When it comes to adding visibility to your supply chain, RFID is among your best options. The addition of interoperability standards from EPCglobal could make the implementation of RFID even easier, with a higher return on investment.
With current RFID (Radio Frequency Identification) tag implementation, different companies can read tags and log the data, but there isn’t any common vocabulary or mechanism for sharing that information. The new Electronic Product Code Information Services (EPCIS) 1.0 that is being tested would set standards for cross-company, open loop supply chain optimization applications.
EPCglobal, a not-for-profit organization dedicated to driving global adoption of the Electronic Product Code (EPC) for supply chain excellence, had business, hardware and software action and working groups focusing on the prototype for the RFID standards. Those groups were working to build better specifications so the different vendors using the tags could “talk” to each other’s software, eliminating some potential errors. Those specifications are then ratified by a Board of Governors and approved for implementation, said Pete Settles, media contact at EPCglobal.
Using the aerospace industry as an example, Settles says the standards would be beneficial in a case where an airplane lands and needs to find a spare part to get back in the air quickly. The standards could pinpoint the necessary parts, even if they are from a different company.
Settles also notes that the software designed to implement the standards is tested by a third-party lab for certification, to help “build more confidence” in a system that will “operate in predictable ways.”
With that certification, “users can focus their resources on completing pilots and capturing information in real business solutions rather than on evaluating software components,” EPCglobal said.
According to Bryan Tracey, chief architect and vice president of engineering for GlobeRanger, an RFID middleware vendor, the idea behind the standards is to be able to use RFID at a more granular level to increase supply chain visibility and efficiency, which will create a higher quality of information flow between companies and their trading partners. While RFID has yet to reach the 5-cent-per-tag mark companies are hoping for, the current cost for tags can be offset by the potential ROI, he added.
For manufacturers, the benefits are clear. This standards system means that for the first time, manufacturers have visibility through every step of their supply chain. Retailers and distributors can benefit too, since they will know in advance where a product is and when it will get to wherever it needs to be.
“Today, we truly have a realistic opportunity to achieve end-to-end supply chain visibility,” said Carolyn Walton, vice president of Wal-Mart, in a statement. “We can cut our expenses. We can reduce the concerns about counterfeit products through powerful item identification and authentication. We have the means to create a safer and more secure supply chain. And most important of all - we can do a better job of taking care of our customers.”
While cost for implementation may vary based on the size of the company and the product it plans to tag, EPCglobal recently released an online tool, the EPC Implementation Advisor v1.0, which is designed to guide companies through the implementation process.
It has a five phase approach that assesses company needs and desired outcomes for either basic, intermediate or advanced implementations. It gives companies a better understanding of what their costs may be, what benefits they may see and when they can expect to see ROI.
EPCglobal is currently testing the standards in a pilot that will use RFID tags to track sea shipments between Hong Kong and Japan. Hardware and software companies, government bodies and global supply chain providers were all involved in planning the pilot. The data associated with it will be exchanged through EPC Information Services. That phase of the pilot is expected to be completed in February 2007, and a second phase between Shanghai and Los Angeles has an anticipated completion date of September 2007.
EPCglobal said the first phase of the pilot seeks to demonstrate the interoperability among multiple trading partners and service providers in a global supply chain; utilize EPCIS/RFID technology components and EPCglobal standards; enable visibility across the supply chain; test and develop requirements for Active RFID and integration with associated technology; identify standards opportunities for transportation and logistics providers; and create an environment of open results and information sharing for the EPCglobal member community.
The second phase will focus on the EPCIS, with information be exchanged between end-users like customs administrators.
“This truly multi-industry, multi-stakeholder initiative is a significant step toward standardizing RFID data,” said Chris Adcock, president of EPCglobal Inc.