Radio frequency identification technology and electronic product code

RFID and EPC

Assessment of RFID Technologies and the EPC Standard

The underlying technologies and concepts of Radio Frequency Identification (RFID) technology have been in existence for decades, with the last several years seeing an accelerating pace of innovation both at the core technology and application levels of this area. In addition, the emergence of Electronic Product Codes (EPC) have made it possible to capture, analyze and predict the performance of complex organizational processes and strategies (Banks, Buckley, Jain, Lenderman, 2002). Combined, these developments and their use are building a strong business case for the adoption of RFID technologies to solve complex processes, problems and attain strategic objectives.

Overview of RFID Technologies

Radio Frequency Identification is based on radio frequency waves that operate at predetermined frequencies to identify and communicate packets of data from the transponder to the reader or receiver (Banks, Buckley, Jain, Lenderman, 2002). What differentiates one type of tag from another are the frequencies used for communicating between the transponder and receiver. The transponder is embedded in a common RFID tag and includes a micro-chip which stores and communicates the EPC-formatted data via antenna to the receiver. The most common configuration fo RFID system includes an RFID tag, reader and host processor (Trunick, 2005). There are passive tags (which are lower cost due to not having a power source) and active tags (which have a power source and operate at higher frequencies). An example of a relatively simple RFID tag is shown in Figure 1, Passive RFID Tag which illustrates where the micro-chip containing the UPC code is in addition to the location fo the antenna (Hartman, 2006).

Figure 1: Passive RFID Tag

Source: (Hartman, 2006)

RFID tags also have a specific EPC Tag Class designations as well, as the EPC taxonomy of codes and data structures bring greater intelligence into the enterprise-wide workflows they are included within. The EPC class codes range from Class 0 to Class 5, each differentiated for a specific task and workflow requirement (Shutzberg, 2004). Figure 2, EPC Code Analysis, indicates how each EPC Code is differentiated from the other, ensuring accuracy and fidelity of each tag class and type overall.

Figure 2: EPC Tag Class Analysis

Sources: EPC Global Site, Shutzberg, 2004

RFID continues to evolve as a standard and is gaining momentum as EPC is providing more data for analytics and assessment of process performance than has ever been the case in the past.

State of RFID implementation

Having progressed from being a technology primarily used for large-scale military logistics applications including managing complex, difficult-to-track assets across diverse geographic regions, RFID today is pervasive in many supply chain, sourcing, quality management, marketing, selling and service strategies globally (Banks, Buckley, Jain, Lenderman, 2002). The combination of EPC and RFID taken together are providing the foundation of value chain efficiency and profitable operation across many industries, with retailing being one of the most rapid adopters (Trunick, 2005). Wal-Mart's pilot in 2004 of its top 100 suppliers further legitimized the use of EPC codes in RFID pilots and discovered that mixed-pallet mode shipping was even more cost-effective than large-scale logistics and supplier enablement (Khanna, 2006). Since 2004 to today, Wal-Mart has continually championed the use of RFID across its global supply chain to reduce inventory carrying costs and also increase the efficiency of its massive distribution centers. While its competitors continue to challenge its pricing strategies and programs, Wal-Mart continues to dominate the financial metrics of performance that matter most. The legacy of Wal-Mart's expertise in analytics and the ability to quickly parse trends out of complex data sets also made the integrated of RFID data easier to accomplish than many of its competitors as well (Krishnamurthi, 2001).

Due to all of these factors and the rapid integration of RFID as a core technology for automating and bringing greater clarity to the value chains of enterprises, analysts predict that the $233 million spent in 2006 will grow to $874 million by 2011 (Trebilcock, 2007). An additional aspect of RFID implementation today is the pervasive benefits occurring for manufacturers, logistics providers and retailers. Table 1, RFID Benefits for Supply Chain Partners provides an overview of the many contributions RFID is making within enterprises with specific focus on those who have distribution- and logistics-centric business models.