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RFID and Supply Chain

Learn More RFID and Supply Chain EPC FAQ The EPC Network and How it Works

Inventory Control Challenges

One of the ongoing challenges in retail is maintaining the optimum level of inventory. After products are counted, the data must be collated, organized, and distributed as quickly as possible to narrow the gap between the number of products on the shelf and the record of these products in information-management systems.

Distributing product information among multiple trading partners with differing data formats requires time-consuming, costly procedures. With the additional problems of theft and fraud, losses related to inventory management add up to tens of billions each year in the U.S. alone. To reduce costs, the retail industry requires a more accurate and timely method of analyzing inventory.

The Development of RFID and EPC

The Auto-ID Center, a research project headquartered at the Massachusetts Institute of Technology (MIT), conceived of a solution using radio frequency identification (RFID) and electronic product codes (EPC) as replacements for the current barcode system. RFID tags store a unique EPC on a chip and transmit this code via an antenna to RFID readers.

Unlike barcode scanners, the RFID readers do not need direct line of sight to collect information from products. They collect information as products are loaded into a truck or placed on a shelf, similar to the electronic toll passes used by commuters on bridges and highways. Where barcodes only distinguish among products (e.g. Coke vs. Diet Coke), the EPC codes are unique to each unit and can therefore provide more detailed information.

Sharing the Data

To distribute EPC codes quickly and efficiently, the EPCglobal organization designed a network system using the Internet Protocol (IP). This network allows all parties in the supply chain to receive up-to-the-minute intelligence about products through a single integration. The EPCglobal Network is built on an infrastructure called the Object Name Service (ONS), which responds to requests for information relevant to each EPC. Architected to handle billions of queries a day, the ONS ensures that accurate product information is available in real time.

The EPCglobal Network Vision

In the EPCglobal vision, RFID readers are placed throughout the supply chain-on trucks, loading docks, warehouses, and in stores. When a shipment arrives at a retail store, the store's inventory system reflects the new products automatically, and as soon as a product is taken from the shelf, the inventory system adjusts accordingly.

The EPCglobal Network captures all of these changes and makes them available to supply chain partners in a secure and seamless system. With such detailed monitoring of individual products, theft and fraud can be significantly reduced, efficiencies in supply chain labors can be realized, and costly exceptions within the supply chain (e.g., product recalls) can be handed more easily. The commercial development of the EPCglobal Network is handled by EPCglobal, Inc., a non-profit organization formed by European Article Numbering International and the Uniform Code Council.