Pharma RFID: Making a Molehill Out of a Mountain
Despite challenges, companies throughout the pharmaceutical industry are bounding past technology hurdles and beginning to wring cost from the supply chain.
By Nancy Anderson
It's an interesting time for RFID in the pharmaceutical industry. While the perception may still be that it's an emerging technology, leading companies throughout the pharmaceutical supply chain are launching successful RFID initiatives. Production deployments are starting to ramp up, with more tagged products appearing in the supply chain. Industry analysts are predicting that pharma will become one of the largest RFID verticals within the next two to three years.
If your company is poised to begin its first RFID project or is struggling to make a current implementation perform to expectations, here's some insight into how savvy pharma manufacturers, packagers, distributors, and retailers are leveraging RFID for real business improvements.
Beyond Compliance: Strong Business Cases for RFID
While new and impending e-Pedigree laws at the federal and state levels continue to drive some implementations of RFID solutions in pharma, it's the further-reaching business benefits and return on investment that are spurring on companies up and down the supply chain.
While addressing compliance and such important problems as drug counterfeiting and gray market operations are critical, the item-level tracking these solutions require can also deliver a bevy of additional cost savings, service improvements, and strategic benefits. Item-level tracking is the term used to describe the tagging of individual products, as opposed to case-level and pallet-level tagging. RFID's ability to uniquely identify each item can eliminate significant amounts of manual labor, errors, and shrinkage throughout the pharma supply chain. Today, RFID is being evaluated to increase productivity and accuracy in shipping and receiving, reduce stock-outs, improve expiration management, and simplify the product recall and sample-management processes.
Innovative use of RFID technology can even enable new business models. For instance, why shouldn't drug distributors take full responsibility for the stocking levels of product at their customers' sites? One of RFID's trump cards over other sensing alternatives (significantly, barcoding) is that no deliberate effort is required to scan a product. With the addition of an easily installed, unobtrusive, and well-networked solution, the distributor could be in a position to replace the traditional arms-length customer-supplier relationship with a vendor-managed inventory model. It would be as if the distributor had control of constant inventory and predicting situations such as soon-to-expire items - but in a much more cost-effective way. This value-added service would be a win for both distributor and retailer.
Competing Technologies and Evolving Standards - The RFID Roadblock?
The good news is that there are a number of vendors introducing innovative new products for RFID solutions. The bad news is that it can be difficult to mix and match technologies - a reality if products are coming from multiple sources. This means that RFID technology decisions that are made by one member of the supply chain have the potential to impact every other member.
Tag technologies are one example. Some drug packagers use short-range HF tags for items and longer-range UHF tags for cases and pallets, while others are using a single frequency (UHF) at the pallet, case/carton, and item levels. How can a distributor or retailer support all the products in its facility when products are tagged using different technologies? The situation becomes even more complex when a supply chain partner has to support the tracking of totes with mixed items after the order picking process.
Making It All Work Together
While RFID standards and technologies are still evolving, vendors are moving to address the problem of interoperability. Sensor networking appliances from Blue Vector (www.bluevector.com) are examples of a wave of new products that make RFID more practical and scalable. The Blue Vector solution brings together different types of sensing hardware, software environments, and tags, to create a system that works regardless of the customer's position in the supply chain. The product line - a system of networking appliances that connect and integrate RFID readers such as those from Motorola (www.motorola.com) or TAGSYS (www.tagsysrfid.com) with back-end systems such as SAP (www.sap.com) - has been adopted by leading manufacturers, distributors, and retailers.
One Blue Vector customer is a distributor who partnered with Blue Vector to deploy "smart shelves" - secure storage and dispensing cabinets that provide both case and item-level RFID tracking of product from Pfizer and GSK. The cabinet automatically tracks the products going into and out of it. In another instance, a major drug store chain is using Blue Vector's Smart Conveyor Tunnel to read HF tags on individual items inside a case or container, as well as any UHF tags affixed to a case-all at once.
Optimization and Accuracy Are Critical
In tackling the job of making RFID work regardless of the varying technologies being employed, Blue Vector also advises pharma companies to keep in mind that optimization and accuracy are critical success factors for RFID implementations. A system with an 80% successful tag read rate means significant manual labor is expended for the other 20%. In fact, companies such as ODIN technologies (www.odintechnologies.com) has been taking RFID optimization to an art, helping companies to significantly improve the performance of their RFID systems. For example, location and orientation are some of the factors that can dramatically impact RFID performance, including:
- Placement of the RFID tag on the case,
- Orientation of those cases or totes on pallets and dollies,
- Attention paid to the directionality of the tag relative to travel, or the use of omni-directional tags, and
- Use of Gen 2 tags.
Here's a real life example of the impact of some of these decisions. A major drug distributor was having difficulty achieving acceptable read rates when moving bulk product via forklift into a high-value cage area. The product in question consisted of over 100 cases of product per pallet moving through a 10-foot wide gate. Read rates hovered in the 40% range. Two changes (the tag location and a switch to Gen 2) led to consistent 100% read rates.
Technology Is No Longer the Hard Part
Another critical success factor often overlooked or underestimated is the impact on existing business processes. Attempting to implement RFID without changing current business processes often results in additional costs as well as unsatisfactory results. If you've attempted to layer RFID onto existing processes, you know what that's like.
When companies can find ways to change and adapt their business processes - the methods and procedures used in production, as well as the interaction with software systems - they can gain maximum return on RFID deployments. For organizations needing assistance with business process optimization, consulting firms such as Accenture (www.accenture.com) and VeriSign (www.verisign.com) can help strategize on how to improve business processes with RFID.
RFID Gains Momentum
As RFID makes its way through the pharma supply chain, the natural evolution of companies adapting the technology is gaining momentum. Not only are members of the supply chain successfully deploying their own RFID projects, they are also establishing ways to work with each other to overcome RFID implementation challenges. From exchanging RFID technology lessons to collaboration on business processes, pharma companies are coming together to reap the benefits of RFID success in efforts such as the On Track initiative kicked off by McKesson and now shepherded by Accenture. Membership in this group is a veritable "who's who" of the pharma industry, including retailers, distributors, manufacturers, and technology vendors. The goals for On Track include an industry-wide drive to lower the cost of inventory management and the collection of pedigree information. And lower costs are something everyone can agree on.
Nancy Anderson is the CEO of Blue Vector, a sensor networking appliance manufacturer located in Palo Alto, CA, with over 30 years of high technology marketing and general management experience. For more information about Blue Vector's sensor networking appliances and RFID solutions, visit www.bluevector.com.
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