If your company supplies products to a fast moving consumer goods (FMCG) company such as Wal-Mart, Target, BestBuy, Tesco, or Metro AG, then you will eventually (if not already) need to start affixing RFID tags to your products. The data on the RFID tags will contain Electronic Product Code (EPC) information specific to your company. This includes your company's unique manufacturer number, product number, serial number, and some additional identifiers. Your company's unique manufacturer number is assigned by a industry association called EPCglobal. If you are not already a member, then you will need to join.
Joining EPCglobal is actually a very easy process - complete the on-line application, send in a check, and you're pretty much done. However, you may find it much more difficult to get through your company's internal processes.
A member of the Wizards community volunteered to share his company's experience joining EPCglobal. Although the application only took a few minutes to complete, the internal process took 18 months and included developing a RFID strategy, determining its technical feasibility, getting agreement and funding from corporate stake-holders, and for legal to approve the intellectual policy agreements.
We cannot disclose names but we will provide a profile of the company: It's a US-based, durable goods manufacturing company with $32 billion in annual revenue. It has 40 manufacturing facilities globally and employs over 50,000 people. Here is the story, in his own words, from a face-to-face interview.
Q: You have no RFID mandate at this time. Eventually, you will from the DoD, but not for a few years. So why would you want to join EPCglobal? A: "We recognize the value of RFID and standards, and we want to work with our retail partners in EPCglobal to ensure the standards address our needs. Our customers will eventually want RFID functionality in the products they buy from us and therefore it's a core piece of functionality we have to provide. We are a global company and it's in our industry's best interest to get EPCglobal, ISO, and the DoD to align on the standards."
Q: What was the first step in the process? A: "Given that there was no corporate RFID strategy, first we had to create an RFID strategy, and then create the processes for maintaining it. Our strategy had to describe how RFID would impact our business over the next few years. Of course, it had to include joining EPCglobal. Coming up with the strategy only took about a day. We aligned our RFID strategy directly with our business strategy and goals. It was a no brainer."
Q: It only took a day? A: "A day to write the strategy. After that, we had to do a technical assessment to determine if RFID would actually work for us. Since the primary benefit to RFID is asset visibility, we initially focused on the order fulfillment processes. Anytime anyone touches a product, they're touching the right product for the right reason, at the right time, doing the right thing with it, and putting it in the right place. Given that we have facilities with over 100 truckloads of outbound product per day, we want to accelerate the order fulfillment processes, while at the same time, ensure that our customers are getting what they ordered."
Q: What did you do for the assessment? A: "The technical assessment involved tagging products, moving them through dock doors with forklifts and seeing how RFID worked. Based on our results, we created a comparison showing how our fulfillment processes work now and how they could work with RFID. We had to double check the math to ensure it was as successful as it appeared. The RFID-enabled processes looked that good. This took about a month."
Q: What did you do with the results? A: "We used the results and video from the technical assessment to help sell the strategy to the early stakeholders around the company. Ultimately, we had to convince them that it is in the company's best interest given that we are not currently facing an RFID mandate. Everyone saw the value of RFID, but most people did not see the value in joining EPCglobal. The big question was, 'What influence could our company have on the standards when the world's largest retailers and their suppliers have already put in place a first cut at standards?'
Ultimately, they had to be convinced the standards are still evolving. Most importantly, we need to be sure that these are global standards. They ultimately believed that our 'small' $17 billion company could have an impact. Convincing them was not the hard part. Convincing them enough to put funds into it was. It took approximately 12 months to convince the stakeholders and get the money."
Q: Was that the biggest challenge? A: "No. The biggest challenge was working through the legal issues with joining EPCglobal. If you're going to participate in the Action Groups, you have to sign the Intellectual Property policy. We are a technology-based company that is very protective of our IP. Naturally, our attorneys are concerned about the reasonable and non-discriminatory (RAND) terms and participating companies are strongly encouraged to 'give' IP to EPCglobal. We will follow the legal aspects of EPCglobal's agreements, but we also want to follow the spirit of EPCglobal. There's nothing wrong with EPCglobal's IP policy, it's just that we may want to keep some IP that gives us a competitive advantage. We don't want to hinder the progress of EPCglobal, but we don't want to jeopardize our on-going revenue either. Working through the legal paperwork took another 6 months because we asked for clarification on certain EPCglobal processes."
Q: How much did it cost to join EPCglobal? A: "EPCglobal subscription fee are based on a company's annual revenue. For us, the fee was $100K. Smaller companies would pay less. There is an annual renewal fee of 20% of the subscription fee."
Q: Is management worried about seeing an ROI? A: "We never had to convince anyone that we would get an ROI. I think a lot of the press about RFID set people's expectations that there is no quick ROI. At this point, we're spending a reasonable amount of money to determine if it's technically feasible to RFID-enable our business processes."
Q: What would you recommend to companies that have not yet joined a standards organization? A: "Do it. Get started now if you haven't already."
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