This article was originally published by RFID Update.
June 16, 2006—Standards organization EPCglobal US has announced three new “value models” to help companies understand the financial impact of deploying EPC-based RFID solutions within their organizations. Each model addresses a particular vertical market: chemical, aerospace, and retail pharmacy. RFID Update spoke with EPCglobal director of action groups Bob Celeste about the release.
In essence, the models are a set of spreadsheets with preprogrammed formulas to produce calculations based on real-world, user-provided input. Variables like costs and net present value over a five-year period are incorporated. Each model comes with a usage manual as well as a white paper discussing the benefits. The manual is approximately 50 pages and documents the formulas behind each calculation. As spreadsheets, the models can be customized and extended according to the needs of a particular organization. “Users can augment the tool or use something that goes more into the nitty gritty data measurements,” said Celeste.
EPCglobal chose the chemical, aerospace, and retail pharmacy verticals based on its perception of where much of the EPC activity is occurring. (There are already two value models for consumer packaged goods and healthcare, both of which were released last year.) While the three models include common core components, they also vary according to each industry’s application of EPC RFID. “There are differences in how these different industries would use the technology,” noted Celeste. While retail pharma focuses on customer safety, prescription compliance, and product recalls, the chemical industry is concerned with risk management and hazardous material administration. Aerospace, by contrast, looks to RFID for improved monitoring of parts location and general asset management. Such vertical-specific RFID business drivers are all captured in their respective value models.
The models were developed in concert with university students from Silicon Valley-based Stanford University and the Netherlands’ University of Eindhoven, who communicated with executives in the three vertical industries to identify the issues and business drivers around RFID deployment. Based on this end-user input, the students worked with EPCglobal to develop the financial models and write the white papers.
Celeste said that the organization would continue producing value models for other industries active in RFID, with another release projected for the fall. Having produced five, EPCglobal has developed an efficient methodology for engaging industries to understand their issues. “You’ll see more of these models coming out, and we also need to go back to the previous ones and readdress their issues and drivers and see if we need to augment them,” he said.
The new models are available free to EPCglobal US subscribers from the organization’s website.