Cardinal Health Deems RFID Pilot a Success

Cardinal Health also decided to follow the practice of allowing the reading of item-level EPC tags at a single point along the supply chain—such as when goods leave a distribution center—to serve as the record for other points along the chain, rather than performing another item-level interrogation. The process is known as inference because Cardinal infers that the initial read was accurate, and that nothing has happened to change the status of pallet or cases. With the inference reading, Cardinal has an electronic record of all those individual item-tag numbers, which becomes part of the advanced shipping notice (ASN) for that pallet and its cases. The ASN is held in a database and correlated with the tag ID numbers for the items on that pallet.

Inference is used to avoid the problems that result if a read at subsequent points in the supply chain aren't as accurate as the first read. If a company were to read the item tags in a case at the staging area, for instance, with only 98 percent accuracy of items—a distinct possibility given that read rates aren't always 100 percent at the item level—employees would have to sort through the case manually to verify the product count. For internal operations, where an ASN is present, inference will suffice. But it doesn't work as well for the extended supply chain, where partners either don't, or can't, receive item-level ASNs.

"We were hoping we wouldn't have to use inference," Kuhn acknowledges, "but it may not be a big deal in our own operating environment because we already exchange advance shipping notices."

Kuhn and other Cardinal Health executives agree, however, that inference may not be acceptable to legislators and regulators, such as the U.S. Food and Drug Administration, which is focusing on drug-pedigree programs to stem the number of counterfeit drugs entering the U.S. pharmaceutical supply chain. Pedigrees, either electronic or paper-based, document a drug's chain of custody as it moves through distribution channels.

"If, in fact, in a packaging or distribution process, you read something and saw all the items, and then at the next stop didn't see all of them, from a regulatory perspective, that might very well kick off a recall [of the items]," said Renard Jackson, the company's executive vice president of packaging services, at the conference. If item-level read rates were consistently 100 percent, he added, "we might not need inference."

With a successful trial under its belt, Cardinal Health is ready to move on to the next stage. Though Kuhn declines to share details, she says the company will continue to build on the knowledge it has gained. "We'll now start to integrate RFID with our operational process," she says, "but we're still very much talking about learning. We're past trying to figure out the technology, and now we need to figure out how we can make it work in our environment."