Dressing Up RFID for Max Appeal

IBM is working with the leading RFID standards body to develop a technology that combines product movement data from radio-frequency identification readers with enterprise application information.

EPC IS, under development by IBM and EPCglobal Inc.—the industry group governing the RFID standards and policies, in Lawrenceville, N.J.—establishes a format for how trading partners gather and exchange inventory information.

The hope is that EPC IS will give suppliers a reason to participate in RFID implementations beyond merely compliance with retailer mandates.

"The reason for our focus is that EPC [Electronic Product Code] information has maximum value when it is shared," said Chris Clauss, worldwide auto-ID leader at IBM, in Armonk, N.Y.

"What we're trying to do is create a database that contains the life history of a product ... all that history of events from the time [a product] is manufactured and sold could be stored."

As part of the EPC IS plan, companies would develop internal repositories to house product data information. Those companies would then be able to share that information with partners and suppliers through the EPCglobal Network.

To make that happen, however, the information would first need to be cleansed and synchronized, industry analysts say.

The EPC IS effort becomes relevant to manufacturers struggling to meet Wal-Mart Stores Inc. and other retailers' RFID deadlines because it would enable product information sharing along the supply chain—the real value of RFID, Clauss said. "What we want to do is create the reason for the tag," he said.

The news could be welcome in an otherwise grim outlook for manufacturers. A recent report by ARC Advisory Group Inc. showed that 95 percent of manufacturers surveyed see no return on investment on their RFID implementations for the next two years, at least.

In conducting the Emerging Practices study, Steve Banker, service director for supply chain management at ARC, talked to 24 companies, all under the gun to comply with an RFID mandate and actively investing in EPC RFID.

"I just feel sorry for these poor suppliers," said Banker, in Dedham, Mass. "In my mind, the biggest issue is just the cost of this. It's $1 million to $1.5 million to prepare the infrastructure and half a million to prepare the tags."

Next Page: Building a foundation before the house.

Add to that the cost of RFID tags, which could easily amount to a $10 million hit for a company that ships 50 million tagged cases a year to Wal-Mart, based in Bentonville, Ark., and a company would have to generate about $11.5 million in new savings to break even, according to Banker. He said he believes benefits will not be met until infrastructure requirements such as better readability with tags and more efficient warehouses are met.

According to EPC's Web site, EPC IS looks to accomplish "the description of alternative interfaces for capturing, securing and accessing EPC-related data at a functional level."

Faced with impending RFID mandates from Wal-Mart, Target Corp. and Albertsons Inc., Mark Engle, director of IT at Campbell Soup Co., can't afford to sit back and wait for standards to be developed. What he's looking for is a sense of reality when it comes to vendor claims. He has seen a limited demonstration of EPC IS and has a call out to IBM to get a better idea of the benefits.

"I want to see fact from fiction," said Engle in Camden, N.J. "I see a lot of fiction all over the place. We have a full suite of WebSphere—if it's Blue, we bought it. But I haven't had anyone come in and say, 'Hey, let's place this and try it out.' I find that interesting."

Engle and Campbell Soup are coming at RFID from a number of different angles. In July, he completed a discovery project in Paris, Texas, that tested different tags and readers against Campbell's product mix—traditionally difficult material to read—and in August, kicked off an RFID implementation project. Campbell has also established an RFID lab to act as a staging ground for middleware.

With all that effort, Engle is still concerned with the basics.

"The fundamental thing we're trying to do is figure out what works. We're trying to build a foundation before we go out and build the house," said Engle.

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Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in ExtremeTech.