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Laying the Foundation for RFID

At this year's U Connect conference, GS1 underscored the importance of global RFID standards to the open supply chain.
By Alexander C.H. Skorna and André Richter
Jul 31, 2007—By Mark Roberti

Each year in June, GS1, the nonprofit organization that oversees bar codes and other standards, holds an event to educate companies on the need for global standards for commerce and how to implement them. This year's event, U Connect, held in Orlando, Fla., underlined how important these standards are to the successful use of radio frequency identification in the open supply chain.

The big topic was data synchronization—the ability to share accurate data with supply-chain partners. While most companies say they have implemented global data synchronization, studies show that only about a third of supply-chain partners actually practice it.

Companies need to use their RFID implementations as a reason to develop processes for adhering to data synchronization.
Other topics on the agenda included electronic data interchange (EDI) and package measurement rules. There are standards for how companies share data over EDI networks, and even how they measure the size of packages. These issues might seem minor, but they are critical to avoiding supply-chain problems that sometimes lead to out-of-stocks and lost sales.

Getting data synchronization, EDI and even measurement standards in place before you implement an Electronic Product Code RFID system is critical. Why?

Let's say you assign an EPC to a new product—a case of 12-ounce shampoo bottles—and your retail partner thinks that that EPC represents a case of 10-ounce bottles, which has been phased out. Perhaps only 18 12-ounce bottles can be stored on the shelf, instead of 24 10-ounce bottles. After the retailer sells 18 bottles, it doesn't restock the shelf because it thinks there are six more bottles available.

Speakers at U Connect stressed the importance of these standards. During a panel discussion, Randy Mott, CIO of Hewlett-Packard (formerly CIO of Dell and Wal-Mart), was asked why RFID wasn't being adopted faster. He said: "One inhibitor is that systems can't deal with data. You have to have good processes, good systems and the ability to share accurate data in place to get the benefits. The foundation isn't there in a lot of cases. At this conference, we are talking about the foundation, and it's not fully implemented. Outside of that, I don't think there is a barrier."

Craig Herkert, CEO of Wal-Mart International, added: "It starts with having clean data. I can't tell you how important data synchronization is. It's the foundation on which everything else we want to do can be built."

Data synchronization isn't easy. One attendee from a health-care products company told RFID journal: "We fix our data, then a customer says it's wrong and we change it back. Then we fix it internally and then we get another customer who says it's wrong, and the sales guys ask the IT guys to change it again."

Companies need to use their RFID implementations as a reason to develop processes for adhering to data synchronization, EDI, package measurement and other standards. This is the foundation for implementing RFID and using EPC standards to collaborate with supply-chain partners. Without these standards in place, RFID implementations will not be successful. As Mott said during the panel: "Without standards, we are chaining ourselves to a world of complexity."

Illustration by the Hess Collection.
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