RFID and the Electronic Product Code

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RFID and the Electronic Product Code
MIT Enterprise ForumRFID SIGOctober 3,
2005Kenneth R. Traub, PhDCTO, ConnecTerra Inc.
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Speaker Background

• CTO of ConnecTerra, Inc.
• ConnecTerra makes infrastructure software for
  RFID and other device computing applications
• Leader in EPCglobal, the worldwide standards body
  for RFID and Electronic Product Code technology
• Co-founder of Software Action Group
• Co-author of most EPCglobal software specs
• Member of EPCglobal Architecture Review Committee

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Agenda

• EPC / RFID vision
• EPCglobal Standards
• Current Deployments
• Retailer
• Supplier
• Business Benefits

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Auto-ID Vision

• The Electronic Product Code (EPC)
• Gives a unique identity to individual physical
  objects items, cases, pallets, locations, loads,
  assets, etc
• Radio Frequency Identification (RFID)
• Cheap sensing of object EPC codes
• The Yin and the Yang
• EPC enables new, value-creating business
  processes
• RFID makes those processespractical

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Application Retail Promotions
Mfrs DistributionCenter
RetailersDistributionCenter
Manufacturing
Retail Store

• Give unique EPC to each case of
  promotion-packaged item, on RFID tag
• Equip facilities with RFID readers loading dock
  doors, trucks, retail back-room door, dumpster
• Can now measure drive promotion
• Timeliness is promotional packaging reaching
  consumer in time?
• Effectiveness is promotional item selling
  better?

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Typical CPG Use Case
Manufacturer
Retailer
Store
Dist Ctr
Dist Ctr
Factory
Store
Dist Ctr
Dist Ctr
Store
Q when does product reach sales floor?
Q when was missing product shipped?
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Key Standards

• Electronic Product Code (EPC)
• Unique identity to physical objects
• RFID tag/reader protocol
• Tag applied by Company A readable by Company B
• EPC Information Services (EPCIS)
• Exchange of detailed information about EPC
  observations between trading partners

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Electronic Product Code

1732050807
EPC
Company Code
Product Code
Unique Serial Number

• Every item has distinct serial number
• Capacity for 200 billion serial numbers per item
  class (on 96-bit tag)
• New business processes based on tracking
  individual things

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EPC Information Services (EPCIS)

• Exchange of business-level EPC data
• What, where, when, and why
• At business process level
• Within enterprise and across enterprises
• Key technical challenges
• Generate data in form meaningful to partners
• Create value through data exchange

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Data Creation Example Palletizer
R
R
EnterpriseApp
at time T, the association of the following case
tags to the following pallet tag was created at
palletizer 3, to fulfill order 1234
EPCIS
PalletizerCapture App
What, Where, When, Why
between the time the case crossed the first beam
and the second beam at location L, the following
tag was read
ALE
Filtering Collection
What, Where, When
dozens of individual tag read events from
specific antenna
Reader Protocol
Reader
Reader
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EPC-enabled Operational Processes
RFID Tag_at_Ship Workstation
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RFID Capture Apps
Manufacturer
Retailer
Dist Ctr
Dist Ctr
Store
Tagging Station
EPC Capture Apps
Palletizer
Portal
Portal
Portal
Portal
Shelving
Doorway
EPCIS Events
ObserveDisaggregate
Commission Observe
Observe Aggregate
Observe
Observe
Observe
Observe
Observe
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EPC Data A Global Resource
Manufacturer
Retailer
Dist Ctr
Dist Ctr
Store
EPCIS Events
ObserveDisaggregate
Commission Observe
Observe Aggregate
Observe
Observe
Observe
Observe
Observe
Global EPC Data
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Challenges Addressed in Current Pilots

• EPCIS data must be meaningful to partners
• Capture apps must abstract away from operational
  details.
• Partners must share understanding
• Agreed terminology for business steps
  (receiving)
• Master data to interpret location identifiers
  (store 23 back room)
• Global EPCIS cloud implemented by data exchange
  operations

EPCIS Association Event Time 314pm
1/1/2005 EPCs 123, 124, 125,
Location DC 2 inbound Biz Step Receiving
Data Center
Data Center
EPCIS Capture Interface
EPCIS Capture
EPCIS Repository
EPCIS Repository
EPCIS Query Interface
EPCIS Query
Internal Apps
Internal Apps
Manufacturer
Retailer
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How This Works Today (CPG)

• Large retailers require case- and pallet-level
  EPCs on RFID tags
• WalMart, Target, Albertsons,
• 200 suppliers currently comply
• Retailer ROI
• Improved operational efficiency within own walls
• Supplier ROI
• Several opportunities based on retailer-provided
  data

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CPG Retailer Supply Chain Suppliers View
Supplier
Retailer
Retail Stores
Factory
Distribution Ctr
Distribution Ctr
1. EPC data collected during tagging and shipping
3. Retailer data shared with supplier via
retailers network
2. EPC observations collected as product moves
EPC Database
EPC Database
4. Combined data used to gain business benefits
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Deployment View Retailer Example
Enterprise-wide Data Center
EPCIS Query
Trading partners
EPCIS
EPCIS Capture
Retail Store
Dist Center
Retail Store
Rdr
Mware
Portal
EPCIS Capture
ALE
Rdr Prot
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Deployment View Supplier Example

• Focus for suppliers is getting tags onto
  products. Not as simple as it sounds
• Tag_at_Ship
• Least invasive, enabled per shipment
• Tag_at_Pick
• Also enabled per shipment, less material handling
• Tag_at_Source
• Least labor, but all customers receive tags

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Tagging Process Phase 1
Factory
Distribution Center
4. Sorted by barcode
3. Labels applied during pick
1. Product warehoused
Sorter
PickingStation
Sort Lane
2. Case EPC labels printed, stored on rolls
R
5. EPCs read and associated
ConnecTerra Middleware Tagging Software
6. Pallet EPC label printed
Tag Printing Station
P
7. Pallet shipped
WMS
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Tagging Process Phase 2
Factory
Distribution Center
4. Sorted by RFID and associated
4. Sorted by barcode
3. Labels applied during pick
1. Product warehoused
Sorter
PickingStation
Sort Lane
2. Case EPC labels printed, stored on rolls
R
5. EPCs read and associated
ConnecTerra Middleware Tagging Software
6. Pallet EPC label printed
5. Pallet EPC label printed
Tag Printing Station
P
7. Pallet shipped
6. Pallet shipped
WMS
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Tagging Process Phase 3 (long term)
Factory
Distribution Center
4. Sorted by RFID and associated
3. Sorted by RFID and associated
3. Labels applied during pick
1. Product warehoused
2. Product warehoused
Sorter
R
R
R
PickingStation
Sort Lane
R
2. Case EPC labels printed, stored on rolls
1. Case EPC labels delivered on packaging
Additional visibility
ConnecTerra Middleware Tagging Software
5. Pallet EPC label printed
4. Pallet EPC label printed
Tag Printing Station
P
Packaging Mfr
6. Pallet shipped
5. Pallet shipped
WMS
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Supplier Benefits Increased In-stock

• Key performance indicator for supplier are goods
  in stock at retail stores?
• Cant sell product if its not where the consumer
  can find it
• Key metric for retailers rating of supplier
• Supplier believes an increase in their in-stock
  rate is possible by using EPC data to examine
  supply chain
• Gather 6 months of baseline data
• Alert if deviation arises e.g., abnormal delay
  in shipping from retailer DC to retailer store
• Take appropriate action in response to alert

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Supplier Benefits Discrepancy Reconciliation

• Discrepancy arises when shipment contents not
  immediately confirmed e.g., concern that
• Wrong product shipped
• Too few products shipped
• Most resolved successfully, but resolution
  process takes time
• Within two months of commencing RFID operations
• Far fewer than the usual 80 of RFID shipments
  reported discrepancies
• Several shipments with discrepancies had retailer
  reads
• ? minutes to file for resolution, instead of days

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Supplier Benefits New Product / Promotions
Execution

• Large manufacturer sees only 70 of promotional
  displays reaching sales floor in time to coincide
  with advertising.
• Merely tagging display items yields instant ROI
• Recovery of incentive fees paid to retailers
• Better prediction of transit time to store front
• Ability to course-correct mid-promotion

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Summary

• EPC and RFID a reality in CPG supply chain today
• Most suppliers to major retailers in compliance
• Many tagging every SKU
• Retailers sharing data to suppliers
• Immediate benefits from RFID/EPC data sharing
• Increased In-Stock Percentage
• Reduced discrepancies
• Illumination of inside of supply chain
• New product / promotions
• Longer-term benefits expected
• Increased in-stock
• Increased operational efficiency
• Obstacles
• Tag cost
• Emerging Technology