The hype surrounding radio frequency identification (RFID) has been going on for years, but it�s been mostly confined to industry forums and largely about the market potential. Now we�re seeing articles about RFID and the new term, electronic product code (EPC) networks, in the general media, and it�s being talked about in the present tense.
Once we get over the shock of seeing barcode technology featured in the general media, we can get behind the issues and look at what is really happening. Are we going to see RFID-tagged razor blades in the near future? Are we going to see tagged clothing walking out of the stores? Probably not.
Yet we are clearly moving in that direction. There have been several high profile EPC initiatives of late, including the highly publicized Auto ID Center at the Massachusetts Institute of Technology (MIT), which is dedicated to bringing EPC barcode pricing down to a level that enables widespread use in low-cost items.
At the consumer level, Gillette and Wal-Mart proposed a pilot project that would test the feasibility of tracking Gillette products through checkout. The Benetton Group proposed the usage of EPC tags to track clothing items in its stores. Both projects have been shelved for now.
For the most part, these projects are not ready for prime time for two reasons:
1. The technology has to advance to the point where collecting EPC information is both cost effective and efficient.
2. Individuals have to debate the role of identification tags that have the ability to broadcast their presence. This raises privacy issues that must be resolved.
These issues will be addressed, and widespread use of electronic tags will come eventually. But where�s the action today? It�s in wireless tracking of pallets and cases
The one area where wireless is practical and non-controversial is in business-to-business commerce. Here it makes sense to use EPC tags because:
� The vendors, shippers and receivers already use optical barcodes.
� The system is a closed loop.
� The items (cases and pallets) are valuable enough to justify the cost of the tags and the reading equipment.
� The cost benefits, through integration with shipping/receiving and electronic data interchange (EDI) systems, are enormous.
� The costs of not closely controlling the movement and security of shipments are high.
� There are no privacy issues.
� There are heavyweight retailers, such as Wal-Mart, who back the use of EPC tags at the wholesale level.
This last point is important and worth spending some time on. You may recall that optical barcoding languished for several years back when it was first introduced. Some companies were using it; some where not. Standards were not strongly enforced, so the industry and the implementation were fragmented. It was similar to any technology (i.e., electricity, telephone or even railroads); until standards were introduced, the technology did not rise to its potential.
For barcoding, the momentum came when the large retailers got behind the technology and helped define the standards � what has become known as compliance labels. They also established a usage standard by mandating barcodes on all of the products they received. This entire process took a long time � over 10 years � which, in retrospect, was too long. It was not until K-Mart, Sears, Wal-Mart, and other industry leaders forced their thousands of suppliers to use barcodes that the technology took off and became more widely used. �
Last time around, suppliers didn�t believe the big retailers would actually enforce the standard, and as a result, many of them got caught flatfooted when their products were rejected or they were fined by the retailers.
We are about to go through the same process with RFID, but this time it will not take 10 years.
Compliance RFID
This past June, Wal-Mart announced a program encouraging its top 100 suppliers to use wireless barcode tags for shipping/receiving/inventory control by 2005. Other major retailers are already making similar moves. The movement won�t stop with the top 100 suppliers at Wal-Mart or any other company.
Further, the Uniform Code Council (UCC) is leading the standards cause, and MIT is putting its considerable technology resources behind the effort. Microsoft recently joined the UCC�s AutoID Inc., an organization that is developing open standards for the EPC Network. EPC is the next big thing, but it�s going to happen in stages, and the first stage directly affects shippers.
Here�s how the electronic tag market is developing. The initial stages will be just as Wal-Mart management envisions: Pallets, containers and possibly some cartons will be electronically labeled to facilitate tracking through shipping, receiving and warehousing. Traditional barcodes will continue to dominate item level and retail checkout tracking for a while.
The large retailers and other leaders in the warehouse and distribution markets are leading the way and, in the process, are encouraging their business partners to come along. Wal-Mart�s initiative alone will introduce at least 100 of the largest retail suppliers in the world to EPC. It will require millions of EPC tags and that will drive down the cost of the tags. The next logical step is to bring this technology to smaller suppliers because no company is going to want to maintain two tracking systems in its warehouses and shipping/receiving operations.
So what can you as a shipping manager do to prepare? First, start by �getting smart� on the technology. You don�t have to understand all of the bits and bytes of it, but you do need to be aware of the dif-ferent technologies and approaches. Both the AutoID Center Web site (www.autoidcenter.com) and the UCC�s AutoID site (www.uc-council.org/autoid/index.html) have a wealth of information.
Look for ways that electronic barcodes can make things easier and more efficient. If properly implemented, they should eliminate the individual scanning of pallets and streamline the process of taking warehouse inventory and updating management systems.
Also, contact a systems integrator who knows RFID and is current with EPC developments to get an understanding of what it�ll take to make the transition. While you�re at it, get a demo so you can see the potential of the system.
EPC is coming. The smart strategy is to embrace the change and prepare for the future.
Mike Lauria is research development advisor at TEKLYNX International (www.teklynx.com). For more information, contact Mike by phone at 888-629-4444, or e-mail sales@teklynx.com.
