Executive Briefings

Taking Supply Chain Visibility to New Levels

RFID is finally becoming the solution that will make integrated supply chain management possible. 2009 promises to be a banner year for the technology, with the introduction of new and more ambitious applications.

Automated information capture tools such as barcodes took a number of years of industry effort to achieve large-scale implementation globally. RFID technologies, on the other hand, are making a worldwide impact in less time and with more influence on daily life. Moreover, users have learned a great deal from recent test projects, particularly about how the technology can create competitive advantage by improving supply chain processes in a difficult economic environment. As a result, RFID will become ubiquitous significantly faster than the information capture technologies that preceded it.

RFID/EPC (electronic product code) for transportation and logistics is entering a very active year and will probably achieve broad adoption in 2009. The applications have been tested in many ways and are supported by both passive and active technologies.

For example, interest group initiatives have demonstrated how RFID/EPC can help companies to track and trace goods moving between Shanghai and Los Angeles. In these projects the EPC technology integrated information on events that involved different actors in the supply chain, including suppliers, forwarders, and custom authorities.

However, what will be truly revolutionary is not the RFID technology itself, but the broad network of information sources around it that will take supply chain visibility to new levels. Supply chain collaboration, empowered by RFID/EPC and related EPCglobal standards, will be one of the most important items on the supply chain agenda in 2009. In this collaborative model different trading partners will share online data about their processes, and translate that into agreed KPIs in order to identify opportunities related to inventory management, service level offers and operational efficiencies.

In Colombia, for example, Almacenes Ã"°xito, the country's most important retailer, along with some of its leading vendors, has begun to implement EPC adoption plans at case level. The project involves the implementation of RFID/EPC for storage, shipping and receiving processes at every stage of the supply chain. The project also involves a third-party logistics provider that is supporting total product visibility and collaboration to improve inventory and reduce out-of-stocks to the end consumer. This is the first project of its type in Latin America.

In the coming months some project milestones will be reached that will launch another generation of applications based on the latest standards of identification: EPC HF Gen 2 protocol. This new standard, along with the use of EPC UHF Gen 2 protocol, will give users a new tool for developing better ways to achieve item-level tagging. Such applications will make it possible for some industries (notably pharmaceutical which is under pressure to make supply chains more secure by implementing item-level tracking) to have total, detailed traceability of an item from manufacture to point of consumption. In addition, retailers will begin applying the new technologies for EAS (electronic article surveillance) implementations, since using an EPC HF Gen 2 tag from origin would reduce the cost of protecting goods from shrinkage and theft.

The Outlook

These new opportunities will open the way to more rapid implementation of RFID technology worldwide. Although the technology will have the same fundamental elements in applications around the world, the key challenge is still how to make EPC/RFID projects more cost effective by harnessing the technology's power to create collaborative networks and increase supply chain efficiency. If these goals are achieved, we anticipate that in the future companies will be more willing to innovate and increase their use of EPC data to collect information regarding the carbon footprint associated with goods moving through supply chains. This will add a sustainability dimension to RFID and reinforce the technology's collaborative capabilities. In addition, end users will be able to take advantage of value-added services such as wireless product information, online payments using e-wallet and self-checkouts at retail stores.

Automated information capture tools such as barcodes took a number of years of industry effort to achieve large-scale implementation globally. RFID technologies, on the other hand, are making a worldwide impact in less time and with more influence on daily life. Moreover, users have learned a great deal from recent test projects, particularly about how the technology can create competitive advantage by improving supply chain processes in a difficult economic environment. As a result, RFID will become ubiquitous significantly faster than the information capture technologies that preceded it.

RFID/EPC (electronic product code) for transportation and logistics is entering a very active year and will probably achieve broad adoption in 2009. The applications have been tested in many ways and are supported by both passive and active technologies.

For example, interest group initiatives have demonstrated how RFID/EPC can help companies to track and trace goods moving between Shanghai and Los Angeles. In these projects the EPC technology integrated information on events that involved different actors in the supply chain, including suppliers, forwarders, and custom authorities.

However, what will be truly revolutionary is not the RFID technology itself, but the broad network of information sources around it that will take supply chain visibility to new levels. Supply chain collaboration, empowered by RFID/EPC and related EPCglobal standards, will be one of the most important items on the supply chain agenda in 2009. In this collaborative model different trading partners will share online data about their processes, and translate that into agreed KPIs in order to identify opportunities related to inventory management, service level offers and operational efficiencies.

In Colombia, for example, Almacenes Ã"°xito, the country's most important retailer, along with some of its leading vendors, has begun to implement EPC adoption plans at case level. The project involves the implementation of RFID/EPC for storage, shipping and receiving processes at every stage of the supply chain. The project also involves a third-party logistics provider that is supporting total product visibility and collaboration to improve inventory and reduce out-of-stocks to the end consumer. This is the first project of its type in Latin America.

In the coming months some project milestones will be reached that will launch another generation of applications based on the latest standards of identification: EPC HF Gen 2 protocol. This new standard, along with the use of EPC UHF Gen 2 protocol, will give users a new tool for developing better ways to achieve item-level tagging. Such applications will make it possible for some industries (notably pharmaceutical which is under pressure to make supply chains more secure by implementing item-level tracking) to have total, detailed traceability of an item from manufacture to point of consumption. In addition, retailers will begin applying the new technologies for EAS (electronic article surveillance) implementations, since using an EPC HF Gen 2 tag from origin would reduce the cost of protecting goods from shrinkage and theft.

The Outlook

These new opportunities will open the way to more rapid implementation of RFID technology worldwide. Although the technology will have the same fundamental elements in applications around the world, the key challenge is still how to make EPC/RFID projects more cost effective by harnessing the technology's power to create collaborative networks and increase supply chain efficiency. If these goals are achieved, we anticipate that in the future companies will be more willing to innovate and increase their use of EPC data to collect information regarding the carbon footprint associated with goods moving through supply chains. This will add a sustainability dimension to RFID and reinforce the technology's collaborative capabilities. In addition, end users will be able to take advantage of value-added services such as wireless product information, online payments using e-wallet and self-checkouts at retail stores.