Are RFID or custom label requirements impacting your company?

In today’s market, several vendors are impacted on a daily
basis by mandates being imposed by the industry giants. These mandates
have been placed on manufactures for years that have produced “private-label”
products. Now these requirements are affecting almost every company that
delivers products today. They vary from specialty packaging labels requiring
the customer’s specific item number and bar-code fonts on the merchandise
being sold so that it arrives labeled and ready for the customer’s shelves.
Other requirements are placed on the packaging that these items are being
shipped in. Most large customers require that specific information such
as the customer purchase order, quantity, item number appear on the carton
label. Others, who utilize distribution centers, require distribution
center, cross-docking information, delivery store information. RFID News
& Solutions reported in their August 30, 2005 publication that “Nearly
half of consumer goods makers, a third of food and beverage makers, and
a quarter of textile and apparel manufacturers that responded to the survey
are implementing RFID because of Wal-Mart’s mandate.” To implement and
keep up with this information is extremely complicated with out a Warehouse
Management Software solution.

We have all seen the UPS commercial where the truck is stopped in the
desert by an individual standing in the street “because the package told
them that they were lost” So we ask what is the difference between a bar
code and a RFID tag?

Bar code is the short name for a UPC Bar Code. "UPC" stands
for Universal Product Code. UPC bar codes were originally created to help
grocery stores speed up the checkout process and keep better track of
inventory, but the system quickly spread to all other retail products
because it was so successful. UPC’s originate with a company called the
Uniform Code Council (UCC). A manufacturer applies to the UCC for permission
to enter the UPC system. The manufacturer pays an annual fee for the privilege.
In return, the UCC issues the manufacturer a six-digit manufacturer identification
number and provides guidelines on how to use it.

RFID is the acronym for radio frequency identification. Industry analyst
believe that when the UPC bar code is replaced by smart labels, also called
radio frequency identification (RFID) tags long lines at stores will be
eliminated. RFID tags are intelligent bar codes that can talk to a networked
system to track every product that you put in your shopping cart. RFID
tags, a technology once limited to tracking animals, will soon be tracking
trillions of consumer products worldwide. Manufacturers will know the
location of each product they make from the time it’s made until it’s
used and tossed in the recycle bin or trash can. In this article, you’ll
learn about the types of RFID tags in development and how these smart
labels will be tracked through the entire supply chain.

Gartner, Inc. is the world’s largest Information Technology research
and advisory company. They have provided the following insights on the
future of bar coding and RFID’s. "Just because bar codes are used
extensively in distribution centers does not mean RFID will be,"
said Jeff Woods, research vice president at Gartner. "Businesses
are beginning to discover business value in places where they cannot use
bar coding, which will be the force that moves RFID forward. As the innovators’
trials become public, broader deployments across emerging sectors, not
just consumer goods and retail, will become evident in 2006 and 2007."
"For the most part, bar codes are better at collecting data in highly
structured and engineered processes, such as warehouses, and this will
likely continue for the next five to seven years," Mr. Woods said.
"However, RFID tags will be used for data collection of mobile assets
and in largely chaotic or unstructured business processes, ranging from
retail environments to hospitals, enabling these environments that lack
sophisticated process engineering or controls to be systematically managed."
Gartner analysts said companies should not think of RFID tags as a replacement
for bar codes. The two technologies will coexist with users applying the
right data collection technology for the right process situation.

As you consider the requirements being placed on your company there are
several things that you should consider when implementing a UPC bar code
or RFID system. Manufacturing Insights suggests the “Options” approach.

“The Options approach involves three steps:

1. Recognize and Create Options for RFID Investment: Identify organizational
options, risk factors and uncertainties using a needs-focused analysis
of business processes, systems architecture and resource capabilities.
Explains Mike Witty, Manufacturing Insights program director, demand management
strategies, “Companies have put blinders on. They’ve been asked to comply
and so they’ve taken the least-cost approach, rather than looking at RFID
as a strategy and saying that for it to be successful it must be incorporated
into overall business processes.” The longer-term view would say “invest
today in a little bit more of an infrastructure that allows you to take
advantage of these other options when they become viable,” Witty says,
including more collaboration with more trading partners to improve efficiency
in distribution. “In the cold chain, it might be the ability to understand
when a unit is above temperature and all the food is going to spoil.”

2. Value the Options: Place a systematic, accepted value on each option.
This requires considering unknowns, such as when a drug chain partner
might adopt RFID, and assigning a potential future value. There is “more
risk today but greater value in the future,” Witty says. It means that
an RFID investment today “is not a throw-away cost that then causes you
to have to invest all over again” to realize that future value.

3. Extract Value From IT Project Options: Establish checkpoints to manage
the options approach successfully. For instance, Witty says, a company
may determine that when “five more retailers have adopted RFID, it will
be easier to roll out (an existing solution) than to set up five more
stand-alone solutions. Or that it will be time to move from passive to
active tags, or to add temperature sensing.”

If your company is currently facing these compliance issues and needs
assistance with implementing a warehouse management, UPC bar coding or
RFID system please feel free to contact us for more information at

This entry was posted in February 2006, Newsletter and tagged , , , , , . Bookmark the permalink.

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