EPC will deliver its greatest value, and realize its true business potential, only when implemented as part of an overall architecture captures mission critical data, moves it to where it is needed, and manages both the data and data acquisition infrastructure.

Radio frequency identification (RFID) is one of the newest and most promising
technologies on the horizon for supply chain applications, holding out the prospect
of significant increases in inventory velocity and availability at all stages
in the supply chain.

Major retailers and end users are quickly moving to adopt the technology. Wal-Mart,
Tesco, Metro, Albertsons, Target, and the Department of Defense have all publicly
begun to require that their suppliers use the technology. While details vary
by company – with some more aggressive than others – the overall tone is remarkably
similar. The top 100 suppliers to these organizations are being requested to
supply RFID-tagged materials beginning early in 2005. Today, these initiatives
are focused mainly at the pallet and case level, meaning that tags are to be
applied to pallets and the individual cases that make up those pallets.

The high-level ROI driving these initiatives is easily understood once the
basics of the technology are explained. At a simple level, RFID tags can be
thought of as extremely long bar codes that can be read without a line-of-sight
requirement, because they are read using radio waves, instead of the optical
waves (light) used to read bar codes. This greater data capacity affects the
business process because it in turn allows a greater degree of unique identification.
For example, a typical product bar code – the universal product code (UPC) –
contains just enough information to identify the class of a product. A typical
example would be a can of soda. The bar code on this soda basically says “this
is a 12 oz. can of Brand X soda.” The RFID equivalent of this bar code – an
electronic product code (EPC) – says “this is a 12 oz. can of Brand X soda serial
#23676777.” The key difference is that each item tagged with an EPC-based RFID
tag is uniquely identified – different from every other item in the world. From
a supply chain perspective, the implication is that every individually tagged
item can now be tracked throughout the supply chain – from factory to retail
store.

Moreover, because these RFID tags can be read without line of sight, they can
be read without human intervention, using a network of fixed readers installed
at key choke points – dock doors, conveyors, forklifts, etc. The fact that human
intervention is not necessary lowers cost to acquire the data – which in turn
allows much more data to be acquired, with significantly greater timeliness.

The Focus Is Clear

There’s not a lot of disagreement about where the ROI for RFID will come from.
Greater granularity of information combined with its near real-time nature will
greatly increase information velocity. Data acquisition costs will decline due
to a reduced need for human data gathering. Quality and timeliness of information
translate directly into supply chain efficiencies that reduce cost. For retailers,
a more efficient supply chain translates into a greater likelihood that goods
will be where customers want to buy them, when they want to buy them (i.e.,
reduced stockouts).

Moreover, there’s not much disagreement as to what the standard will be. In
the past, lack of RFID standards has been the single greatest impediment to
adoption of the technology in the supply chain, even while it has enjoyed great
success in other areas such as electronic road tolling and animal tagging.

Today, the focus is clear. For retail and supply chain applications, the standard
is EPC. Electronic product code enjoys widespread support, and is the focus
of the initiatives and mandates from large retailers which have garnered so
much press of late. The success of EPC is rooted in its history. It emerged
from an organization known as the MIT Auto-ID Center. The center was a private/
academic partnership driven by some of the world’s largest retailers and consumer
packaged goods companies, in partnership with a broad spectrum of technology
providers. EPC technology simply works better and is more focused on user requirements
than previous generations of RFID technology. As we move forward, management
of EPC has transitioned to a nonprofit organization associated with the Uniform
Code Council (UCC) and EAN International. This new organization – EPCglobal
– is expected to continue development of the standards while using UCC/EAN’s
experience of retail bar code standards to ensure an appropriate support infrastructure
is developed.

Finally, it seems clear that RFID/EPC technology works. In response to the
retailer initiatives discussed above, a significant number of pilots are already
well under way. While some difficulties have been encountered – and no doubt
more will be – the basics of the technology are proven. Pallet tags can be read
reliably when passing through a dock door portal. Case tags can be read reliably
– as long as they are singulated on a material handling system first. Reading
many cases simultaneously while on a pallet remains technically challenging,
however, and is the area where most improvement is possible.

Overall, the agreement is clear – ROI is defined, the standards are there,
and the technology works. It sounds like there are few remaining challenges.
Unfortunately, that’s not quite the case. Everything looks good at a pilot scale,
but the real challenge is yet to come – implementing these pilots enterprisewide
and ensuring that broad companywide deployments are not only possible, but also
profitable.

Scaling RFID for the Enterprise

As we change our focus as an industry and begin to look beyond pilots to full
enterprise deployments. the following challenges arise:

• Integration with other data sources and devices such as bar code, wireless
  networks, and portable data terminals is critical. There will be no RFID islands
  in the warehouse of tomorrow. RFID data and devices must interact seamlessly
  with data gathered through other means.
• Solution suppliers with a proven track record will be preferred. One thing
  that is clear is that when RFID is deployed at scale, the scale will be quite
  large in scope.
• Manageable and scalable readers and software infrastructure will be key.
  Once the reading infrastructure is installed, the challenge becomes keeping
  it running smoothly and efficiently. How do you know whether an RFID reader
  is working? Is it functioning at full capacity or is it impaired in some fashion?
  What happens when an RFID reader fails? How often will this happen?
• Expansion of existing solutions to include EPC will be preferred. IT and
  operational managers already have a plethora of software, hardware, and technology
  to manage; standalone RFID technology can be viewed as a burden.

So how can companies move toward solutions that address these issues? It all
starts with one thought: “Point solutions are not adequate – only integrated
architectures can provide the value that EPC promises.”

Capture, Move, Manage

The message of experience to date is simple – EPC will deliver its greatest
value, and realize its true business potential, only when it’s deployed as part
of an overall architecture that integrates all of a corporation’s data and mobility
needs. Any such architecture must meet these fundamental functions:

• Capture information in real time at the point of business activity;
• Move information instantly to and from the point of greatest impact; and
• Manage the unimpeded flow of information and the devices that supply it
  with exceptional efficiency and security.

Architectures That Deliver Value

A key element of this architecture is not just that these layers – capture,
move, manage – exist, but that they interact in an integrated fashion to optimize
business value. How can an integrated architecture deliver value? Let’s look
at a few examples:

Imagine a scenario where some portion of your wireless LAN bandwidth is dedicated
to the receiving function in a warehouse, through a VPN, or other mechanism.
What happens when exceptionally heavy inbound loads occur? In an integrated
architecture, this can be detected and the class of service for that VPN can
be upgraded, making more bandwidth available to the receiving function.

What happens in a realistic warehouse scenario, where a worker may be moving
dynamically between items that are tagged with EPC tags and items in an adjacent
aisle or storage bin that are tagged with bar code? In an integrated architecture,
devices would be capable of switching quickly between bar code and RFID on a
transaction-by-transaction basis, meeting the needs of the realworld environment.

What happens when an administrator needs to manage a wide variety of mobile
and fixed devices, including 802.11 wireless infrastructure and a geographically
disseminated network of RFID readers? In a nonintegrated architecture, it’s
time to break open two, three, four, or more manuals. In an integrated architecture,
a single interface for managing a wide variety of devices is available, reducing
complexity, cost, and training requirements.

Moreover, this trend toward integrated architectures is likely to pick up steam.
In particular, over time the market is likely to move toward an increasingly
integrated product strategy that seeks to exploit convergence between wireless
data and RFID infrastructures wherever possible. At some point, this may even
result in a unitary infrastructure, where the difference between these components
is no longer relevant. While it can be difficult to predict the pace and direction
of technical innovation, it is clear that only companies with primary technical
expertise in both RFID and wireless 802.11 systems will be in a position to
drive possible convergence.

Closing Thoughts

There is simply no disagreement – RFID in general and EPC in particular are
going to become a central part of the supply chain technology infrastructure.
Business Integration Journal stated the case succinctly in their January 2004
issue: “Widespread RFID adoption is inevitable and will have a transformational
impact on supply chain execution.” As RFID evolves from pilots to enterprise
rollouts, point products will quickly give way to RFID integrated with end-to-end
enterprise solutions. Companies will need to ask themselves: How will RFID solution
providers meet this need? The answer is clear: an EPC-enabled enterprise mobility
architecture that integrates the ability to capture, move, and manage a variety
of data and devices – including RFID.