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Models of Teamwork

Collaboration is the key to getting RFID's benefits, but there's no one right way to work with supply chain partners on an RFID project. Here are three models that can work in many industries.
By Bob Violino
Jul 23, 2004—By Mark Roberti

Collaboration is easy to talk about and hard to do. Companies have their own agendas and their own competitive issues that makes them reluctant to share information with business partners and work with them to achieve mutual benefits. But early adopters of the Electronic Product Code (EPC) technology understand that they need to work with each other to achieve many of the much-heralded benefits it offers.

During the past year, many companies began working together on pilot projects to begin to understand and address the issues surrounding the deployment of EPC systems. These efforts can serve as models for companies looking to work together within particular industries to achieve benefits across the entire supply chain. Broadly speaking the models fall into three broad categories described below. Which one is right for a particular company will depend on the industry that company is in, the level of adoption within that industry and the assertiveness of third parties, such as trade organizations, within that industry.

One-to-One Collaboration
When an industry is dominated by one or a few major companies, these so-called channel masters can drive collaboration. Boeing and Airbus are cooperating to establish standards for tagging major airplane parts within the airplane manufacturing industry. These two companies control the entire market for large commercial jets and share many of the same suppliers. Both plan to run pilots with their suppliers and then compare what they’ve learned to set standards for data sharing and establish procedures for common business processes, such as shipping and receiving.

Wal-Mart has been driving adoption within the mass-merchandise retail and consumer packaged goods (CPG) industries. The press generally portrays Wal-Mart as a heavyweight forcing companies to use RFID technology against their will. It’s true that Wal-Mart has mandated RFID tagging as a condition of doing business with the retailer, but the effort is more collaborative than many news stories suggest.

When the Auto-ID Center was developing EPC technology from 1999 to 2003, Wal-Mart supported the effort and worked with Coca-Cola, Gillette, Kimberly-Clark, Procter & Gamble and other companies for more than a year on a field test. More recently, Wal-Mart has been working with eight top suppliers to track goods with EPC tags as they arrive at Wal-Mart’s distribution center in Texas and through to seven stores in the state.

“We’ve been meeting with our suppliers on a one-to-one basis to do tagging reviews and make sure we can get to 100 percent reads as their products enter our distribution center,” says Simon Langford, manager of RFID strategies at Wal-Mart. “In the course of those discussions, we’ve been sharing information about what we’ve learned—and, where we can, what other suppliers have learned—to help them build a road map and their own busines case for deploying the technology.”

Langford says that Wal-Mart is also discussing with suppliers how best to roll out the technology across its operations over the next few years. “We’re working with all our suppliers and will incorporate that feedback into our expansion plans beyond 2005,” he says.

Since the EPC Network, which was conceived as a way for supply chain partners to share information about the location of products securely, is not up and running, Wal-Mart is sharing data over its existing extranet, called Retail Link. By working collaboratively with eight early adopters, Wal-Mart can understand what information its suppliers need and how often they need it to improve their ability to replenish goods before Wal-Mart’s shelves are out of stock.

“Wal-Mart has always been unique in terms of the information they will share through their Retail Link portal,” says Bob Mytkowicz, manager of customer, order, and logistics systems for Gillette in North America. “They make information available to drive win-wins.”

Wal-Mart and its competitor Target both sit on an EPCglobal working group that is hashing out standards for what EPC data needs to be shared and what procedures are necessary to automate shipping and receiving within the retail-CPG sector using EPC technology. The pilot work that Wal-Mart and Target are doing separately with their suppliers provides the background they need to work with suppliers to formulate standards that create efficiencies for the entire industry. “You need to work through industry organizations; otherwise you end up with one-off solutions that aren’t scalable,” says Mytkowicz, who cochairs the group with a rival from P&G.
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