EXCLUSIVE INTERVIEW
Dow Chemical's Dave Asiala on the Beauty of RFID

When Dave Asiala, Dow Chemical's (NYSE: DOW) shared services IT director, is talking about his company's RFID (radio frequency identification) initiatives and wants listeners to have an "Aha" moment, he tells them about Dow AgroSciences' use of RFID tags in its in-ground Sentricon Termite Colony Elimination System.

"Essentially these are bait traps that are underground," Asiala says. "Over the last couple of years, we have modified the product to include a passive RFID tag that is triggered when the bait is eaten. Now the service provider has a much easier way of reading when traps have been activated -- all he has to do is wave the wand over the ground to see if the bait has been taken."

Asiala likes using this example because it illustrates the many uses to which RFID technology can be adapted. Typically -- and as is the case with Dow Chemical -- RFID technology is first deployed as an internal productivity play.

As the technology becomes more robust, though, he said, it exposes not only new opportunities in the supply chain, but also ways to improve other products and services. Following are excerpts from CRM Buyer's exclusive interview with Asiala about the company's RFID strategy.

CRM Buyer: Can you tell me about some more interesting uses for RFID?

Dave Asiala: Well, one use is with our rail cars. Rail cars have been using some form of passive RFID technology for the last 15 years, usually in a "last seen" function -- that is, it can track where the car last registered in the system. We own about 26,000, and have outfitted two fleets of rail cars and are outfitting two more with a GPS (Global Positioning System) device and an RFID sensor unit to help us monitor the 20 percent of shipments that are hazardous materials.

What we are doing is augmenting the last seen capability with real-time polling capability. In case of an accident, we want to use information like the environmental condition of the car to help first responders.

Our current safety performance with our assets is 99.97 percent incident-free. The technology we are putting in now will take us beyond that.

There are smaller-use cases too. For instance, Dow Chemical employees have badges equipped with passive RFID tags. The readers at our facilities around the world will grant access based on the user's profile. We can use the badge globally. I used mine in Brazil recently, for example.

Other examples include pipelines that send out remote signals when repairs are needed, and equipping intermodal shipping containers with active RFID tags.

CRM Buyer: How does Dow Chemical decide which projects to initiate?

Asiala: Rather than going at it piecemeal, we have put together a strategy around the use of RFID and GPS technologies so they can make a difference in our organization. This is a multi-generation plan -- we looked at, say, 450 ideas and narrowed that number to 50, and then we took the top ten of those ideas and put them in the first generation of our implementation plan.

We have a very strong ROI mentality -- when a division or unit decides to make improvements in our IT or work processes, we have to compete for dollars. We are very proud of the fact that the program is able to compete for and receive funding.

CRM Buyer: How does the budgeting process work?

Asiala: Well, roughly, we have long-term spending plans and annual investment plans. Our company will determine how much money will be spent based on the tangible benefits the project will bring to the bottom line.

The soft benefits, such as safety and security, we don't even count. A NPV (net present value) is one of the most significant factors that help us decide in what technologies to invest.

That doesn't mean every single project we do adds value -- some are loss leaders. But by looking at our program as a whole, we give ourselves the ability to make these strategic decisions.

CRM Buyer: What has been the ROI (return on investment) for some of these projects you've described?

Asiala: We don't share ROI numbers. We do have thresholds and hurdles that we have to meet, such as a time to zero cash flow hurdle or an NPV return on a lifecycle, which we can calculate based on three, five or ten years. And if the return is not meeting expectation half way through the cycle, we will change the plan.