Meeting the Needs of Small and Midsized Suppliers

By Steve Keifer

Assessing SMBs' Readiness for RFID
While mass adoption of RFID by SMBs may be several years away, actions taken in the coming years can lay the groundwork for that future. Currently, many SMBs do not participate in the related data-synchronization and electronic data interchange (EDI) processes necessary for RFID success. Of additional concern is that many pallets and cases originating from SMBs are not serialized or labeled with a bar code.

EDI and Bar-coded Labels
The most common EDI document used to automate receiving is the advance shipment notice (ASN). This is an electronic message sent by a supplier to a retailer's warehouse management system (WMS) with details about a forthcoming shipment, including the order number, delivery address, packaging structure, delivery date and transportation carrier. ASNs are often used in conjunction with standardized bar-coded labels. When goods arrive at a retailer's distribution center, a scanner reads their bar codes and queries the WMS for the associated ASN. The retailer can then access the order details electronically, eliminating the need to inspect the shipment physically. In the future, RFID tags will be substituted for bar-coded labels. However, the need for the ASN to provide associated order details will remain. For SMBs that have already adopted bar-coded labels, the adoption of RFID is simpler, as it is a newer technology replacing an older one, rather than an entire shift in business practice or culture (as required by less technologically advanced SMBs).

Data Synchronization
Data synchronization is another critical, foundational technology necessary to realize the promise of RFID. Data synchronization is a standardized approach for manufacturers to share their product catalogs electronically with retailers. Product catalog data includes marketing, packaging, pricing, promotion, taxation and regulatory information. Most significant to note is that the electronic product code (EPC) utilized in the retail supply chain will be derived from global trade identification numbers (GTINs) supplied by manufacturers during data sync. GTINs highlight the strong link between RFID and data synchronization. If a manufacturer doesn't keep its GTIN list current and accurate, a retailer may not be able to identify an item, case or pallet.

Data synchronization processes also exchange information about the packaging hierarchy, such as the quantity of items per case and cases per pallet. Accurate packaging data is critical for realizing RFID benefits in processes such as store-shelf replenishment.

Leading retailers and larger suppliers have been early adopters of data synchronization, and a growing number of SMBs are beginning to leverage the technology as major retailers of DIY, grocery and general merchandise roll out supplier-enablement programs. However, the majority of SMBs in the retail supply chain today are not evaluating or deploying a data-synchronization strategy.

Business Applications
RFID can generate significant amounts of data about the locations of goods as they flow through the supply chain. The data, if analyzed, can identify supply-chain inefficiencies, expose potential out-of-stocks and pinpoint causes of shrinkage. Both SMBs and large businesses can benefit significantly from the new insights RFID can provide. However, many SMBs are not equipped with the business intelligence or ERP systems necessary to consume and analyze the data generated by retailer and logistics-provider RFID systems.

While SMBs have not embraced ERP or business-intelligence suites, they have increasingly adopted commercial, off-the-shelf software applications to manage such business processes as accounting, logistics and manufacturing. These applications are lighter versions of ERP, designed for the reduced complexity of the SMB environment. Popular SMB packages include Intuit Quickbooks, Peachtree Pro Accounting and Microsoft Dynamics. A handful of early adopters have already begun to use these packages for RFID, but the majority of businesses have not. The vendors of these solutions need to make their RFID features more robust.