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© 2005 ConnecTerra, Inc.
RFID and the Electronic Product Code
MIT Enterprise ForumRFID SIG
October 3, 2005
Kenneth R. Traub, PhDCTO, ConnecTerra Inc.
© 2005 ConnecTerra, Inc.
Speaker Background
• CTO of ConnecTerra, Inc.– ConnecTerra makes infrastructure software for RFID
and other device computing applications
• Leader in EPCglobal, the worldwide standards body for RFID and Electronic Product Code technology:– Co-founder of Software Action Group– Co-author of most EPCglobal software specs– Member of EPCglobal Architecture Review
Committee
© 2005 ConnecTerra, Inc.
Agenda
• EPC / RFID – vision
• EPCglobal Standards
• Current Deployments– Retailer– Supplier
• Business Benefits
© 2005 ConnecTerra, Inc.
Auto-ID Vision
• The Electronic Product Code (EPC)– Gives a unique identity to individual physical
objects: items, cases, pallets, locations, loads, assets, etc
• Radio Frequency Identification (RFID)– Cheap sensing of object EPC codes
• The Yin and the Yang– EPC enables new, value-creating business
processes– RFID makes those processes
practicalEPC
RFID
© 2005 ConnecTerra, Inc.
Application: Retail Promotions
• Give unique EPC to each case of promotion-packaged item, on RFID tag
• Equip facilities with RFID readers: loading dock doors, trucks, retail back-room door, dumpster
• Can now measure & drive promotion:– Timeliness: is promotional packaging reaching consumer in
time?– Effectiveness: is promotional item selling better?
Manufacturing Mfr’s Distribution
Center
Retail Store
Retailer’sDistribution
Center
© 2005 ConnecTerra, Inc.
Store
Typical CPG Use Case
Dist Ctr
Manufacturer Retailer
Store
Store
Dist Ctr
Dist Ctr
Dist Ctr
Factory
Q: when does product reach sales floor? Q: when was missing product shipped?
© 2005 ConnecTerra, Inc.
Key Standards
• Electronic Product Code (EPC)– Unique identity to physical objects
• RFID tag/reader protocol– Tag applied by Company A readable by
Company B
• EPC Information Services (EPCIS)– Exchange of detailed information about EPC
observations between trading partners
© 2005 ConnecTerra, Inc.
Electronic Product Code
• Every item has distinct serial number• Capacity for 200 billion serial numbers per
item class (on 96-bit tag)• New business processes based on tracking
individual things
1732050807+
Company Code Product Code Unique Serial Number
= EPC
© 2005 ConnecTerra, Inc.
EPC Information Services (EPCIS)
• Exchange of business-level EPC data:– “What, where, when, and why”– At business process level– Within enterprise and across enterprises
• Key technical challenges:– Generate data in form meaningful to partners– Create value through data exchange
© 2005 ConnecTerra, Inc.
Data Creation Example – Palletizer
Reader
Filtering & Collection
PalletizerCapture App
EnterpriseApp
Reader Protocol
Reader
ALE
EPCIS
dozens of individual tag read events from specific antenna
“between the time the case crossed the first beam and the second beam at location L, the following tag was read”
“at time T, the association of the following case tags to the following pallet tag was created at palletizer #3, to fulfill order #1234”
R R
What, Where, When
What, Where, When, Why
© 2005 ConnecTerra, Inc.
EPC-enabled Operational Processes
Warehouse Shelving:RFID-enabled
“Smart Space”
Forklift:RFID-enabled
“Smart Mover”
Loading Dock Door:RFID-enabled“Smart Portal”
RFID Tag@Ship Workstation
© 2005 ConnecTerra, Inc.
EPCIS Events
EPC Capture Apps
RFID Capture Apps
Palletizer Portal Portal Portal PortalShelving
CommissionObserve
ObserveAggregate
Observe Observe ObserveDisaggregate
ObserveObserve
Doorway
Observe
Manufacturer Retailer
Dist Ctr Dist Ctr Store
Tagging Station
© 2005 ConnecTerra, Inc.
EPCIS Events
EPC Data – A Global Resource
CommissionObserve
ObserveAggregate
Observe Observe ObserveDisaggregate
ObserveObserve Observe
Manufacturer Retailer
Dist Ctr Dist Ctr Store
Global EPC Data
Global EPC Data
Case #123 of Cherry Hydro
2/5 1:23pm Mfr DC #2 Shipping
2/7 4:28am Retail Store #5 back room
Receiving
2/8 5:23pm Retail Store #5 front room
Observe
© 2005 ConnecTerra, Inc.
Challenges Addressed in Current Pilots
• EPCIS data must be meaningful to partners
– Capture apps must abstract away from operational details.
• Partners must share understanding– Agreed terminology for business steps
(“receiving”)
– Master data to interpret location identifiers (“store #23 back room”)
• Global EPCIS “cloud” implemented by data exchange operations
Dist Center
EPCIS Association Event Time 3:14pm 1/1/2005 EPCs 123, 124, 125, … Location DC #2 inbound Biz Step Receiving
Data Center
EPCIS Repository
EPCIS Capture Interface
EPCIS Query Interface
Internal Apps
Data Center
EPCIS Repository
EPCIS Capture
EPCIS Query
Internal Apps
Manufacturer Retailer
© 2005 ConnecTerra, Inc.
How This Works Today (CPG)
• Large retailers require case- and pallet-level EPCs on RFID tags– Wal*Mart, Target, Albertsons, …
• 200+ suppliers currently comply• Retailer ROI:
– Improved operational efficiency within own walls
• Supplier ROI:– Several opportunities based on retailer-
provided data
© 2005 ConnecTerra, Inc.
CPG Retailer Supply Chain – Supplier’s View
Supplier Retailer
Factory Distribution Ctr Distribution Ctr
Retail Stores
EPC Database
EPC Database
1. EPC data collected during tagging and
shipping2. EPC observations collected as product moves
3. Retailer data shared with supplier via retailer’s network
4. Combined data used to gain business benefits
© 2005 ConnecTerra, Inc.
Dist Center
Deployment View – Retailer Example
Retail Store
Retail Store
Enterprise-wide Data Center
Rdr Mware Portal
EPCISTrading partners
EPCIS CaptureALERdr Prot
EPCIS Capture
EPCIS Query
© 2005 ConnecTerra, Inc.
Deployment View – Supplier Example
• Focus for suppliers is getting tags onto products. Not as simple as it sounds…
• Tag@Ship– Least invasive, enabled per shipment
• Tag@Pick– Also enabled per shipment, less material
handling
• Tag@Source– Least labor, but all customers receive tags
© 2005 ConnecTerra, Inc.
Tagging Process – Phase 1
Factory
Tag Printing Station
Distribution Center
Sort Lane
PickingStation
Sorter1. Product warehoused
2. Case EPC labels printed, stored on rolls
3. Labels applied during pick 4. Sorted by barcode
5. EPCs read and associated
6. Pallet EPC label printed
7. Pallet shipped
ConnecTerra Middleware &
Tagging Software
WMS
R
P
© 2005 ConnecTerra, Inc.
Tagging Process – Phase 2
Factory
Tag Printing Station
Distribution Center
Sort Lane
PickingStation
Sorter1. Product warehoused
2. Case EPC labels printed, stored on rolls
3. Labels applied during pick 4. Sorted by barcode
5. EPCs read and associated
6. Pallet EPC label printed
7. Pallet shipped
ConnecTerra Middleware &
Tagging Software
WMS
R
P
4. Sorted by RFID and associated
5. Pallet EPC label printed
6. Pallet shipped
© 2005 ConnecTerra, Inc.
Tagging Process – Phase 3 (long term)
Factory
Tag Printing Station
Distribution Center
Sort Lane
PickingStation
Sorter1. Product warehoused
2. Case EPC labels printed, stored on rolls
3. Labels applied during pick
ConnecTerra Middleware &
Tagging Software
WMS
P
4. Sorted by RFID and associated
Packaging Mfr
1. Case EPC labels delivered on packaging
2. Product warehoused
3. Sorted by RFID and associated
5. Pallet EPC label printed
6. Pallet shipped
4. Pallet EPC label printed
5. Pallet shipped
R
R
R R
Additional visibility
© 2005 ConnecTerra, Inc.
Supplier Benefits – Increased In-stock
• Key performance indicator for supplier: are goods in stock at retail stores?– Can’t sell product if it’s not where the consumer can
find it– Key metric for retailer’s rating of supplier
• Supplier believes an increase in their in-stock rate is possible by using EPC data to examine supply chain:– Gather ~6 months of baseline data– Alert if deviation arises; e.g., abnormal delay in
shipping from retailer DC to retailer store– Take appropriate action in response to alert
© 2005 ConnecTerra, Inc.
Supplier Benefits –Discrepancy Reconciliation
• Discrepancy arises when shipment contents not immediately confirmed; e.g., concern that– Wrong product shipped– Too few products shipped
• Most resolved successfully, but resolution process takes time
• Within two months of commencing RFID operations:– Far fewer than the usual 80% of RFID shipments reported
discrepancies– Several shipments with discrepancies had retailer reads minutes to file for resolution, instead of days
© 2005 ConnecTerra, Inc.
Supplier Benefits –New Product / Promotions Execution
• Large manufacturer sees only 70% of promotional displays reaching sales floor in time to coincide with advertising.
• Merely tagging display items yields instant ROI:– Recovery of incentive fees paid to retailers– Better prediction of transit time to store front– Ability to course-correct mid-promotion
© 2005 ConnecTerra, Inc.
Summary
• EPC and RFID a reality in CPG supply chain today– Most suppliers to major retailers in compliance– Many tagging every SKU– Retailers sharing data to suppliers
• Immediate benefits from RFID/EPC data sharing:– Increased In-Stock Percentage– Reduced discrepancies– Illumination of inside of supply chain– New product / promotions
• Longer-term benefits expected:– Increased in-stock– Increased operational efficiency
• Obstacles:– Tag cost – Emerging Technology