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GlobalRFID Edmund W. Schuster Stuart J. Allen David L. Brock Global RFID The Value of the EPCglobal Network for Supply Chain Management With33Figuresand8Tables 123 EdmundW.Schuster Dr.DavidL.Brock MIT 77MassachusettsAve.,Rm35-212 Cambridge,MA02139 USA edmund [email protected] [email protected] Dr.StuartJ.Allen 790460thDriveNE Marysville,WA98270 USA [email protected] LibraryofCongressControlNumber:2006936845 ISBN978-3-540-35654-7SpringerBerlinHeidelbergNewYork Thisworkissubjecttocopyright.Allrightsarereserved,whetherthewholeorpartofthematerialis concerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation,broad- casting,reproductiononmicroﬁlmorinanyotherway,andstorageindatabanks.Duplicationof thispublicationorpartsthereofispermittedonlyundertheprovisionsoftheGermanCopyright LawofSeptember9,1965,initscurrentversion,andpermissionforusemustalwaysbeobtained fromSpringer.ViolationsareliabletoprosecutionundertheGermanCopyrightLaw. SpringerispartofSpringerScience+BusinessMedia springer.com ©Springer-VerlagBerlinHeidelberg2007 Theuseofgeneraldescriptivenames,registerednames,trademarks,etc.inthispublicationdoes notimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant protectivelawsandregulationsandthereforefreeforgeneraluse. Production:LE-TEXJelonek,Schmidt&V¨ocklerGbR,Leipzig Cover-design:WMXDesignGmbH,Heidelberg SPIN11784760 134/3100YL-543210 Printedonacid-freepaper Table of Contents V Table of Contents List of Figures and Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII Foreword Who Invented the EPC? by Kevin Ashton . . . . . . . . . . . . . . . . . . . . . XI A Large-Scale Effort by Sanjay Sarma. . . . . . . . . . . . . . . . . . . . . . . . . XV Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XXIII Part I: Introduction Chapter 1 The Emergence of a New Key Technology . . . . . . . . . . . . . . 3 Chapter 2 Hardware: RFID Tags and Readers . . . . . . . . . . . . . . . . . . . . 15 Chapter 3 Infrastructure: EPCglobal Network . . . . . . . . . . . . . . . . . . . . 29 Chapter 4 Data: What, When, and Where? . . . . . . . . . . . . . . . . . . . . . . . 41 Part II: Leveraging the Supply Chain: Case Studies Chapter 5 Warehousing: Improving Customer Service . . . . . . . . . . . . 49 Chapter 6 Maintenance: Service Parts Inventory Management . . . . . . 59 Chapter 7 Pharmaceuticals: Preventing Counterfeits . . . . . . . . . . . . . . 71 Chapter 8 Medical Devices: Smart Healthcare Infrastructure . . . . . . . 109 Chapter 9 Agriculture: Animal Tracking . . . . . . . . . . . . . . . . . . . . . . . . . 119 Chapter 10 Food: Dynamic Expiration Dates . . . . . . . . . . . . . . . . . . . . . . 127 Chapter 11 Retailing: Theft Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Chapter 12 Defense: Improving Security and Efficiency . . . . . . . . . . . . 159 Part III: Creating Business Value Chapter 13 The Role of Data in Enterprise Resource Planning . . . . . . . 177 Chapter 14 Building a Business Case for the EPCglobal Network . . . . 187 Chapter 15 Enhancing Revenue Using the EPC . . . . . . . . . . . . . . . . . . . . 199 Chapter 16 Outlook: Navigating the Sea of Data . . . . . . . . . . . . . . . . . . . 229 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 List of Figures and Tables VII List of Figures and Tables Figure 2-1 A Passive RFID Tag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 2-2 A Reader . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table 2-1 Comparison of Different Tags . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 2-3 Classes of Tags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 2-4 The Electronic Product Code . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 3-1 Technology Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Table 5-1 Cost Savings in Warehousing . . . . . . . . . . . . . . . . . . . . . . . . 56 Figure 6-1 Business Process for Evaluation and Signing of Service and Support Contracts with Customers . . . . . . . . . . . . . . . 62 Figure 6-2 The Service Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Table 6-1 Performance Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Table 7-1 Common Anti-counterfeit Methods . . . . . . . . . . . . . . . . . . 77 Figure 7-1 The Pharmaceutical Supply Chain . . . . . . . . . . . . . . . . . . . . 79 Figure 7-2 Data Aggregation in the Pharmaceutical Supply Chain . . 82 Figure 7-3 Databases Within the Pharmaceutical Supply Chain . . . . 85 Figure 7-4 Central Information Repository for the Pharmaceutical Supply Chain . . . . . . . . . . . . . . . . . 86 Figure 9-1 The Beef Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Figure 10-1 The MRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Figure 10-2 A Temperature Sensor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Table 11-1 Characteristics of RFID Technology That Relate to Theft . 141 Figure 11-1 The Three Conceptual Stages of Theft . . . . . . . . . . . . . . . . . 144 Figure 11-2 Conceptual Applications Environment – Store . . . . . . . . . 154 Figure 11-3 Conceptual Applications Environment – Distribution Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Table 12-1 Procurement Classes of Materials and Equipment . . . . . . 166 Table 12–2 Implementation Opportunities for RFID in the DOD Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Table 13-1 Data and ERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Figure 13-1 Hierarchy of Production Decisions . . . . . . . . . . . . . . . . . . . 182 Figure 14-1 Dell’s Supply Chain – Overview . . . . . . . . . . . . . . . . . . . . . 192 Figure 14-2 Radio Frequency Identification Scorecard . . . . . . . . . . . . . 193 VIII List of Figures and Tables Figure 14-3 Sample RFID Business Case . . . . . . . . . . . . . . . . . . . . . . . . . 196 Figure 15-1 Successful Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Figure 15-2 Unsuccessful Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Figure 15-3 Gathering Data for Spatial Diffusion Analysis . . . . . . . . . 217 Figure 15-4 Mapping Spatial Diffusion . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Figure 15-5 Aerial Picture of MIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Figure 15-6 Zip Code Boundaries for Massachusetts . . . . . . . . . . . . . . 221 Figure 15-7 Zip Codes Overlaid on Aerial Map . . . . . . . . . . . . . . . . . . . 222 Figure 15-8 Google Two Dimensional Maps . . . . . . . . . . . . . . . . . . . . . . 223 Figure 15-9 Google Aerial Map of MIT . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Figure 15-10 Spatial Diffusion, Aerial Map . . . . . . . . . . . . . . . . . . . . . . . . 225 Figure 15-11 Spatial Diffusion, Two Dimensional Map . . . . . . . . . . . . . . 226 Figure 16-1 The M Interface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 F OREWORD Who Invented the EPC? XI Who Invented the EPC? by Kevin Ashton One of the questions I get asked most often is “Who invented the Electronic Product Code?” I know I am expected to answer with a single name – some heroic figure who labored completely alone, perhaps me, perhaps someone else. But that’s never how invention works, and it’s certainly not true of the EPC™. Many hundreds if not thousands of people deserve credit. The EPC system is just a way of using RFID – radio-frequency identification. The name RFID dates back to the early 1990s. The technology has roots in radar-related work done in the 1940s. During these six decades, hundreds of engineers and scientists, most of them unknown, worked on RFID. By the time I first saw it in the mid-1990s it was commercially availa- ble, used for applications like controlling access to office buildings and automating toll collection. The same is true of Sanjay Sarma, David Brock and Sunny Siu, the three people with whom I cofounded MIT’s Auto-ID Center. If any of us “discovered” RFID, it was only by looking in our pock- ets or at the windshields of our cars. The big challenge in the mid-1990s was to make RFID cheap and standard enough that it could be used everywhere, and to find the killer applications that would make ubiquity useful – to build a mass market for what, until then, was a niche technology. David Brock, a research scientist in MIT’s Artificial Intelligence Lab, wanted to use RFID to help robots interact with the world around them. He saw that combining the automatic identification capability of RFID with the limitless information access of the Internet could be a powerful, practical way to do this. Sanjay Sarma, a rising Professor in MIT’s Mechanical Engi- neering department, championed Brock’s idea and helped develop it. Sarma also reached out to his faculty colleague Sunny Siu for additional expertise on the networking challenges. XII Foreword At the same time, I was a junior Brand Manager at Procter & Gamble wor- ried about a much more mundane problem: how to keep my products on the shelf. Embedding RFID tags in the products, and RFID readers in the shelf, seemed like the perfect – indeed the only – way to do this. But I needed RFID to be cheaper, better, and standardized in an open system. In early 1999, by sheer chance, I met Brock and Sarma. The result was a potent meeting of minds. I was looking to fund research, and Brock, Sarma and Siu were looking for research funding. Working with Alan Haberman of the Uniform Code Council, one of the founding fathers of the UPC bar code, and Allan Boath of the Gillette Com- pany, we developed a plan for a new industry funded research consortium at MIT. Haberman wanted to call it the Center For Automatic Identification And Data Capture. At the last minute I persuaded him to abbreviate it to the Auto-ID Center. But my luck with names is hit and miss: inspired by the bar code, I had the bad idea of calling Auto-ID Center’s technology UPC2. Brock and Sarma saved the day – one of them, I cannot remember which, proposed a far better alternative: EPC, for electronic product code. The Auto-ID Center opened on October 1, 1999. P&G loaned me to MIT to act as Executive Director, and Sunny Siu was the first Research Director. When Sunny left MIT in 2000, Sanjay Sarma, always the guiding light behind the research, took on his role. The four-year project was more challenging and ultimately more fruitful than any of us expected. The Center grew from its founding three sponsors, P&G, Gillette and the UCC, to 103 companies. It expanded globally, funding additional research labs in Japan, Australia, China, Switzerland and the United Kingdom. Working closely with industry, it published hundreds of research papers by hundreds of researchers, and solved many of the prob- lems standing in the way of low cost, high performance, ubiquitous RFID. In 2003 the Center’s sponsors were ready to use the EPC. MIT licensed the technology to the UCC, which established a new subsidiary, called EPC Global, to operate the EPC system all over the world. The labs were renamed Auto-ID Labs and funded by EPC Global to continue advanced research related to the EPC System. Who invented the EPC? It’s the wrong question. Invention is not an activity of individuals. It is the output of many people, spread around the world Who Invented the EPC? XIII and across decades, working hard to improve things, sometimes alone, but more often in teams and frequently unaware of one another. The heroic individual inventor is a myth created after the fact – an unfortunate side effect of success. When something succeeds, as the EPC indisputably has, people want to know ‘who invented it?’ as if they urgently needed to carve a statue. But no one invented the EPC system. It was and still is the art of many – a brilliant, vibrant society of disparate minds and voices, all working passionately to make something new and important. That may be a more complicated answer, but it is also more uplifting. One of the greatest lessons of the EPC, and of all other technologies if their stories were truly told, is that invention is not a lonely act: it means bridging oceans, gener- ations, and cultures to build a community of creativity. Kevin Ashton, cofounder and former executive director, MIT Auto-ID Center