Download PLAN Supply Chain

EPC / RFID for Senior Managers
Training
Chapter 1
Introduction
Introduction
Welcome to this EPC course.
We are happy to present you with the EPC / RFID for Senior
Managers course where you will learn more about how EPC /
RFID can benefit your company and improve your business
processes
Enjoy the course!
3
Pre-requisites
It is advised if you’re not familiar with EPC and/or RFID, that you
first take the “Basics of EPC” course.
4
Preface
5
Preface
Plan
Source
Return
6
Make
Deliver
Return
Process, arrow indicates material flow direction
Process, no material flow
Information flow
Customer processes
Supplier processes
Supply Chain
Chapter 2
Before you start
Before you start you should:
Before you start, you should have a basic knowledge about EPC,
RFID and which overall benefits you should expect from this
combination.
While this chapter will give you a brief overview about the EPC
and the RFID technology, you should refer to the other training
courses of this series that are “basics of EPC”, “Advanced
technical aspects of EPC / RFID” and “advanced business
aspects of EPC / RFID” for more information.
This chapter also briefly describes the SCOR model that we will
use to show which of your business processes are impacted
by EPC / RFID
Additional information about the SCOR model can be found from
the Supply Chain Council at www.supply-chain.org
8
The EPC Concepts
Exchange
Capture
Identify
The Basic Needs of the Supply Chain
9
The EPC Concepts
Solution to identification
EPC = Electronic Product Code.
The EPC identifies
each single item.
10
What is the Electronic Product Code?
Trade Item A
31234567 89012 0000000123456
Trade Item A
31234567 89012 0000000123459
© Jean-Pierre Attal
11
What is the Electronic Product Code?
12
The EPC Concepts
Solution to DATA CAPTURE
The EPC, is captured using RFID
RADIO FREQUENCY IDENTIFICATION
13
Capturing the data from the tag
Host
14
Reader
module
Antenna
Tag
EPCIS Capture Interface
Object Event
15 Jun 16:10
EPC X
Store #23 Back
Receive
Sellable
TAG
READER
ALE
EPCIS CAPTURE
EPCIS CREATE
EVENTS
EPCIS
REPOSITORY
BAR CODE
HUMAN INPUT
INTERNAL/EXTERNAL
APPLICATION
15
The EPC Concepts
Solution to Data Exchange
EPC is a System that allows the trading
partners to capture and share information
about the items in an automated way.
EPCglobal Network provides real-time
information about each item.
16
What are the EPC / RFID benefits?
As we will see during this course, there are many benefits that
EPC, RFID and the EPCglobal network will bring to your
business.
Without entering too much into detail, please note at this stage
that EPC / RFID enables:
• End-to-end visibility along the supply chain
• Effective capture of data without human intervention and
without line of sight
• Better data accuracy and integrity
• Tracking and tracing at granular level
17
What is the SCOR model?
Plan
Deliver
Return
Suppliers’
Supplier
Source
Make
Return
Deliver
Return
Supplier
Internal or External
18
Source
Make
Return
Deliver
Return
Your Company
Source
Return
Make
Deliver
Source
Return
Return
Customer
Internal or External
Customer’s
Customer
What is the SCOR model?
Plan
Source
Return
Make
Deliver
Return
Process, arrow indicates material flow direction
Process, no material flow
Information flow
19
Customer processes
Supplier processes
Supply Chain
Understanding my current processes
Roasting
6
5
2
Freezer
3
1
Filling
4
Roasting Area
Grab oil management process at Nestle UK
Courtesy of Nestle UK
20
Filling Area
Other factories
Summary
This topic presented the three major concepts of identification, data capture
and data exchange and how EPCglobal Inc has provided solutions to these
key questions:
- the Electronic Product Code (EPC) to identify items
- RFID to capture information
- the EPCglobal Network to exchange data
This topic also introduced to the SCOR model that we will use in the following
chapters to highlight the benefits you can achieve by using EPC / RFID
21
Chapter 3
EPC / RFID and the PLAN
processes
The PLAN Processes
Plan
Source
Return
Make
Deliver
Return
Process, arrow indicates material flow direction
Process, no material flow
Information flow
23
Customer processes
Supplier processes
Supply Chain
PLAN Supply Chain
The concept of manufacturing a product in one country for sale in
another country is not new.
But when China joined the World Trade Organisation in
December 2001 it gave a whole new meaning to this concept.
Many believe that the attraction for moving manufacturing to
China was the extremely low labour rates compared to the rest
of the world.
But this is only half the story.
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PLAN Supply Chain
Indeed, labour costs are only part of the picture as what really
matters in the supply chain is the total cost of the finished
product as it reaches the consumer.
So you can see that these costs include not only the cost of
making the product but also include the costs for transporting
it, storing it, importing it and giving it to the point of sale,
including any applicable duties or taxes.
This is often referred to as the actual cost or the landed cost.
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PLAN Supply Chain
China didn't attract half the world's manufacturing simply because
wages are very low compared to other regions.
It attracted that manufacturing because the landed cost, was on
aggregate cheaper than manufacturing elsewhere.
But this scenario introduced more factors into the equation, or to
be more precise it didn't introduce them, it just made them far,
far more important than they had been before.
Those factors were time and risk.
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PLAN Supply Chain
Let's imagine a scenario that more closely represents supply
chains of 25 to 30 years ago.
An upmarket department store in Munich is selling seasonal
fashion clothes, and those clothes were made in Milan.
Assume that the journey time by truck from Milan to Munich is in
the order of 24 to 48 hours.
If demand substantially exceed forecast then the time to recover
would probably be quite short and would mostly consist of the
time taken to make the products if they are not in stock and the
time to carry them by truck them from Milan to Munich.
So the chances of replenishing before season end and the
subsequent lowering of demand are quite good.
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PLAN Supply Chain
Now let's run that scenario again, but this time those clothes were
manufactured in the city of Nansha on the Pearl River Delta in
China.
The margin on these products is not so large as to sustain the
cost of air freight so they have to be transported by ship.
The nearest major port is Hong Kong where they will be
consolidated and loaded into containers for shipment to a
major German port.
Once at destination port they must be imported, customs cleared,
handed over to the trucking company and taken down to
Munich.
Time to replenishment? Probably not less than four weeks, and if
the season has only three weeks left to run?
28
PLAN Supply Chain
You can see from these scenarios that when the manufacturing
was moved to China the supply chain was considerably
extended both geographically but also in terms of elapsed
time.
But it was also made more complex as many more stages and
modes of transportation were introduced as well.
All of this combines to greatly increase the risk that some part of
the process is going to go wrong, in general, the more
processes there are in a chain the higher the risk of failure.
So what can be done to mitigate this risk and minimise any
adverse impact?
29
PLAN Supply Chain
The key to doing this lies in having the ability to see exactly what
is happening at every stage along the way.
And that visibility has to be frequent, timely and accurate.
But what exactly do we mean by visibility?
In its simplest form it consists of just three elements:
• knowing what something is
• knowing where it was
• knowing when it was there
Existing methods that rely principally on the scanning barcodes
collect visibility data at just a few key steps in the overall
process.
RFID technology enables the automatic capture of this data much
more frequently, more accurately and in real-time.
30
PLAN Supply Chain
The use of standards, such as those offered by GS1, to identify
items, locations, commercial relationships, assets etc. means
that this data can be easily exchange between trading partners
and service providers, such as transportation companies, in a
standard manner.
This standardisation acts as a key incentive for trading partners to
participate in this exchange because, having developed a
system to do this once, it can be used for any other trading
partners using the same standards.
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PLAN Supply Chain
Within EPCglobal network, the cross-company exchange of data
regarding the physical flow of the products and assets is done
using EPCIS.
EPCIS will not be covered in this course as its benefits and
technical aspects are already in the “Advanced technical
aspects of EPC / RFID” and “Advanced business aspects of
EPC / RFID” courses.
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PLAN Supply Chain
So EPC / RFID provide you with a mean to know what is
happening in your supply chain in a manner that is much more
granular, accurate and timely and to exchange this information
with your trading partners.
But the benefits of doing this can extend far beyond simply
knowing when something has just gone wrong.
It's possible to use such an environment to accurately predict that
something is going to go wrong.
And it is this which enables a much more proactive approach to
the management of supply chain issues.
33
PLAN Supply Chain
Let us illustrate this with a scenario where products are being
trucked from the factory to a consolidation warehouse for
loading into containers in time for the sailing of the particular
vessel.
With existing methods it is quite likely that we would not know if
the truck would make the vessel sailing until the truck arrived
at the port.
But using RFID infrastructure, coupled with standard means of
identifying the truck and its contents, it's possible to track the
progress of the truck along its route from the factory to the port.
Any delays en route can be automatically detected and alarms set
to trigger in the system, with alerts sent to those managing the
customer relationship.
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PLAN Supply Chain
Customers don't like bad news but in general they can manage if
they know what is going on.
But customers absolutely detest late bad news, because in effect
you have robbed them of the opportunity to contribute to
improving the situation.
In the above scenario knowing in advance that the truck would
miss the vessel sailing enables you to proactively warn your
customer on the situation and to then offered to work with them
on alternative courses of action.
Your customer then gets the perception that you know what is
going on, that you are proactively managing situation and that
you really are concerned about the impact on them.
35
PLAN - Manage Performance of
Supply Chain
We will clearly highlight in the next chapter how EPC / RFID can
provide you with accurate and timely data to help you
monitoring your different processes such as your receiving or
production processes.
We will also highlight in the following chapters how EPC / RFID
will allow to improve the performance of these processes that
is for example you will better use your assets and equipment
or need less inventory or production space.
Improving the performance of your processes can have a
beneficial impact far greater than the cost directly associated to
the process.
36
PLAN - Manage Performance of
Supply Chain
Imagine a manufacturing plant that is nearing its throughput
capacity.
Under these circumstances it would be prudent to undertake
securing the next plant or other manufacturing facilities.
But securing additional manufacturing facilities is a serious, timeconsuming and expensive proposition.
Suppose that the new factory doubles your overall capacity.
But the day you proudly complete the opening ceremony it's very
unlikely that your sales volumes would have doubled as well.
This means that the overheads in terms of capital invested and
other general expenses for two factories must be spread over
the same or slightly larger volume of units produced.
.
37
PLAN - Manage Performance of
Supply Chain
You can see from this example that delaying the point at which
you must introduce new capacity is a beneficial move.
Yet the only way that this can effectively be done is to increase
the throughput using the existing capacity and EPC / RFID can
have just about the impact.
That ability to take less time to complete the production has the
effect of increasing supply chain velocity, which in turn delays
that point in time at which you need to consider additional
capacity.
This is a non-recurring benefit as at one point you will probably
need another facility but it is a sizeable benefit which could
prolong current levels of profitability, so it is well worth going
after.
38
PLAN - Manage Plan Regulatory
Requirements and Compliance
Government regulation can be an important driver for the
implementation of systems that would benefits from EPC /
RFID.
As an example, let us mention the European Union regulation that
became effective in January 2005 and that demands
traceability of food along the entire supply chain in order to
ensure consumer safety.
Consequently, companies in the food business, whether they are
producers, processors or distributors, have to record from
whom they receive food products and to which businesses
they supply food products.
Companies don’t have to trace their products through the entire
supply chain as they are only responsible for their own
operations and for the interface with their trading partners.
39
PLAN - Manage Plan Regulatory
Requirements and Compliance
Many companies started implementing barcode supported
traceability systems well before the EU regulation for internal
quality control and customer service purposes.
What is new is that the increased visibility along the supply chain,
provided by EPC / RFID can really improve your existing
traceability system.
First, EPC / RFID will reduce the data capturing effort and lower
the risk of human errors such as mixing cases.
What will generally happen if one of your food product container is
not properly scanned?
Well there is a good chance you won’t be able to trace this lot
anymore thereby violating food safety and traceability
regulations.
Therefore you will probably have no other choice than to destroy
these non-traceable products
40
PLAN - Manage Plan Regulatory
Requirements and Compliance
Improved traceability systems can also help you target your
recalls.
Companies generally remove more products than required when
there is a recall.
Obviously, if there is a health issue, you will recall all the products
as you probably don’t want your customer to think you haven’t
removed potentially dangerous products.
But what would you do if you need to recall products because
there is a printing error for some batches?
EPC / RFID at the case level would allow to better and faster
identify which cases are part of the batches to be recalled.
Similar applications such as those impacted by food safety,
patient safety, hazardous material handling, would also benefit
from the increased visibility EPC / RFID provides
41
PLAN - Summary
In this chapter, we have learned that extended supply chains
demand much more attention to having good visibility all along
the chain
EPC / RFID provides visibility along the supply chain that is what
is where and when thereby allowing a better management and
performance of the supply chain from inventory control to
facility management.
EPC / RFID also allows the sharing of the data with trading
partners through EPCIS.
Finally, you have understood that EPC / RFID could improve your
traceability system by reducing the number of products you
would have to recall.
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Chapter 4
EPC / RFID and the SOURCE
processes
The SOURCE processes
Supply Chain
Supplier processes
Source
Return
44
Make
Deliver
Return
Customer processes
Plan
SOURCE – Schedule Product
Deliveries
45
SOURCE – Receive Product
46
SOURCE – Receive Product
47
SOURCE – Verify Product
48
SOURCE – Verify Product
49
SOURCE – Verify Product
50
SOURCE – Verify Product
51
SOURCE – Transfer Product
52
SOURCE – Transfer Product
53
SOURCE – Assess Supplier
Performance
54
SOURCE – Assess Supplier
Performance
55
SOURCE – Manage Product Inventory
56
SOURCE – Manage Product Inventory
57
SOURCE – Manage Product Inventory
58
SOURCE – Manage Product Inventory
59
SOURCE – Manage Product Inventory
60
SOURCE – Manage Product Inventory
61
SOURCE – Manage Capital Assets
62
SOURCE – Summary
In this chapter, you have learned that EPC / RFID will speed up
processes of receiving and verifying the products.
EPC / RFID will reduce out-of-stocks by reducing theft and
obsolescence and by detecting inaccurate deliveries right at
the gate.
By providing real time information on what was where and when,
EPC / RFID will also allow you make sure your inventory is
adequate that is also you don’t have excess inventory.
This better control over your inventory will allow you to further
reduce your inventory costs as you will also be able to reduce
your safety margins, minimum stocks, size of warehouse and
the needed equipment to operate it.
63
Chapter 5
EPC / RFID and the MAKE
processes
The MAKE processes
Supply Chain
Supplier processes
Source
Return
65
Make
Deliver
Return
Customer processes
Plan
MAKE – Schedule Production
Activities
66
MAKE – Schedule Production
Activities
67
MAKE – Issue Material
We have already covered in the previous chapter the benefits to
be gained by EPC / RFID when you wish to issue material,
including packaging material, but the picking location is empty.
EPC / RFID will also save you time in the picking process as you
won’t have to scan the picking location or to input the number
of cases of cases you picked as this can be automatically
detected.
For increased visibility, you can also install an RFID portal that
would detect automatically the material that has left the
warehouse and entered the production zone.
68
MAKE – Produce and Test
In some supply chain operations, particularly those which produce
complex finished goods, various components are brought
together in specific configurations to form the final product.
Automobiles, household white goods, computers, furniture and
office equipment are all examples of these.
What is particularly important in these operations is that the right
components are brought together in order to make the final
product.
69
MAKE – Produce and Test
For many products the components are designed in such a way
that the wrong components will not fit together properly and
thus provides a very visible signal that something is wrong.
However, there are other operations were components such as
computer disks, may be identical in physical form and may
vary only in some other manner such as capacity, speed or
internal content.
Where this is the case it would be comparatively easy to complete
the assembly of the product with the wrong components.
In most cases this would lead to financial loss, customer
dissatisfaction or incorrect functionality.
But in some cases it could lead to the final product being a
dangerous combination of the wrong components, such as an
electrical fitting that would be incompatible with the electricity
supply in the target market.
70
MAKE – Produce and Test
So you can see from this that building the product with the wrong
components can have serious consequences.
Up until now barcodes have been the most effective barrier to this
type of error.
But this technique requires that the unit identity, the workstation at
which it is sitting and the identity of key components are all
scanned in order to collect the identification data.
This is an effective technique, but it is not always an efficient one
as it can take quite some time relative to the overall process to
complete.
71
MAKE – Produce and Test
Now imagine that a combination of RFID and standard means of
identification of items and location are being used.
Now the main unit will be identified simply because it arrived on
station.
Bring a component near to that unit that is not on the bill of
materials that build and the system will automatically identify
what that component is, pick up a serial number and then
determine if it really should be being used for this unit.
If it shouldn't be then the operator can be warned and the system
would refuse to close the builds of that unit until the error was
corrected.
72
MAKE – Produce and Test
Therefore, any work being done at that workstation is devoted
entirely to progressing the build rather than identify what is
being built.
This has the double benefit of greatly improving accuracy while
reducing time to build.
These in turn have knock-on effects on industry levels, customer
satisfaction, time to market and supply chain velocity.
Finally, note that no one has had to scan anything thereby
reducing human errors that are often reported to be the biggest
source of material and time waste
73
MAKE – Waste disposal
You have made your finished products, packed them and they are
now available to the DELIVER process
It is now time to collect and manage waste produced during
manufacturing including scrap material and non-conforming
products.
While today, EPC / RFID brings limited benefits for waste disposal
at company level, it is expected that companies will be more
and more requested to tag their waste for recycling and
disposal in the future.
74
MAKE – Waste disposal
As an example, under the latest WEEE directive manufacturers of
PCs, and other electrical goods such as cookers, fridges and
other white goods, are now liable for the cost of their disposal.
In Japan, medical waste materials are being tracked as they are
moved for disposal, the primary goal for the RFID system
being to prevent illegal waste disposal.
With tags fitted into these products, the task of disposal is much
simplified.
75
MAKE – Manage Production
Performance
To measure your production performance, you will look
periodically at your Key Performance Indicators or KPI’s such
as number of products manufactured, failure rates, processing
times, comparison between like operations, consistency of
inbound material delivery, etc.
By looking at these KPI’s over time, you will be able to identify
"trends" that would both tell you what has happened in
summary and provide you with a reasonable indication, though
not a perfect one, of what is likely to happen in the future.
It is these KPI’s and trends that are used to monitor performance,
set production targets, give commitments to customers, decide
on inventory levels, set replenishment points, scheduled time
for the use of lines and equipment, and so on.
76
MAKE – Manage Production
Performance
But the key thing about trends is that they are made up of the
underlying data of individual events, which means that they
can only be as accurate as that underlying data.
RFID technology, identification standard data & the means to
easily exchange that data in a standard way can vastly
improve the quality and availability of this underlying
‘operational management’ data.
And that means getting a much better view of what is happening,
trends, choke points, early warning of degradation and all sorts
of key information that enables you to improve operations.
Basically, putting much better data into the management reporting
system is likely to result in much better decisions being made!
77
MAKE – Manage Make Equipment
and Facilities
There are numerous applications where reusable containers such
as totes, bulks, crates, used in production are tagged so that
they can be better tracked and traced within the company.
Having a better visibility on these containers minimises time for
their search thereby reducing the total lead time.
Attaching active tags coupled with sensors would allow you to
record parameters such as the temperature while these
containers are going through these harsh processes.
This would mean that by knowing where your assets are and in
which condition they are, you would reduce or eliminate
manual checks for maintenance
Another advantage for these assets that will transit through harsh
environment such as stoves or freezers is that rugged tags
generally resist better than barcodes.
78
MAKE - Summary
In this chapter, you have learned that efficient production is
heavily dependent on the availability of raw material,
containers, packaging material and equipment .
By providing better visibility in finding and picking this material,
EPC / RFID reduces the production lead time and the labour
costs.
We have also learned that EPC / RFID can speed up the time to
build by limiting human errors and ensuring your final product
such as a computer are made of the correct components as
indicated on the bill of materials.
You finally understood that EPC / RFID provides you with more
accurate production data so that you can better assess the
performance of your production and make better business
decisions.
79
Chapter 6
EPC / RFID and the DELIVER
processes
The DELIVER processes
Supply Chain
Supplier processes
Source
Return
81
Make
Deliver
Return
Customer processes
Plan
DELIVER – Reserve Inventory
Thanks to the increased visibility on your products whether they
are in stock, work-in-progress, in transfer within your company,
or on their way to your receiving dock, EPC / RFID will
providing you accurate data on where your products are and in
which quantity.
This will ease your process of reserving these products for
specific orders and will allow you to schedule and commit for
an earlier delivery date than if you had less visibility.
Customer rarely complain to be delivered sooner, do they?
82
DELIVER – Receive Products from
Source or Make
Finished goods coming either from the receiving zone or from the
production zone will be received, verified, recorded and put
away in a location such as in your finished goods warehouse.
While barcode is a perfectly fine technology to do all these tasks,
we have seen in the previous chapters that EPC / RFID really
speeds up these tasks as most data will be captured
automatically by the RFID readers.
This limits human intervention that are prone to errors ensuring
product data is recorded more accurately.
83
DELIVER – Pick and Pack products
We have already covered the advantages that EPC / RFID
provide in picking products in the section on issuing material
for production.
Your picked products will next be combined, packed and wrapped
and a label or tag will be placed on the pallet before delivering
it to the shipping area for loading.
A stretch wrap station is usually the final step before shipping so
an RFID system at this place guarantees the integrity of the
containers.
A stretch wrap station is also extremely attractive for an RFID
portal considering the orientation of the tags continuously
changes while the pallet spins making their reading very
efficient.
84
DELIVER – Load Vehicle
To see how EPC / RFID can help with this process, let us imagine
a scenario where a pallet is barcode scanned before loading
on to the truck.
The scan told you that the pallet was at a certain position at a
certain point in time.
It told you that the pallet was staged for shipping, it can't tell you
that the pallet was definitely loaded on to that truck.
The pallet could still be loaded on to the wrong truck yet the
"system" considers that it was put on the right one!
85
DELIVER – Load Vehicle
With RFID it's possible to minimise the chances of this type of
error occurring.
In this example positioning RFID antennae at the entrance to the
truck would indicate whether or not the goods had indeed been
loaded.
Some trucking companies are fitting out their trucks with readers
for this very purpose – and of course the reader can detect if
the goods are being removed from the truck too!
And readers are getting smarter too, with some now adding the
capability to determine direction of the tag as well as proximity.
86
DELIVER – Ship Product
EPC / RFID can also provide with visibility on your products while
they are “en route”.
Let's take the example of a truck load of valuable items and let's
suppose that the truck embarks upon a journey that should
take 14 hours, and that we'd like to know if that track deviates
from its route timing at all.
It is possible to use a combination of RFID to identify the truck,
GPS to establish its position on earth and some form of
communications to transmit the information back to a control
point.
RFID helps greatly here because it can enable you to see where
things are much more accurately, more frequently and at a
much lower level of granularity than you could before.
87
DELIVER – Ship Product
It's important also to realise that most operations today already
have some form of visibility of their processes.
Perhaps the form of this is that most people are familiar with is the
courier companies such as FedEx, who have very
sophisticated tracking systems which customers can access
through a common website.
FedEx are only able to provide this information because it was
captured during their processes to begin with.
So with RFID we aren’t really talking about providing something
that wasn't there before.
But what we are talking about is a vastly improved method for
capturing the data that is then fed into such systems and for
exchanging this data with your trading partners using EPCIS
88
DELIVER – Assess Delivery
Performance
Knowing precisely exactly when the products departed and when
they arrived will allow you to better monitor your delivery
performance and improve your percentage of on-time
deliveries.
A good example can be seen in airport where tagged luggage are
automatically detected while passing choke points as to inform
the passengers when they should expect their luggage and as
to report real-time the percentage of delivery on-time.
EPC / RFID will also help you detect more accurately if shrinkage
occurred during the shipment so that you can take corrective
actions.
89
DELIVER RETAIL - Receive Product at
the Store
The process for store receiving is in theory the same as that for
receiving goods into a warehouse.
But for most stores there is a significant difference between the
two, which is that stores typically have much less dock doors
and smaller receiving areas than warehouses do.
Whilst it is also true that stores have less goods to receive than
the average warehouse, what it does receive can arrive in an
unpredictable and uneven manner, thus putting pressure on
those receiving to complete the task very quickly.
This is can be a particular problem during periods of high sales
such as the period leading up to Christmas.
There are two common solutions to this problem, neither of which
is particularly perfect!
90
DELIVER RETAIL - Receive Product at
the Store
The first is to specify a precise time at which each delivery can be
made.
This has the distinct advantage of evening out the flow of arrivals
at the store receiving area.
It has a distinct disadvantage of loss of flexibility in the operation
and the potential that goods desperately needed on the
shelves are sitting in a truck in the yard at the back of the store
waiting their turn to be received.
91
DELIVER RETAIL - Receive Product at
the Store
The second method is even more unpalatable, as it involves
taking shortcuts on the receiving process itself by not checking
goods as they arrive but simply moving them to a location in
the back store, or directly to the shelf it is the type of operation
that does not have an actual back store.
As a mechanism for pulling goods through from the receiving area
into the store very quickly this has much to recommend it.
But for the impact on your inventory, customer service, overall
operational efficiency, use of storage and financials, it has
nothing to recommend it!
92
DELIVER RETAIL - Receive Product at
the Store
With EPC / RFID, the ability to automatically identify something as
it comes through your dock door should really speed up
receiving, just as it does in any warehouse.
If it is radio friendly material, then it's quite likely that you can
automatically receive it right down to carton level. But even if
the material being received is an impediment to radio
identification, it should still be possible to receive it and say
pallet level from reading the tag on the outside of the pallet.
The ability to automatically confirm where the goods have been
put should also speed up the put away process.
Whilst the other benefits, such as inventory accuracy and being
able to find things later on, are important, at the back of the
store it is this ability to significantly increase throughput that is
key.
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DELIVER RETAIL - Pick Product from
Backroom
Picking products from the backroom is no different than issuing
material from a raw products warehouse or picking finished
products for delivery.
The problem will discuss now is what happens if your shelf is
empty or as expressed in the retail world, you are out-of-stock.
When those goods are not on the shelf they are not going to be
sold, as simple as that.
And this has knock-on effects, such as customer dissatisfaction
and loss of revenue.
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DELIVER RETAIL - Pick Product from
Backroom
Customers will not always go and shop with a competitor just
because something they want is not on the shelf, it depends
greatly on brand loyalty, time available, distance to competitor
and a whole host of other factors which are very well
understood by retail professionals.
But if the customer encounters this situation often enough, they
will move to a competitor.
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DELIVER RETAIL - Pick Product from
Backroom
There are three basic issues which cause out of stock that are:
1. the item is not actually physically on-site, either in the shop or
the back store
2. the item is in the back store but cannot be found
3. the item is in the store that cannot be found
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DELIVER RETAIL - Pick Product from
Backroom
Let's take the first situation where the item that is not on the shelf
is not physically on sites either, be that on the shop floor or in
the back store.
Here the most important thing to know is that the item is not
actually available at all and that therefore going to look for it
would be a complete waste of time, effort and money.
But as we have already seen, the logical inventory as perceived
by the system does not always match what is physically in
place.
EPC / RFID, by Improving inventory visibility, goes a long way to
removing this issue and restoring faith that the logical inventory
picture does match the physical.
Its potential to avoid unnecessary work should not be
underestimated.
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DELIVER RETAIL - Pick Product from
Backroom
Next, let's look at the situation where the goods are on site but
they are lost somewhere in the back store, in other words,
when the associate went to the location as indicated by the
system the product could not be found at that location.
The two most common causes of this issue are incorrect put away
and the products being moved after a correct put away without
the system being notified.
Again, EPC / RFID can be used to ensure an accurate put away
or to detect when items had been moved to another location.
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DELIVER RETAIL - Pick Product from
Backroom
Lastly, let's look at the situation where the item is on-site and we
know that it was moved to the shop floor at some point. How
we know this will be explained in the next topic on shelf
stocking.
Success in detecting where the item is now really depends upon
the type of infrastructure that you have set up on the shop
floor.
If it's in an area where you are tracking at item level on the shelf
and it's quite likely that the system will tell you where it is.
If it's not, then you will not necessarily know where it is but at least
you will know that it was moved to the shop floor.
And of course, it is still palletised you should be able to find it fairly
quickly as it's difficult to miss a complete pallet!
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DELIVER RETAIL - Stock Shelf
Exactly when to replenish a shelf and to what level to replenish it
is dependent upon many different parameters.
In essence there are three basic parameters that drive this
process that are:
• the current level of stock on the shelf
• the desired level of stock on the shelf
• the probable level of demand in the foreseeable future
The current stock level can be determined by deducting sales of
that product from the stock level at a previous point in time and
then adding any stock that has been moved to the shelf since
then.
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DELIVER RETAIL - Stock Shelf
For this to work well you must have an accurate count of what has
been moved out of the back store and onto the floor and shelf.
Using barcodes, this would be a very expensive and timeconsuming process, as you would have to interrupt the flow of
products leaving the back store to scan them before they enter
the sale floor.
Indeed, this is such an expensive proposition that is simply not
done.
But it can be done automatically using RFID and identification
standards, giving an accurate picture of the flow from the back
store to the sale floor.
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DELIVER RETAIL - Stock Shelf
We should point out that unless RFID has been implemented as
an item level on the shelf itself, then this technique does not
guarantee that the item made it to the shelf, though it does
guarantee that it left the back store and entered the shop
selling area.
Where item level tagging is in operation on the shelf, the arrival of
the goods onto the shelf would indeed be confirmed back to
the system .
This has spin-off benefits as well, such as inventory accuracy and
even process improvement based upon a time analysis of the
replenishment process.
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DELIVER RETAIL - Fill Shopping Cart
There are many mushrooming RFID based applications that are
all aiming at better serving the customer and providing him
with additional information.
More and more retailers are installing screens coupled with an
antenna station in their stores where the customers can check
if the products are somewhere in the shop.
The stations also generally provide additional information on the
product such as how the country of origin, how the product is
made, the allergens it may content or whether this product is
available in other sizes or colours.
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DELIVER RETAIL - Fill Shopping Cart
While all this can be achieved with let’s say barcode technology,
RFID has the advantage to insulate the consumer from the
technology .
Basically, the customer only need to know enough to take the
product to a place where it is indicated they can get more
information.
They don't need to scan anything and indeed they don't even
need to be aware that anything is being scanned to begin with
So the real difference between both technologies is the ease and
convenience with which the identification of the product can be
made.
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DELIVER RETAIL - Fill Shopping Cart
In the apparel industry, similar applications such as the magic
mirror available in the changing room are also bringing benefits
to the customers.
Magic mirror will inform you on the different sizes and colours
available for the clothes you brought in the changing room, let
you know which other pieces of clothing would fit well with the
one you choose and also inform you about any promotion on
these items.
EPC / RFID in the changing room can also be used to
automatically record which items go in and out of the changing
room for theft prevention.
While you will frequently find today a store attendant counting
manually the number of items entering the changing room, all
this could be done automatically with EPC / RFID
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DELIVER RETAIL - Checkout
The original reason for inventing barcodes was for speeding up
check out at supermarkets.
Today sophisticated 3D scanners have speeded up that process
to the point where it takes just a quick swipe of each item
across the scanning area to capture the identity of most items.
The weakness of the process is that it is still basically sequential,
so now matter how fast you are, you can only scan one item at
a time.
Imagine now bringing 15 items of apparel to check out, placing
them on the checkout counter and then receiving the receipt or
credit card voucher for them 2 seconds later.
Sounds implausible? Well, it is being done today all over the
world.
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DELIVER RETAIL - Checkout
This technique is particularly effective with the items being sold
are made of material that is radio friendly.
Apparel and footwear fall into this category, and there are many
very successful implementations in this industry sector. But
recent advances in technology mean that books, DVDs and
pharmaceuticals; all previously considered too difficult to use in
this scenario, have all been successfully implemented.
Don't expect RFID to completely replace barcodes at retail
checkout for some years however as this process can’t yet be
carried out for all types of items within a retail store.
Metals and water still impact some forms of RFID such as UHF
and other forms such as HF have a limited range.
However, every month new developments are announced that
move the technology nearer towards overcoming these
limitations.
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DELIVER - Summary
In this chapter, you have learned that the increased visibility
provided by EPC / RFID on your products and assets will
speed up most of your delivery tasks and reduce your labour
costs while providing you a better accuracy as to which
products are where and when.
You have understood that EPC / RFID can also save you a lot of
time in the store by locating more precisely whether the
products are on the back floor or on the sale floor reducing
thereby out-of-stocks for your customers.
Finally, you have been shown some example of EPC / RFID
applications implemented at the store level for the benefit of
your customers.
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Chapter 7
EPC / RFID and the RETRUN
processes
The RETURN Processes
Supply Chain
Supplier processes
Source
Return
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Make
Deliver
Return
Customer processes
Plan
Authorize defective product return
Let us imagine a scenario where a customer returns to your shop
and claims that the digital camera he just bought last week
doesn’t work anymore.
He wants the camera to be fixed or replaced, what will you do?
Most probably you will first want to confirm that the customer is
actually entitled to warranty services for the camera that is
checking the "warranty entitlement".
Warranties come with differing levels of repair, differing levels of
service to repair and differing periods within which warranty
may be claimed.
So it's important that the precise terms and conditions of the
warranty are understood and can be confirmed before any
work is undertaken.
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Authorize defective product return
The traditional method of achieving this was for the customer to
be given a warranty certificate of some form at the time of
purchase and have to produce it at the time of claiming
warranty service.
In some industries this may also be supplemented by the ability to
look up the warranty details by reference from the unit serial
number.
This latter method works well when manufacturers provided their
own warranty service as they had details to their own records.
But as this work has increasingly been contracted out to third
parties, this is far less convenient.
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Authorize defective product return
RFID can help to make this whole process both more effective
and more efficient by carrying the warranty details on the
product itself.
Clearly these details need to be protected in some way against
unauthorised changes, or everything that is sold will suddenly
acquire a 20 year on-site full parts warranty!
But there are techniques available today to ensure the integrity of
this data in the same way that such techniques protect the data
held on disk in the manufacturer's records.
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Authorize defective product return
There is another aspect of warranty that is perhaps far more
interesting, and although not openly spoken about, far more of
a problem, at least for those providing warranty service.
Imagine a scenario where a customer company owns two
identical PCs and that the disk drive in one of them fails.
That machine is not under warranty but the other one is.
It's a simple matter to swap drives in the machines and then make
a warranty call for the machine that now contains a different
disk drive to the one that was sold with it.
The disk drive in that the machine is not under warranty but the
warranty check will be done only at the PC serial number level.
The manufacturer has now provided warranty on a component
that was no longer under warranty, and has borne the cost of
doing so.
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Authorize defective product return
There is already work underway looking at the technique of
storing the full configuration of complex units like computers or
television sets on its RFID tag at the time of manufacture.
This is commonly referred to as the "DNA tag" of the machine.
It is then a simple process for whoever is providing warranty to
read the DNA of the machine and verify that all of the
components that are being submitted under warranty are
entitled to that service.
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Authorize Maintenance, Repair and
Overhaul (MRO) product return
Warranty service would normally include some form of repair.
While repair processes should be dealt with in the chapter on the
MAKE processes, it is discussed here for clarity.
The "DNA tag" can be very useful for the repair process as well,
as it will be useful for the repair operator to know the original
configuration of the unit for diagnosing the possible root
causes of the problems being experienced.
This concept can also be extended to indicating versions of
firmware or software in electronics products and even for
variations of the same part number.
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Authorize Maintenance, Repair and
Overhaul (MRO) product return
Indeed, in some industries the same physical part has a different
reference for warranty and repair services than that used for
the original sale.
This is a technique invoked to ensure that parts that have already
been used or serviced are not used in the manufacturing
process for new product.
So sometimes, for the repair process, it is necessary to know not
only the reference of the original part but also the reference of
the replacement part.
This is another important piece of data which could be carried on
the DNA tag.
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Authorize Maintenance, Repair and
Overhaul (MRO) product return
EPC / RFID and the concept of DNA tag are also very useful to
keep the history of critical components such as aircraft parts.
Aircraft parts are refurbished regularly that is bringing the part
back to the condition and tolerances that it enjoyed when it
was new.
However, all refurbishment processes to some extent weakens
the integrity of the original part so in many cases limits are set
as to the number of times that refurbishment can be carried
out.
Therefore someone has to keep track of what has happened to
these aircraft parts and ensure that any refurbishment limits
are not exceeded.
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Authorize Maintenance, Repair and
Overhaul (MRO) product return
Today this is all achieved with paper records adjacent to the part
in combination with electronic records with the manufacturer or
owner of the part.
While effective, this process is also a very cumbersome and timeconsuming method of maintaining and tracking this
information.
Although the central records will always be the formal records,
imagine the efficiencies that could be obtained if the part
history was effectively carried on the RFID tag on the part
itself.
This is in effect, an extension of the DNA tag concept discussed
before and is under active development by the aerospace
industry.
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RETURN - Summary
In this chapter, you have learned that: the handling of returned
product may not be complex enough to benefit significantly
from RFID
The warranty details can be stored on the tag attached to the
product as to speed up the verification of the warranty
entitlements at the satisfaction of the customer.
The full configuration of the product can also be encoded in what
is called a DNA tag.
DNA tags are useful for speeding up the repair of the product,
verifying that the customer returns exactly what was sold and
tracking critical components such as refurbished aircraft parts.
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