Project Closure

We need to close the project after full scale deployment. Project Manager will organize a kick-off meeting to hand over the project to the F&N management team. A contract will be signed off and the final documentation will be submitted to the owner.

Risk Assessment

1.0 Executive Summary

The report herein discusses the risks of RFID Implementation for the F&N warehouse. The risk analysis identifies the project risks, assesses their probability of occurrence, and evaluates their potential impacts to the project. Various courses of actions are pre-planned to mitigate the risks and assist the management decision making process. The activities with higher risks are listed below and shall be discussed in details in the following sections:

· Hardware Specification & Supplier Selection

· Acceptance Testing

· Selection of ERP Consultant and Middleware

· User Communication and Training

· Process Mapping

In particular, the cost and delivery impact on the risks associated with the acceptance testing and hardware specification & supplier selection will be analyzed in details here.

2.0 Risk Analysis

Activity	Risk Description	Probability (1-5)	Impact (1-5)	Risk Category	Rank (1-10)
1.0 Planning & Rationalizing
1.1 Project Scoping	Not well-aligned, leading to failure at execution	2	3	LP, HI	6
1.2 Budgeting	Over budgeting	3	4	HP, HI	6
1.3 Scheduling	Implementation delays	3	3	HP, HI	7
1.4 Risk Analysis	Overlook Potential Risk	3	3	HP, HI	6
1.5 Steering Committee	Incapable Leadership	3	2	LP, LI	6
2.0 Process Reengineering
2.1 Process Mapping	Overlook important process / procedure	5	5	HP, HI	5
2.2 Process Simulation	Arguable simulation results, results does not reflect actual situations	3	4	HP, HI	6
3.0 Software Integration
3.1 Selection of ERP Consultant and Middleware	Poor intergration	5	5	HP, HI	3
3.2 Redesign of ERP software Code	Bugs in the system	3	5	HP, HI	6
3.3 Data Migration & Documentation	Migration failure and data corruption	4	4	HP, HI	6
3.4 User Communication & Training	Inadequate Training	4	5	HP, HI	4
4.0 Hardware Configuration
4.1 Hardware Specification & Supplier Selection	Compatibility of various hardware with the existing process and software	5	5	HP, HI	1
4.2 Warehouse Layout Modification	Improper modification of warehouse layout	2	3	LP,HI	6
4.3 Hardware Installation & Documentation	Incorrect installation of the hardware	3	4	HP, HI	6
4.4 User Communication & Training	Inadequate Training at ground level	4	5	HP, HI	4
5.0 Pilot Testing
5.1 Acceptance Testing	Design of testing might mislead the Go or No Go decision	4	5	HP, HI	2
5.2 Defect Classification and Correction	Long lead time to troubleshoot	3	4	HP, HI	6
6.0 Full Scale Deployment
6.1 Performance Monitoring (KPI)	Improper KPI	2	3	LP, HI	9
6.2 System Maintenance Plan	Constant hardware.software failure	3	4	HP, HI	9
6.3 Continuous Improvement Plan	Process flows are not review properly.	2	3	LP, HI	10

3.0 Top 5 Issues

No	Activity	Risk Description	Root Cause	Mitigation Strategy
2.1	Process Mapping	Overlook important process / procedure	Many hidden complex process involved	Obtain input from senior/experience members/consultant.
3.1	Selection of ERP Consultant and Middleware	Poor intergration	Loose selection criteria for RFID middleware and consultancy service	Set a stringent vendor selection criteria and only use the vendors/consultants with experience in FCG industry.
3.4	User Communication & Training	Inadequate Training at ground level	Poorly defined training requirements to address individual/functional needs.	Adopt customized training. Set up a hotline/ suggestion box
4.1	Hardware Specification & Supplier Selection	Compatibility of various hardware with the existing process and software	Missing critical hardware features to run the RFID at warehouse.	Consult RFID expert, Establish a comprehensive list of specifications, and source from vendors with proven experience.
4.4	User Communication & Training	Inadequate Training at ground level	Poorly defined training requirements to address individual/functional needs.	Adopt customized training. Set up a hotline/ suggestion box
5.1	Acceptance Testing	Design of testing might mislead the Go or No Go decision	Test checklist is incomprehensive and incomplete	Create a detail test plan, and get expert or consultant to review the testing process and procedure.

4.0 Impact on costs and schedule for top two risks

i.) Risks associated with Hardware specification & Supplier Selection

To ensure the proper selection of the hardware and its specification, a 3^rd party RFID expert is recommended on the contract basis to assist the selection process. It is estimated that the selection should be finalized in 30 days with the help of the RFID expert. A number of well-known RFID consultants like Zebra should be able to provide such ad-hoc service locally. Hence, an additional $5000 should be sufficient. Besides, 10 more days are added to this activity to ensure the correct party is chosen here. The overall schedule will not be affected as we have total 20 days float in this project.

ii.) Risks associated with Acceptance Testing

To ensure the acceptance test is complete, an experienced professional engineer is recommended to help develop the test checklist. It is estimated that the test checklist can be established within 10 days. Institute of Engineers, Singapore usually has a technical committee to provide such consultancy service for Singapore-based companies at a competitive price. Hence, an additional $6000 is deemed sufficient to tap the consultancy service of a professional engineer. The overall schedule will not be affected as we have total 20 days float in this project. The project schedule and budget should be monitored more closely after considering such changes.

5.0 Conclusion

RFID implementation requires thorough evaluation on every aspect, including risk analysis and cost budgeting. The potential risks have been analyzed and each mitigation plan has been proposed in this tutorial. The impacts of the two potential risks have been discussed and the action plans are developed to mitigate these risks.

Budgeting

Budget Allocation and cost deriving is a challenge in this project. It is not easy to get a profoma quotation from vendor because of the pricing is confidential information. Even we pretend we are interested in their product, soon they will find out that we are not keen to buy because they asked a lot of question about company profile and main product, annual Revenue etc which we have limited information on that.

Hence, the costing is derived based on the result from visiting vendor’s website, making phone call & sending email (pretending as buyer), from rfid Journal and also making own assumption on our best knowledge.

The job is shared by all members and I have been assigned to consolidate the result from each member. I like to give a Big thanks to our member, Tzuu Bin, his expertise in doing project for his company help us a lot to understand how the cost likely should be.

Second challenge is ROI (Return on Investment) calculation. After a long discussion, we agreed to perform ROI based on the cost saving has been generated from implementing RFID successfully. We have made some assumption and estimation on the figure as in this part we need some information which F&N does not release due to confidential issue.
Below attached is our result:

Project Schedule

Scheduling is the next critical step of the project as it tells us the overall length of the project and whether we can complete the jobs within the planned duration of 15 months. Estimating the time for the activities is particularly challenging here because we are unable to approach all F&N employee at our convenience for the best guess of the task duration. Duration determination is therefore based on several documented case studies from FMCG industry, RFID reference books, internet resources, and our own experience. A number of assumptions are made in the preparation of the project schedule:

• F&N normal operation time: 8.00am to 5:30pm, 5 working days per week.

• All the planned tasks and activities will start AS SOON AS POSSIBLE.

• Project kick-start date is Feb 1, 2011 and latest finish date is May 3, 2012.

• No major change in the company financial health that must postpone the project.

• No labor strike, vendor delay, equipment breakdown, accidents, or major bugs in the software program within the planned date.

• 14 days of Singapore public holiday are taken into account in the schedule.


Exception List:


[Please click for bigger image]

With the stated assumptions above, we decided on the task durations and its predecessors as shown in the Table below:


[Please click for bigger image]

We constructed our Gantt chart in MS Project 2007 based on the planned task durations and predecessor listed in the Table above. Note that the critical path of the project is highlighted in red. We need to pay attentions to the task in critical path as any delay will jeopardize the completion date of this project.

Gantt Chart of the RFID project

We also created the AON diagram in MS Visio to find out the total/free slack of the project activity as well as the early start/finish date and late start/finish date of each tasks. It is found in this exercise that the project has a total slack time of 20 working days. However, this does not mean that we can manage the schedule loosely and let the task slips its planned schedule. We will conduct the risk analysis of the project activities later. Some high-risk activities might need more time for execution. This part will be explained in the later post for risk assessment.

Critical Path of the RFID Project

[Please click for bigger image]

Work Breakdown Structure (WBS)

Work Breakdown Structure (WBS) is used to simplify and organize the important activities of the RFID project in a systematic way. WBS is the essential first step here, as we will use this structure to prepare the project schedule, calculate the budget, and perform the risk assessment of the individual tasks. It also helps us allocating the resources and assigning responsibility to the project stakeholders more effectively. We understood the importance of this exercise and so had subsequently held three separate meetings in November/December 2010 to brainstorm the details of WBS. A mind map is created using the online software Mind Meister. Although this software is powerful and easy to use, it only allows three free mind maps and we need to buy the license after 30-day trail period.

Overall, we decided to divide the project into six main elements: Plan, Process, Hardware, Software, Test, and Deployment. A maximum 2 sub levels will be included so that we could have better control of the overall progress. A mini-project could always be formed for the individual tasks if necessary.

• In the planning stage, we need to do project scoping, budgeting, scheduling, risk analysis, and forming of a steering committee to drive the project and the change management.

• For the process, we need to do a detailed mapping and simulation of the current manual process and the proposed RFID process. Sensitivity analysis will need to be conducted to understand how far we can tolerant the deviation of the simulated results.

• For the hardware, we need to determine the specifications, decide on the vendors, modify the existing warehouse layout, install the RFID equipment, prepare documentation, and train the stakeholders to run the hardware correctly.

• For the software, we need to integrate the RFID with the existing JD Edwards system. Hence, we need to select the right consultant, pick the right middleware, redesign the JD Edwards system code, migrate the RFID data to new server, prepare the documentation, and train the stakeholders to use the software efficiently.

• In the pilot testing, we must design the acceptance test in such a way that it will reflect all possible scenarios during full-scale implementation. If any errors are found during the acceptance test, we need to troubleshoot and provide remedies to fix the problem.

• In the final full-scale deployment, we have to make sure the right KPIs are established to sustain the benefits of the RFID. In addition, we need to ensure that the new system will be maintained and monitored periodically. A team should be set up to continuously drive the improvement plan of the system so that RFID benefits can be maximized at all time.

[Please click for bigger image]

Project Scope

With no hesitation, we would like to express our intention in this project and discuss the scopes involved in this post. It is an honour to give our very best to share with you, every business aspects involved with the implementation of RFID in F&N Warehouse Management System.

Our objectives are:

• To integrate RFID Technology in Storage and Distribution Network to achieve systematic product handling and storage.
  
  
• To maximize data accuracy of product movement and minimize the human-related risk of management.
  
  
• To achieve Real-Time Monitoring of Distribution and Excellent control of Product Quality within Distribution Network.

However, our project is started with an unexpected challenge...

One of our group members -- Tzuu Bin is having two-weeks business trip in Thailand. We have to carry out the discussion via MSN and e-mail, using "inefficient" internet service providers at both sides.

First, we have to discuss the scope for this project, which we think is rather broad and challenging. We cannot deny the fact that cost is the ultimate "STOP" caller in every ambitious and wonderful dream.

We came to a conclusion that RFID tag should be attached to the pallet or case, not on every single item (product). The latter will increase the cost tremendously, without bringing any clear economic impact. Domestic consumers will not benefit as the tag does not benefit them at all. Most importantly, the embeded RFID tag in the product packaging can hardly be recollected for recycling. The return on investment (ROI) could be very low.

If we consider tag on either pallet or carton crate, the tag can be easily recycled for each product cycle, the quantity of tag purchase can be shrank to 60000 at
the initial investment, with annual replacement of 5000 for damaged tags (assumption). This saves a lot compared to tens of thousands per day.

Then, we need to outline the stages (phases) of RFID-technology implementation. With constructive discussion held and adequate research done, we concluded the following three phases of roll-out .

Phase 1

• RFID Business Analysis

Phase 2

• Technical Assessment
• Pilot
• Integration assessment

Phase 3

• Delivery
• Promotion

Besides, the support from top management is strictly required. We intend to convince the stakeholders with the following benefits gained over the proposed investment:

Cost – Working Capital Reduction

Adoption on RFID technology enables less man-hour on quality inspection and prevents manual recording of information for each crate and pallets, thus reducing human capital cost in warehouse.

Revenue – Profit Increase

- Reduce labor costs in stores and warehouses (long-term).

- Decrease inventory with better information management.

- Reduce shipping loss and inventory loss due to mis-manifest, mis-routed,

pilferage, damage, shortage and duplicate order.

Improve Efficiency

Improve asset visibility, leading to improved asset utilization and working capital efficiency.

Improved Product and Service Quality

Improve product return management - manufacturers could quickly locate and recall faulty products, even before they reach consumers.

Legal and Regulatory Requirements

Temperature control ensure safety and quality, ensure longevity (shelf-life) of food products.

Improve Customer Satisfaction

Better information management of stock level will assist sales department in making necessary business decision, assisting customers on orders and enquiry.

Increase Visibility

Real time information can be obtained for quick management decision, e.g. routing, sorting and recalls.

Improve Collaboration

Increase inventory accuracy, assist accurate demand planning and reduce inventory cost.

Next, we have to decide the timeline. We estimate 15 months of transition and implementation.

In order to formulate the budget required for this project, we have to list out all the resources we need, and do research on the costs from available sources online.

In the meantime, we also discuss on the hidden cost that might appear during the implementation of RFID in warehouse.

The basic but critical elements of a RFID system include tags, printer/encoders, reader/encoders (interrogators), sensors, middleware (for data-filtering and data-flow management), and, if needed, some software adaptations to enable legacy applications and systems to receive RFID-generated data.

The integration of the RFID into the existing program (hardware and software system) and the support from third-party technical consulting team constitute major percentage of our costs. The team is required to provide single technical consulting engagement or execute a complete turnkey international solution through its comprehensive reseller and systems integration network.

Subsequently, we have to define who are the participants (or stakeholders) required in this project and their roles and responsibility respectively.

Job Title	Duties
Project Manager/s	Manage the progress of the project and make sure the tasks are executed within budget.
IT Department	Concerned with technical information regarding the physical integration of the RFID system into the current IT infrastructure. This includes information such as the hardware/software structure, security issues and standards.
Process Management group	Interested in a potential change of processes when implementing an RFID system, the integration of new processes into the existing business processes, and evaluating how processes can operate more efficiently.
Legal Department	Handles the legal issues associated with RFID and requires information such as related legislation, to ensure that the firm is complying with all relevant national legislation.
Human Resources (HR) Department	Need to be provided with information regarding topics such as health implications from the use of RFID or also employee rights
Communication Department	Requires information on RFID so that it can communicate information to various parties.

Then, we have also converse the expectation of stakeholder and the critical success factor.

Stakeholder

• Management
• Finance (sponsoring department)
• Team member
• RFID Technology supplier
• RFID service provider (consultant)
• End user

Expectation & Success Factor

Strategic level

• Creating strong internal and external motivation for improvement
• Developing a clear RFID strategy
• Partnership with competent RFID providers
• Strengthening mutual understanding in organization
• Top management support and commitment from leadership

Tactical/management level

• Determining which practice should be incorporated into RFID system
• Facilitating equipment vendor’s investment
• Integrating RFID into a existing IT architecture
• Proper staff training
• Starting with small RFID project (trial)
• Utilizing a cross-functional team

Operational Level

• Avoiding major process change/ limit process changes
• Coordinating improving procedures
• Integrating the data collected
• Lack of comprehensive facts and data
• Using cost-effectiveness reusable tags

The following assumptions were made in preparing the Project Plan:

• Management will ensure that project team members are available as needed to complete project tasks and objectives.
• The Steering Committee will participate in the timely execution of the Project Plan (i.e. meeting when required)
• The Project Plan may change as new information and issues are revealed. Mid and upper management will foster support and “buy-in” of project goals and objectives.

The following represent known project constraints:

A relatively high cost

Implementing a fully functional RFID system incurs multiple costs, including tags, readers, printers, infrastructure, consulting, training, change management, and service provider fees. There is also the cost for additional labor that will invariably be needed with early stage of RFID deployments.

Business process changes

Automation process through RFID technology requires a new working methods ad performance measurement for the supply chain in F&N. There will be significant impact on the whole organization, especially on warehouse operating protocols.

Thus, the designation of RFID system must consider new processes and procedures to automate tasks and decision making, as well as considering the impact on the whole organization.

Risk to the nature of business

Although RFID is a mature technology; it is not popular among dairy product manufacturers. The lack of ROI information upon RFID deployment increases the risk of the business nature.

Additionally, RFID technology is widely deployed in U.S and Europe country but not in Singapore. The lack of established local vendor and experienced consultants in the region are few issues we have to consider.

At last, your comments and constructive suggestion are strongly welcome.