In Dow Chemical's Adoption of RFID, Many Lessons

By Mel Duvall Print this article Print

Industrial company is now pursuing 10 actual initiatives—450 possibilities were originally on list.

While many companies are still determining whether they want to make the leap into applying radio frequency identification (RFID) technology to their business practices, Dow Chemical is wrestling with the enviable challenge of having to whittle down opportunities.

A call two years ago for RFID project proposals among the company's wide ranging businesses generated more than 450 responses. Dow is already producing concrete results from many of those proposals, including using RFID technology to track hazardous goods shipments, to monitor temperature, pressure and the general condition of individual containers, and even detect termite infestations (see "An Application That's Buggy by Design").

In fact, Midland, Michigan-based Dow has developed one of the more advanced programs for not only identifying how RFID can best be applied to its wide ranging businesses, but also for capturing and sharing best practices.

Back in 2004, when Wal-Mart was detailing its far-reaching plans for using RFID throughout its supply chain, Dow Chief Information Officer Dave Kepler quizzed his team about whether the company should be looking more seriously into RFID. Dave Asiala, Dow's information technology director, recalls that at the time the general feeling was that RFID wasn't ready for prime time.

Kepler was more optimistic. In July of 2005 he decided to put out a call across Dow's far ranging operations-the company has annual sales of $50 billion in areas like chemicals, plastics and agriculture-for proposals on how RFID might be applied. His hunch, that RFID could answer a number of existing business challenges, generated close to 450 proposals.

The next step was to evaluate those proposals, based on the company's Six Sigma methodology, to find 10 projects to approve. "There were many more that had merit, but we always have more ideas than money to spend," he said.

In conjunction with the evaluation process, Dow established a center of expertise dedicated to RFID. It would be the responsibility of that center to not only identify the best projects to proceed out of the initial 450 proposals, but to also evaluate emerging RFID technologies and capture best practices. "Basically, when a business unit has a need that might be solved by RFID, we're available to them as consultants," said Craig Casto, RFID Global leader.

In order to narrow the initial 450 projects down to a more manageable number, the evaluation team applied a fairly broad vetting process. It looked first at the project's likelihood for success, based on the readiness of the RFID technology being applied, and the challenges involved, and then at the total value of the project, both tangible and intangible. By plotting the projects on a matrix, Dow was able to narrow the list down to 50 projects.

Next, Dow decided to reach out to its information technology partners and the RFID vendor community to conduct a more practical analysis of the remaining 50 projects. It essentially created a technology advisory board comprised of representatives from such companies as SAP, Cisco, Intel, Savi, and Accenture to evaluate the proposals with an eye to which projects could provide the most benefit and which were strategically aligned with corporate goals. Asiala said the advisory board was crucial in identifying projects where standards were not ready or the technology was not mature enough to move forward.

An example was the use of RFID to help locate and identify parts used at a construction site. At a construction site, parts are typically stored in a "lay-down" yard, essentially a large area where they can be retrieved as needed. It was thought RFID could be used to keep track of the parts and speed their retrieval. Asiala said while the idea has merit, and a potentially valuable payback, the technology wasn't ready yet. The project would have involved setting up a network of RFID readers or sensors over a large area. "We felt the technology needed to mature a little, but those technologies are starting to come out onto the market," he said.

After a roughly six month evaluation process, the green light was given to 10 RFID projects in the following areas:

This article was originally published on 2007-09-17
Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

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