based auto-ID by 2002, and they
foresee a generalization of smart technology applications
by 2005.
• International Paper has a joint project with Motorola, and
other companies are actively engaged in a process of
exchanging ideas, sharing vision on the course smart
technology will most likely take.
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• But what is meant by smart technology?
• The simplest way to answer this query is to say that it represents the
development of low-cost and low-power solutions that permit the use
of smart material in the best possible way.
• What does smart material stand for?
• Any sort of material that one uses is an object one can classify and
identify. It may be a raw material, semi-manufactured goods, or
ready products. It may be in process at the factory floor, stored in a
warehouse, or in actual use in the home or office
• If this material, wherever it happens to be, has the means of
knowing itself, or at least the class to which it belongs and its serial
number, then it can be thought of as being smart; all the more so if it
can receive messages from this material and respond in real-time to
queries about its routing. This is the sense of automatic
identification, which is based on very low-cost chips.
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• As Exhibit 8.1 suggests, auto-identification is the merger of
two technologies: classification and identification, and
semiconductors.
• Classically, inanimate material has been identified as a group:
computers, chips, tables, chairs, razors, pencils, or other
objects. Some of this material, typically teh more expensive,
has a serial number – therefore, individual identification.
Autos, all sort of motors, and personal computers are
examples. This serial number, however, has the following
limitations:
– It is typically issued by its manufacturer; it is not global
– It is imprinted on a piece of metal attached to the machine;
it cannot communicate its ID
– It helps very little in inventory optimization, where the class
to which the item belongs (not the individual item) is
tracked.
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• Both globality and auto-ID are important. Yet, despite big
pronouncements such as the Universal Product Code (UPC), there
has been a distinct lack of valid identification methods and
procedures.
• In a global economy, this is a major drawback. Half-baked
approaches such as UPC are not enough. Identification should have
universal characteristics with synonyms and acronyms avoided as
much as possible. This is not easy, but it is doable
• Classification is a prerequisite to a global ID system. Once a piece
of material, any material, has been properly classified, it can be
uniquely identified; and with low-cost technology, it is possible to go
to the next step automatic identification.
• What one needs to add to this material is a very inexpensive chip
with an antenna; therefore, the ability not only to store the ID
number but also to communicate it to other entities: materials or
people.
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• A more advanced
implementation stage of smart
materials will go beyond
communication and require
some sort of computation. This
will be available everywhere in
abundance at very low cost
during the coming years. The
same is true for efficient, userfriendly personal access to
databased resources to be
used by smart materials and
by people
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• The tougher part of the smart materials revolution will be cultural
because organizations are made of people, and people tend to keep old
habits. Both an open architecture and an open mind are made
necessary by the fact that the global supply chain is the largest network
in the world. It is operating all the time, seamlessly to most people, and it
is at the same time sophisticated, random, and complex.
Bina Nusantara
Identification Is Key to Introducing Smart
Technology into the Supply Chain
• In conclusion, auto-identification by smart materials and
the ability of all entities to communicate their information
or ask for other datastreams will revolutionize current
conceps. Nothing has yet been seen concerning the real
magnitude of the oncoming change and its management.
• Sending and receiving data by inanimate entities will
cause changes in the physical world beyond those
experienced during the past 60 years with computers
and give a big boost to Internet commerce, because Icommerce will be at the core of streamlining the total
supply chain.
Bina Nusantara
•
Goals to be Achieved Through Automatic
Identification
There are four major components in the solutin targeted by MIT’s
automatic identification project:
– The ID code
– ID-system
– Internet Directory, and
– Language
• The latter is the Product Mark-up Language (PML)
• The implementation of auto-ID has put forward several objectives,
each with characteristic contributions to greater supply chain
efficiency, including:
– Enrichment of product information
– Ordering via the Internet
– Fast replenishment in the shop
– Automatic check-out and online debit
– New ways to strengthen customer loyalty
– Product customization to each customer’s needs
Bina Nusantara
Goals to be Achieved Through Automatic
Identification
• With smart tags used by all items on
display,replenishment will be done automatically. Floor
intelligence will be informed by rack intelligence on items
whose frontline inventory is thinning.
• But able to use of auto-ID obliges one to rethink the
entire design, packaging, and merchandising process –
as well as to seamlessly integrate the new system’s
components with those already in place. Otherwise,
there will be crevasses in process management.
Bina Nusantara
Goals to be Achieved Through Automatic
Identification
• Database mining will be likely to fulfilling both objectives,
hence the interest the MIT Project birngs to the use of an
Internet directory and its real-time usage.
• Simply stated,after interpreting the auto-ID, the Internet
Directory will provide the information necessary to
channel the message to the appropriate server. This
server will contain appropriate product and package
information to permit holding less data on the e-tag than
otherwise necessary, therefore reducing local, item-byitem cost.
Bina Nusantara
Why Automatic Identification Means Major
Changes in Business Partnerships
• The advent of an auto-ID system will promote further
development of online commerce.I-commerce will get a great
boost if and when current inefficiencies dating back to Old
Economy solutions are overcome.
• Therefore, there is plenty of scope in studying the further-out
impact of auto-ID, as well as in providing a steady stream of
improvement
• From CRM to ERP and distribution chores, e-tags will in all
likelihood underpin the new logistics. The expectation is that
smart products and smart packages will bring massive
efficiencies to the global supply chain, starting with the
assistance they can provide to manufacturers in assembly lines
as well as in tracking inventory and foiling counterfeits.
• Other applications include integration with ERP and CRM
software to promote customized products, new production
paradigms, use of e-tags in robotics and warehouse
management
Bina Nusantara
Why Automatic Identification Means Major
Changes in Business Partnerships
• With smart materials, agile seamless interfaces and the ability
of inanimate agents to communicate among themselves will
automate operations that are still manual, despite 50 years of
using computers
• To help in better e-tag integration with CRM and ERP, as well
as in upgrading these programming products, here in a
nutshell is the scenario that will most likely characterized a
thoroughly restructured logistics process.
• A customized order will be received over the Internet; it will be
assigned an electronic product code and scheduled for
production; the EPC will be embedded in a smart tag attached
to the item: and a low-cost chip will literally be printed on the
package. From this point on, the identification/communication
process will be take on, so to speak, its own life
Bina Nusantara
The Need for a Sound Policy Regarding
Technical Standards
• To introduce the concept underpinning the need for global standards
in a rigorous manner, one can start with a definition of the word
standard.
• Etymologically, the term means any figure or object, such as a flag
or banner used as emblem or symbol of a community or military unit.
• A standard is also a reference, a norm, something established for
use as a unit of measurement (e.g., the meter) technical
characteristic (e.g. the Internet Protocol [IP]) or quality of material
(e.g., the proportion of pure gold and base metal)
• A standard is something recognized as correct by common consent,
approved custom, industry agreement, rule, or regulation. As such, it
helps as a guide in the domain where it is regarded as a goal or
measure of accuracy. Because it is viewed as a general reference, a
standard tends to be associated with a model.
– Without standards on which to rest, no new product would
survive the market’s test for a long time
– Any product and any process needs a generally accepted frame
of reference, targeted by settings standards
Bina Nusantara
Bit-Level Standards and Infrastructural
Developments
• Today, database are global, they are available interactively, and they
are accessible from a large variety of end-user devices. Routinely,
one connects to database systems through means that range
anywhere from nomadic portable to big multi-million dollar
machines. These devices are linked together through a network that
knows the circuit end-to-end, but is often blind regarding the
identifications of other real-world entities mapped into the database
• Bit-level standards and network standards relative to electronic
product code systems should account for EPC’s targeting a global
implementation.
• Why is it necessary to established standards on two levels?
The answer is because we are faced with two challenges:
– The network of items, handled through Internet, intranets, and
extranets.
– The network of bits, which is a new concept and is generated
from the network of items
Bina Nusantara
Bit-Level Standards and Infrastructural
Developments
Bina Nusantara
Bina Nusantara