EPC Finds a Beachhead in the Supply Chain

Each time we produce RFID Journal LIVE!, our annual conference and exhibition, the event is different. The first year was small and mostly attended by those curious about RFID. The next year, there was a sense of enthusiasm, a feeling that attendees were part of a pioneering effort to transform the way companies do business. That enthusiasm faded in 2005, as companies found the benefits would be harder to achieve than anticipated. Last year, there was a practical focus on internal applications of RFID that could drive benefits. That continued strongly this year, though companies were also really excited about using RFID—in particular, Electronic Product Code (EPC) technologies—to achieve benefits among business partners.

Rollin Ford, Wal-Mart‘s CIO, discussed Wal-Mart’s committment to RFID because it is reducing out-of-stocks. Rear Admiral Mark Harnitchek, supply corps. director for the U.S. Dept. of Defense’s Transportation Command (USTRANSCOM), said the DOD is committed to rolling out RFID globally because it is seeing benefits from the many projects going on across the DOD’s operations.

T3Ci, a leading provider of software for analyzing EPC data, hosted a reception celebrating the fact that the company has analyzed more than a billion tag reads for customers. Jonathan Golovin, the company’s chairman, CEO and co-founder, explained how customers are now able to act on RFID data to reduce out-of-stocks and improve the management of in-store promotions.

Two other software vendors, TrueDemand and OATSystems, also made presentations about how they can help end users improve the replenishment and execution of in-store promotions. Our cover story in the current issue of RFID Journal magazine chronicles, in detail, how Kimberly-Clark is using OAT’s software to analyze EPC data from Wal-Mart to make sure promotional displays are in the stores when the promotions are being advertised (see Kimberly-Clark Gets an Early Win). Executing promotions properly can significantly improve sales, benefiting both manufacturers and retailers.

Promotions management represents a beachhead for EPC in the supply chain. I’ve said all along that the use of EPC in the supply chain wouldn’t be able to ramp up until several things happened:

  • The creation of standards allowing tags to be read anywhere in the global supply chain and companies to share the data securely.
  • Companies figured out how to read tags on products consistently.
  • Companies learned where they can achieve short-term wins.
  • Companies determined how to use EPC data in new applications or integrate EPC data with existing applications so they can act on data.
  • Companies changed their business processes to act on RFID data and achieve the promised benefits.

The standard for EPC tags was ratified in late 2005, and data-sharing standards for the retail/CPG industry were agreed upon in 2006. Early adopters figured out, for the most part, how to read tags consistently during those years. In 2006, they also focused on promotions management as an obvious short-term win, and they began working with software companies to discover how to analyze the data. Then, in late 2006 and into 2007, they learned how to change their business processes so they could act on information about the location of promotional displays in the supply chain.

Promotions management, therefore, is the first EPC “use case”—to use EPCglobal‘s lingo—where all the processes needed for ramping up are complete. Kimberly-Clark told me it would like to tag all promotional items bound for RFID-enabled stores.

This is significant because the software and business process changes used to better manage promotions can be applied to managing replenishment and reducing out-of-stocks on fast-moving products. Thus, volumes can begin to build as early adopters tag more promotional displays and then tag more fast-moving products. Indeed, Kimberly-Clark has said it will begin using EPC technologies to improve its replenishment (see Kimberly-Clark Using RFID Analytics Service to Trim Out-of-Stocks).

Don’t expect to see volumes of tagged goods ramp up overnight, however. There is still a lot of work to be done to put the infrastructure and business processes in place to achieve the benefits of improved promotions tracking and replenishment. But the applications to which EPC can be put can expand dramatically once the basic infrastructure and processes are in place. I’m willing to bet that by the time of EPC Connection 2007, EPCglobal’s fourth annual fall event, produced in partnership with RFID Journal, we’ll see some new end-user success stories that will keep the buzz from RFID Journal LIVE! going strong.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.