December 15, 2015 Opinion piece
In retail, the success of getting a product from the point of manufacture to the customer is reliant on the supply chain. For this reason supply chain efficiency can be a key determinant in the success or failure of a retail business.
To keep pace with market pressures, supply chains have become ever more complex, creating complex webs of internal departments, partners and suppliers crossing geographic and political boundaries. Communication within this matrix is key, however, as supply chain tend to develop fairly organically with each business or department using different systems and technology. Few retailers have the level of data quality and systems integration required to meet the challenges of the multichannel environment.
Retail today is largely preoccupied with technology as the enabler and solution to all issues. And while technology is the unavoidable way forward, too much time and money is spent discussing the pros and cons of each technology investment – constantly trying to decipher what is compatible with solutions that are already in place. Trying to find the best deal can be tricky, particularly as sometimes it can feel like some tech suppliers have you over a barrel. This isn’t what retail is about.
The use of open standards, means the technology platform you use becomes irrelevant as they promote interoperability by standardising key system components and interfaces – leaving you to focus on how you leverage your investment to deliver the outputs you need to achieve your business goals. This allows an agnostic approach towards suppliers and technology, focusing on extracting the best value. The UK Government is even getting in on the act, with a current consultation running to move all of its procurement technologies to open standards, allowing it to become nimble and flexible – unshackled from supplier’s proprietary offerings.
The early years of RFID technology were hampered by not having an open standard. Before the adoption of the Electronic Product Code (EPC) standard the technology was plagued by incompatible, proprietary technologies. Making any decisions towards hardware, middleware or software would restrict what choices retailers had elsewhere. There was variation in how the data was stored, the frequency used, if the tag carried a power source and even how the tags and readers communicated with each other and business systems.
The variability within RFID caused a number of issues. The market struggled to achieve a critical mass sufficient to drive down costs. Retailers were uncertain whether their investment would have validity in the future. The power was with suppliers who owned proprietary systems.
GS1 worked with industry to produce the EPC standard, and defined:
- How information is to be stored on a tag
- How a tag talks to a reader
- How readers talk to business systems
Evolving data
The data structure for tags is a simple extension of the widely used GS1 system that identifies the barcodes found on most consumer products. All retailers and brands need is their GS1 company prefix. EPC RFID codes are made up of product identifiers (an EAN or UPC) with the addition of a serial number for each product instance. This means that EPC numbers are compatible with EAN or UPC barcode numbers. Using this incremental approach has led to a 25% reduction in the time it take to implement a RFID tagging solution.
Solutions that work together
The EPC standard also provides a blueprint for how tags and readers talk to each other. This means that as long as both are EPC compliant any combination of tag and reader will work with together. In order to do this the industry has reduced the variability of tags and readers, uniting in the use of passive, Ultra High Frequency (UHF) tags. Science tech speak aside, this has benefitted retailers by creating a critical mass of tags in use – 6.9 billion EPC tags were used globally in 2014. This explosion in tag use has led to the cost of tags plummeting by 75% in the past 4 years, with the average price of a tag just $0.12! This will only reduce further as apparel retailers are expected to triple the use of tags in the next five years.
Assured that readers and tags will be compatible, retailers will be empowered to seek the best deal possible, giving their attention to the function of the RFID solution instead of the technological nitty gritty.
Informing your systems
The final part of the EPC standard, how the reader links the data it captures back into your legacy systems, ultimately ensures the interoperability of your RFID solution. This enables the efficient, and automated, communication of data across your network of departments, suppliers and partners.
By uncoupling the use of RFID technology from the use of expensive proprietary software, retailers have real time and accurate data within their reach – without a systems overhaul.