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In the future, supply chain management will require more than just counting boxes. With RFID technology, manufacturers will know more about their inventories than just numbers. 
When Wal-Mart required suppliers to track inventories with bar codes over a decade ago, the results revolutionized supply chain management practices. At the time, the goal of Wal-Mart's program was to track the flow of product from dock to stock automatically. With the company's recent announcement mandating the use of radio frequency identification (RFID) by 2005, Wal-Mart is about to make history again. Welcome to the world of RFID, a 50-year old technology that has primarily been associated with tracking wildlife or enabling drivers to speed past electronic tollbooths on the highway. The idea is elegantly simple: Place a radio frequency transponder that contains a microchip (RFID tag) on something being tracked and it will emit or reflect a signal whenever it passes under a scanner. Decreasing chip prices have made RFID technology cost effective for the supply chain. Drive It, Track It Here's one possible implementation scenario: A forklift picks up a pallet loaded with several dozen cartons of product from a warehouse. Bar-code technology would require the forklift driver or warehouse operator to scan the label on each carton manually to track what's being moved. RFID technology would enable the same tracking by equipping an archway or doorway with an RFID scanner that registers what's in the load when the forklift drives through. The scanner simply reads the signals of tags within radio transmission range. No human effort is required to track the load, except to drive it through. At first glance, RFID appears to be an automated form of bar-code tracking. But, according to Dirk Heyman, Sun's senior Auto-ID solutions manager, that's misses the point of RFID. "While both are used for tracking the movement of goods, RFID can provide much more detailed information on what the product is, where it's going, and how to handle it," he says, adding that the information could be critical for future regulatory compliance requirements. "The European food safety law, which takes effect in 2005, will require food manufacturers to trace all ingredients back to the point of origin. You can't do that with SKUs alone." For one thing, RFID tags have far greater capacity than bar-code labels for storing information. While the familiar universal product code (UPC) labels on typical retail packaging fit only 12 to 14 bits of information, current-generation RFID tags could accommodate up to 96 bits. Consequently, while bar-code labels are only capable of identifying that the item is a 1-pound box of cornflakes, RFID tags could identify exactly which box it is. Additionally, the new generation of RFID technology is being reinvented to work using the Internet. That unique product identifier could be hyperlinked to additional information, including manufacturing batch and production history, product handling instructions, storage or delivery instructions, expiration dates, and other details. The possibilities are limited only by the imagination. Visibility vs. Privacy "This could increase the visibility in the supply chain dramatically," Heyman says. "You could interact with the item and know where the object has been." He notes that such data could help companies with compliance issues as well as handling the supply chain and inventory replenishment. Heyman believes RFID tracking could be far more secure than bar coding. "Bar codes are physically easy to copy, while RFID tracking is harder to tamper with," he says. According to privacy advocates, RFID might compromise consumer privacy if tagged items continue to signal after the consumer has left the store. But although they are the subject of numerous articles in the general press, item-level tags are not on the agenda of retailers like Wal-Mart. For now, tags are too expensive to be embedded on every box of detergent. Also, tagging each item in the store would generate an explosion of data that would be costly to manage. While some European retailers are testing the feasibility of tagging individual items, Wal-Mart is limiting its initial program to pallets and cartons. Sun's Involvement in RFID In his other role as chairman of the technology board at the Auto-ID Center, an MIT-based research consortium overseeing standards development for the Uniform Code Council (UCC) and EAN International, Heyman is playing a central role in ensuring that RFID technology standards take full advantage of the Net. The new electronic product code (EPC) specification will include an elaborate, multitiered architecture with elements covering data management, Web-based data addressing, and product data structures. "EPC is moving toward becoming a universal product identifier," says Heyman. It starts with Savant, a set of middleware standards specifying protocols for managing distributed networks that capture and filter EPCs picked up by RF scanners. Next, the object naming service (ONS) provides standards for specifying the Internet addresses where product attributes and related information are maintained, while the physical markup language (PML) will include an XML-based set of standards for structuring product data. On the horizon, additional standards will cover communications protocols for RF tags and readers. Practicing what it preaches, Sun is already applying RFID technology to its internal manufacturing and supply chain operations. "At the end of the day, we believe in RFID because it is open and standards-driven," says Heyman.
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