DHL Consulting case: Books & Codes

The following framework/structure provides an overview of the case:

• Radio-frequency identification (RFID) is the use of an electronic chip (RFID tag) applied to e.g. a product in order to identify and track it using radio waves
• Latter is done by a RFID scanner
• RFID tags can be scanned over a wide range (~7 meters)
• RFID tags can be scanned in bulk

In this phase the candidate should come up with the following deliverables

• Overall structure for following analysis
• Identified need and potential of RFID technology, including key benefits and main risks
• First assessment of RFID idea

Based on this high-level knowledge about RFID the interviewee should be able to assess its potential. 

These are generally good frameworks for such problems:

• Cost-benefit analysis
• SWOT
• 4Cs

The interviewee should infer from the SWOT analysis that there are strong arguments on the benefits side. Therefore RFID seems to be quite promising and its worth to have a closer look at it.

It is important that this first step ends with a clear hypothesis stating whether the implementation of RFID is beneficial for the library or not. If the interviewee does not take a clear view on it she is not applying an answer-first approach.

Current system:

• Barcode, each book scanned manually by employee for lending/ return

RFID pilot offer:

• 2 tiers: bulk checkout process conducted by employee (all books scanned at once) + automatic return process (for non opening hours)
• Financial aspects of investment negligible (covered mostly by governmental ministry)

Library:

• 4 employees, working 8h a day
• Media, mainly books: 900,000 books
• 20,000 students, 1,000 faculties, 100,000 inhabitants of city

In this phase the candidate should come up with the following deliverables

• High level understanding of current library system including all key drivers
• High level understanding of RFID pilot offer

The candidate should ask relevant questions regarding the current as-is situation.

Ideally the interviewee lays out the typical lending process of a book in a library first to gain full transparency.

As a second step the interviewee can indicate which process steps are affected by RFID. 

Checkout process conducted by employee: Take one (next) book ->
open it -> scan it -> close it -> put it away

New checkout process conducted by employee: Take all books -> put under scanner -> scan all at once -> put books away

In this phase the candidate should come up with the following deliverables

• Description of lending process
• Based on realistic assumptions, calculation of difference between barcode and RFID systems for major processes

To quantify the benefits of RFID the interview should calculate the process time of the current lending process using traditional barcodes and compare it with the process time of the lending process using RFID. The gap is the potential benefit or loss respectively.

Based on the process chain it is reasonable to assume 10 sec per book for the checkout. To derive the total time demand for the checkout process in an entire library the interviewee needs to estimate how many books are borrowed per year. The number of books borrowed multiplied with the checkout time per book results in the total time demand.

Calculated in FTE (Full-time employees) you need 1.35 FTE (298.5/ 221) to carry out the checkout process throughout the year. To finally evaluate this workload we need to determine how many FTE are needed for a new process using RFID technology.

Since this process is quite similar to how it was before it is reasonable to assume also 10 sec time demand per borrower. Not much has changed except the fact that a bulk of books can be scanned at once instead of scanning every single book. However, this slight process difference leads to a significant time benefit.

To derive the total time demand for the new checkout process the interviewee needs to estimate how many borrowers show up in the library per year. The number of customers (borrowers) multiplied with the checkout time per borrower results in the total time demand.

In this phase the candidate should come up with the following deliverables

Clear recommendation including reasoning

Potential next steps if only weak recommendation

Based on the pure time savings it is highly recommended to switch to RFID. The library can save almost one entire FTE which equals ~30,000 EUR per year in savings (assumed salary: 30,000 EUR + social insurance). In addition it is highly likely that the perceived service quality will be better at the same time; e.g. due to possible returns during non-opening hours (as indicated in the SWOT analysis).