- Startups have had a golden year in 2015. In India itself, a cumulative funding of over USD8Billion has been made available. There are eight startups with a valuation of over USD1Billion each. The growth for almost all these companies has been at a breakneck speed – most of them have been in existence for less than a decade.
- However, there are very few companies, if any, that are making profits. To keep competition at bay, these companies are rolling out discounts to customers and selling products at a break even or even at a loss. This will obviously lead to a failure by most of these companies. So how can these startups insure themselves against failure? Probably the most compelling methodology will be efficient utilization of available resources and maximizing its effectiveness to generate good return on investment.
- In this scenario one of the best emerging technologies to help startups harness their resources – both material and human- would undoubtedly be RFID. To corroborate my thought process, I spoke to a number of entrepreneurs to see if indeed RFID could help them be one of the “survivors” in the startup eco system. The aim of the interaction was to educate startup founders (mostly youngsters) on the use of RFID technology and its benefits and to dispel myths around RFID technologies and its implementation. This blog is a result of this interaction and highlights the 5 key reasons for startups to embrace RFID technology.
A) Efficient Asset management. Whilst the cash rich startups buy new assets whenever the need arises, inefficient use of the same leads to over stocking of such assets. In recent studies it has been proved that the inventory of assets can be reduced by as much as 25% if RFID tags are used on the assets permitting an efficient tracking of the same and thus enabling maximum utilization of assets. For example, in hospitals it has been found that the number of mobile equipment quantities can be reduced just by being able to track equipment by use of RFID.
B) Make optimum use of available human resources. Startups are in a dynamic state all the time. The human resources are scarce and it is critical to make the best use of those available. For a start up doing mass recruitment, it will always happen that some employees take undue advantage of lax HR policies and wander away in working hours. RFID systems can ensure that employees can be efficiently tracked thus ensuring optimum productivity thus reducing the need to increase manpower. This becomes critical in the service industry where timely availability of services makes or breaks a startup.
C) Controlling the sellable inventory . A good example of this is Justbooks, a Bangalore based startup for renting books. The company has automated some parts of one’s library usage, for instance RFID based unmanned kiosks. Owing to RFID tagging, JustBooks’ kiosks have the real time information about books (current owner/location of the book etc.) that helps them keep the cost low. The unmanned kiosk outside the library equipped with the Library Management Software (LMS) and the tag reader acts as a one-stop shop for all requirements of the reader, right from finding the book of choice to depositing it after reading. The LMS is mapped according to the layout of the library and is also linked with the inventory and back-end, which helps to point the exact location of the book. Due to effective use of RFID, JustBooks has been able to maintain optimum inventory, reduce cost of resources and track and manage its assets efficiently.
D) Automation and hence, less hiring: Startups cannot afford to hire people and teams for all activities. It is important to automate many processes, especially non-core ones. Efficient tagging and maintaining of assets and inventory and generating reports for senior management can all be automated by efficient use of RFID. Smart startups, especially in sectors such as logistics, food delivery can use RFID based tagging and reports to not only optimize their operations but also serve their customers better. It also enables startups to hire less people at the beginning and hence saves time and effort on administration and human resource management.
E) Leveraging Data Mining for better decision making: By effectively using RFID technology, startups are able to access and gain invaluable business relevant knowledge by Data Mining. The RFID generated data can be analyzed by startup’s to understand patterns and insights on usage of resources and map the return on investments. With effective use of Data, startups are able to alter strategies and make better decisions. This enhances the probability of their success and helps them to grow much faster.
- It would be evident from above that RFID can actually address the top reasons why startups fail. The natural next question is if it is worth the investment for startups. As a keen student and practitioner of RFID technologies, I would urge startups to think of RFID as an investment which can yield short term benefits in automating operations and long term returns by effective Data Mining. It also gives clarity on the execution at the ground level and efficiently aligns strategy with execution. This enables startup’s to sharpen focus on revenues and profits and thus, attain profitable growth.
- I would invite your comments, especially if you are a startup founder or part of a startup team, on this blog and would be happy to engage in a discussion on why RFID is not an expensive technology given its great ROI and how startups can implement RFID technologies efficiently and cost-effectively.