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EPC highway,
       Focus
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     Logistics



                    next right
                                 ...
implementation of RFID at Point of         Germany recently announced that it
Sale. In fact, several pilot trials and    w...
a manufacturing company like the                              The real benefits
“Best Company to Work for in 2004”
(Fortune...
where the products are at all times           already gearing up.
will generate $575 million savings, the       With an ad...
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The future of barcoding: EPC In Global Id Magazine

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Why manufacturing companies and retailers need to prepare for adoption of EPCglobal tags.

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Transcript of "The future of barcoding: EPC In Global Id Magazine"

  1. 1. EPC highway, Focus on Logistics next right I magine the ultimate in consumer shopping experience: Catherine goes shopping in her favorite supermarket; today she is excited about this story she heard on TV last night, about a new chip they are putting into her products which replaces what she reckons is this somehow old-fashioned barcode that the cashiers have to scan at the checkout counter, sometimes taking ages before she can get out of the store. This time the scanning of the “RFID” codes at the checkout counter takes only a few seconds for the entire shopping cart, and the cashier’s role has changed to helping her pack the With major goods. global players forging ahead with RFID, the time for manufacturers Coming soon to a supermarket and retailers to make strategic near you? decisions regarding EPC adoption is now, Until last year, many industry experts or risk finding themselves and analysts believed that this scenario at a competitive disadvantage was still 10 or 20 years away. Today, in the near future with major global players like Wal- Mart, Metro, Tesco, the US Department of Defense and others forging ahead by with RFID, Catherine’s new shopping Erwin experience may be much closer than De Spiegeleire, most people think. EAN International There is, of course, a roadmap for the 10 gid 13
  2. 2. implementation of RFID at Point of Germany recently announced that it Sale. In fact, several pilot trials and would impose a similar practice on its experiments are being conducted top suppliers by November of this year. on item level tagging of DVDs and Metro is also piloting WiFi technology garments [for example by Gap, Marks & for high-speed wireless transmission Spencer and Kaufhof (Metro)] although of EPC data from each data collection nobody is quite ready to organize location to Metro’s back office. But the “Catherine’s” new shopping experience winner for early adoption of RFID is just yet. But first things first: the RFID without doubt Tesco (UK), which has barcode, named EPC (Electronic Product announced that it would implement Code), will initially be applied at the RFID from April 2004. “shipping” unit level. Its use will only expand to encompass goods at the item As with most of the technological or “consumer“ level when it has really revolutions of the past (the telephone, proven itself. the fax machine, Internet, and mobile phones) the secret to widespread acceptance and use lies in scaling The timeline for RFID adoption fast. Mass adoption only occurs if the market is ripe for reaching a critical In 2003 and 2004, numerous tests mass that drives, sometimes indeed have been or are taking place to pilot forces, other players to join the game. EPC implementation. One of the most impressive projects is the Metro Future How the benefits Store Initiative, which is showing how The costs of the RFID revolution of RFID RFID will revolutionize supply chain add up management (SCM) and ultimately the RFID-barcodes come with a cost, in the case consumer’s shopping experience. there is no question about that. of one Metro In January 2005, Wal-Mart’s top 100 Manufacturers and retailers will need supermarket suppliers must apply EPC codes on all to invest in tags, readers, infrastructure, products they supply to the leading and business process changes that retailer. That’s only eleven months from are necessary to adapt their systems now. What’s more, Metro Group of and make the EPC network work. For 11
  3. 3. a manufacturing company like the The real benefits “Best Company to Work for in 2004” (Fortune’s laureate: The J.M. Smucker EPC benefits at the manufacturer’s Company), the investment will be at factory and warehouse levels accrue least $10 million. through the automation of a number of manual processes. At the pallet tagging In return for such investments in level, clear benefits arise from (but are RFID technology, manufacturers will not limited to) automation of barcode gain from a significant increase in scanning, pallet assembly optimization supply chain management efficiency. (less operator time), goods receipt, Through increased accuracy, the warehousing staging (automation of ability to gather information from storage location verification), truckload additional locations along the supply assembly and truck loading. chain, and e-collaboration between trading partners, EPC will reduce the As seen Depending on whether we speak about costs of launching new consumer with other tagging of cases or pallets, the benefits products in stores. Following the old technologies at the distribution centre level are in and still valid economic principle of in the past, areas such as shipment receipt, pallet supply and demand, the cost of RFID there will be staging, pallet breaking, order assembly chips (and their readers) will go down a switchpoint and truck loading. exponentially when sufficiently large in the EPC orders are placed by consumer goods adoption curve, Finally, at the retail store level, the retailers and manufacturers to the after which benefits are in the areas of order chip manufacturers. A few USD/Euro companies receipt, shelf restocking, mixed pallets cents is the target for making EPC fly at will have and return/recall processing. The table Catherine’s shopping basket level. to adopt on the previous page shows how these the new standard benefits add up on a yearly basis. in order Another huge benefit for the retailers What do you do to do business is theft reduction, both at the backdoor with all this data? level and in-store. With the proportions that theft has taken on, there are The EPC network - with chips sending millions of dollars to be saved with data to readers, and readers sending EPC tagging. For Wal-Mart, knowing data to an internet based infrastructure via the ONS (Object Naming System - similar to the DNS used for Internet) - will generate an incredible flow of information. One of the key challenges for users of this new technology will be to wisely select what data they need. This is “Good News” for the software industry. Furthermore, consumer privacy must be preserved (and the technology is there to enable that). 12 gid 13
  4. 4. where the products are at all times already gearing up. will generate $575 million savings, the With an adoption trend similar to that bulk of which comes from the much of Global Data Synchronization (and improved security that the tags provide before that, mobile phones and the in the warehouse alone. Internet), the CPG industry will reach the critical mass for RFID on pallets On the scale of Wal-Mart, the benefits and cases at the end of 2004, and the of RFID implementation can be critical mass for consumer items will estimated at US$8.35 billion, broken be reached at a much faster pace than down as follows: currently anticipated. • $6.7 billion: savings in labor costs by eliminating manual scanning at the To stay ahead in the game, companies case and pallet level; should get in touch with EPCglobal. • $600 million: reduction in the level of By joining the EPCglobal User Action “out of stock” products; Group and companies can play an • $575 million: savings from reduction active role in the development of of employee theft and “administrative” EPC solutions for data standards errors; through GSMP, the Global Standards • $300 million: savings from more Management Process. GSMP is a global efficient tracking of its 1 billion pallets; platform and a community of hundreds • $180 million: reduced inventory by of experts from leading companies knowing which product is where at worldwide and from EAN.UCC. anytime. The relevance of global Time for action standards There is a double reason why companies The beauty and relevance of having need to make the strategic decision put global standards on the agenda to prepare for EPC implementation. of the CEOs of the world’s leading First, the Global Data Synchronization manufacturers and retailers lies Network (GDSN) must be prepared, in the fact that never before which is a pre-requisite for full EPC has the connection between the implementation. In fact, as the EPC ultimate “raison d’être” of retailers, network will generate a vast quantity manufacturers, EAN International and of information, it is vital to ensure movements like GCI (Global Commerce that only clean and aligned master Initiative) and ECR (Efficient Consumer data is exchanged between trading Response) become so naturally clear: partners. Otherwise, “garbage in insisting on global standards, using becomes garbage out”, and errors in state-of-the-art technology in a the master data carried by EPC tags and truly collaborative environment, and transmitted by EPC readers will spread enhancing best business practices and like an infectious disease. processes across the entire value chain Second, retailers and manufacturers adds up to “shaping a better world who delay plans for EPC for consumers”. implementation may find themselves with a competitive disadvantage, as This is the price of Catherine’s leading retailers and manufacturers are satisfaction. 13

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