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EPC and the Need for Good Data

Initiatives to improve companies' ability to share clean data will affect the pace of EPC adoption. By Marshall Kay
By Bob Violino
Aug 03, 2003Aug. 4, 2003 - Following Wal-Mart's June 11 announcement that it will require its top 100 suppliers to put Electronic Product Code tags on pallets and cases shipped to the retailer, many people have begun to assume that the retail industry will move rapidly to adopt the EPC. That may be true,
but the ability to share data may have a profound impact on the rate of adoption.

That's the view of many leading retailers and suppliers. The CEO of a leading US food retailer recently stood up in front of nearly 100 fellow CEOs and presidents at the Grocery Manufacturer of America's Executive Conference and said: "I have never seen anything start to explode like EPC. But if we don't get data synchronization right and the registry up, none of this will happen." No one disagreed.

Very few of the people devoted to the advancement of EPC technology seem to fully appreciate why it's so important that retailers and manufacturers make significant headway with data synchronization before turning their full attention to EPC. Not only must companies clean up or purge inaccurate data currently residing in their legacy systems; they must also take steps to enable the continuous automated exchange of standardized data between themselves and their trading partners. Global synchronization of item master catalog data, through UCCnet's GLOBALregistry, will lead to a significant increase in the quality of data. In so doing, it provides the foundation upon which future collaborative initiatives, of which EPC is merely one, can proceed.

None of this is terribly controversial in the EPC community either. A chorus of chuckles and nodding heads greeted Ed Gropp, chief business and technology officer for Ahold Information Services, at the recent RFID Journal Live! conference when he joked that unless data issues are resolved, EPC will only speed up the flow of bad data. Yet the significance of his comment appears to have been lost on many. RFID vendors need to understand that they are competing with global data synchronization (GDS) projects for limited organizational resources. The fact that their customers have made GDS a higher priority than EPC is not a bad thing. It's in the RFID vendor's interest for the early collaborative EPC pilots to succeed. Bad data puts that outcome at serious risk.

Imagine running a collaborative pilot with corrupt data. A pair of blue jeans gets pulled from the retailer's shelf, triggering a message to the back room. On-shelf position is low. The back room is also running low on that item, triggering an order for replenishment. Yet instead of a shipment of blue jeans, the truck arrives with corduroy pants. Or perhaps blue jeans do arrive, but they're the wrong style. Unless the retailer and supplier are sharing identical data, these unfortunate scenarios are inevitable. And rightly or wrongly, EPC will suffer a black eye.

But if EPC acts as a license plate, isn't GDS irrelevant? In theory Auto-ID Inc.'s EPC registry (to be launched shortly) would create a single "one truth" catalog that all parties could refer to. In practice, no retailer is going to agree to relinquish control of its item master catalog. Item master maintenance is a huge issue that gives rise to a significant amount of ongoing work for retailers because of its criticality across the extended enterprise -- think inventory control, financial reporting and category management, to name a few.

If you were Safeway, for example, would you cede control of this important function to your network of trading partners? Not likely. This position was confirmed in a series of interviews conducted jointly by A.T. Kearney and Kurt Salmon Associates this spring. We spoke to senior executives from more than 80 organizations, including leading technology vendors, on behalf of the GMA, the Food Marketing Institute, the National Association of Chain Drug Stores, the National Retail Federation and the National Association of Convenience Stores. The focus of the interviews was on the interconnection between GDS and EPC. The results were presented in June to an exclusive audience of Presidents and CEOs at the GMA's Executive Conference at The Greenbrier. The final report is due for publication later this summer.

If you're an EPC vendor, the good news is that your customers appreciate the need to investigate EPC more seriously. GDS may delay large investments in EPC technology, but this ultimately is in the best interest of the EPC community, not to mention the customer. Vendors that demonstrate awareness of this issue and express interest in the status of their customers' GDS implementations will earn favor and respect. Don't let poor data catch you by surprise.

Marshall Kay is a consultant with the global management consulting firm A.T. Kearney. He focuses on serving consumer industry and retail clients. You can share your thoughts on this article directly with him at marshall.kay@atkearney.com.

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