The a-Biz proof-of-concept project tests the ability of Auto-ID to improve the links between manufacturers and retailers.

With Wal-Mart requiring all of its supplier shipments to incorporate RFID tags by January 1, 2005, all retailers and suppliers need to accelerate implementation plans for upgrading their retail supply chain infrastructure by using Electronic Product Codes (EPC). The MIT Auto-ID Center—along with Sun Microsystems, Procter & Gamble, and Target Corporation—has created a pilot implementation of just such a system, called a-Biz.

The a-Biz initiative has been led generally by the MIT Auto-ID Center and specifically by one of its researchers, Tim Milne, to explore the use of Auto- ID in managing a supply chain. Although it may seem intuitive that the use of a radio frequency ID (RFID) system can lead to new efficiencies, each implementation has been proprietary and unique. Auto-ID, on the other hand, focuses on interoperability—companies that put RFID tags on their products and use an Auto-ID-compliant system can be sure that the other companies doing so will be able to read these tags and know what information is associated with them.

Auto-ID is expected to create a large demand for the use of RFID tags, by enabling companies to share the infrastructure. The a-Biz project defines a specific implementation between a manufacturer and a retailer. It is designed to explore the challenges of implementing an RFID-enabled supply chain application and using the Internet for partner communication.

The first phase of a-Biz encompassed documentation of these use cases to gain an understanding of how products were shipped. The objective of this project was not to be purely an academic exercise but rather to model specific, current industry-based use cases.

Two Scenarios Tested

The team studied a couple of scenarios. One called for a product to be shipped directly from a manufacturer to a retailer on large pallets. Another had products shipped from a manufacturer to a distributor. In this scenario, the distributor unbundled the product from the large pallets and created smaller pallets with mixed products, which were then sent off to stores that required smaller, specific amounts.

The second phase of the project is to implement an RFID system that automates the process of collecting and sending information. Sun technology enters the picture at this juncture, with Sun Services collecting information, listening to retailer and manufacturer concerns, and then integrating a mixture of products from Sun to implement the a-Biz project.

The implementation involves automation of despatch notices (sent from the manufacturer to the retailer, apprising it of what products have been shipped). The assumption is that cases of products are tagged in the manufacturing facility as they are produced. Cases are picked and assembled onto a pallet for shipment to the retailer.

As the pallets are loaded into a specific shipment, they pass through the field of an antenna, allowing the tags to be read and the contents of the order to be automatically recorded. This process triggers an automatic despatch notice to the retailer. The loop is closed when the retailer receives the shipment. The incoming pallet passes by an RFID reader at the receiving door. Its contents are then automatically recorded, triggering a verification of the order, to ensure that the contents the manufacturer claimed were shipped were received.

This proof-of-concept implementation demonstrates the automation of processes that are currently fraught with error, because they are manual, paper-based, and slow. Their cycle times are typically measured in weeks or longer, and the costs associated with inaccurate information and lost products are high. Systems such as a-Biz will dramatically improve the retail supply chain. Costs and shrinkage will be reduced, inventories will be streamlined, cycle times will be shortened, and these benefits will be directly attributable to the use of RFID-enabled automated systems.