Virgin Atlantic Tries RFID on for Size

Case Study: Virgin Airlines jumped into the RFID fray with its own pilot system, with help from consultants and technology from Oracle.

Virgin Atlantic Airways Ltd. prides itself on being different, forward-thinking and fun. But in its airline maintenance and engineering division, fun is the last adjective on the list.

More important is the task of making sure the right parts make it to the right place, on time and working perfectly.

Virgin Atlantic, based in London, has its parts supply chain and distribution center business processes down to a science. But with looming RFID (radio-frequency identification) technology deadlines from such heavyweight manufacturers as The Boeing Co. and Airbus S.A.S., Virgin decided to take a proactive approach with the untested technology, by implementing a pilot program. The goal was to test the technology and find potential efficiencies in the supply chain from its channel partners and suppliers.

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"Suppliers said that clearly this was a technology we could work with, but we werent exactly convinced of that," said Mark Butler, Virgin systems implementation manager. "We wanted to understand what we could use RFID for and to have it work in our environments. We also wanted to generate some questions—what we would need to ask suppliers and how it would integrate with other systems. This is very much a trial of technology rather than any business benefit."

Butler said he and his team had been aware of RFID technology for about 2.5 years, but they really started looking for specific information about a year ago.

"The reason for the pilot was due to the fact that we were aware of this new technology, this emerging technology," said Butler. "Id seen a lot about it in the press, and we felt it was appropriate to get a better understanding of what it could do for us as a business. Ive seen lots of information but not any answers of whether this was a technology we could use."

Using the implementation methodologies, workshops and consulting services from Tata Consultancy Services, a division of Tata Sons Ltd., and technology from Oracle Corp., Virgin began the task of determining how best to approach the RFID pilot program. With the help of TCS, which takes a business process approach to RFID testing and implementation, Virgin determined that rather than trying to find a business case to rationalize the technology, it would focus on optimizing a single process.

Virgin is looking at the supply chain process from the point where parts enter the Virgin warehouse from suppliers and manufacturers to the point where they enter the inspection area and, from there to binning, storage and dispatch.

"We are tracking three things with tags: parts, location identifiers on bins and users within the warehouse, so we can identify who is doing what and who is supposed to be doing what," said Bhuwan Agrawal, RFID solutions consultant for TCS. "These are the processes we will measure and develop specific metrics for, which we will use to measure benefits."

"Virgin has taken the right approach of taking a business process, identifying [where RFID could be of use from] end-to-end," Agrawal said. "The difference with Virgin is that this is not a compliance-driven initiative. Theres nobody saying Virgin needs to comply with [a specific] mandate, so compliance is not really a motive."

TCS does have a specific goal for its RFID practice, according to Agrawal.

"We are interested in helping customers and partners understand how RFID can help and improve business processes," Agrawal said. "We think RFID is a destructive process—it really gives customers across industries the opportunity to relook at business processes. There are not a lot of opportunities like this to look at supply chain processes."

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The process is such that as a part arrives at the stores door, it goes through a three-stage receiving process to confirm that the parts have arrived at the facility, that the quantity of parts is accurate and that the parts are in good condition. From receiving, the parts move to an inspection process and then out to store shelves to be issued to aircraft engineers for maintenance.

For Virgin the objective of the pilot is to determine how RFID will work in the supply chain and what sort of process benefits it will add. From TCS perspective, the process is threefold. Agrawals objective is to help Virgin understand how RFID will work in the supply chain, what sort of process benefits it could bring and how it will help improve supply chain visibility.

"Virgin will take ownership of the 8380 [Airbus newest aircraft] in 2007, and it will have 10,000 RFID tags on airplane parts that are coming from manufacturers. Thats where RFID becomes part of the supply chain," said Agrawal. "You have to be able to take advantage of that. You have to be interested in it."

Next page: Asking, integrating, answering RFID questions.