The Next Wave of RFID and Serialization Technologies

Radio Frequency Identification (RFID) and standards-based serialization emerged in the late 90’s. Now, these technologies are maturing, and SAP customers across many industries are deploying them in productive applications. Companies are now discussing the business value captured from these technologies, and try to identify the critical success factors; for example the integration of serialized data with business information from back end systems.

Now we are seeing the beginning of the next wave in the deployment of these technologies: A new class of collaborative applications, that leverage data shared among many trading partners in a network, to enhance operations based on deep network visibility.

Until recently, most collaborative applications within the supply chain have facilitated communication between two trading partners operating a bilateral business process. For example collaborative forecasting, vendor-managed inventory (VMI), and visibility into order status and inventory. But RFID tagging and serialization technologies – thanks to new data-exchange standards from the international standards organisation EPCglobal – are opening the door to a new class of collaborative applications. They allow multiple players to participate in a collaborative process.

Exploiting the collaboration potential

The potential collaborative advantages of RFID and serialization technologies are best illustrated in the consumer products and life sciences industries, where these technologies are becoming a critical component to track the flow of goods to meet competitive and regulatory demands.

For some time manufacturers in the consumer products and consumer electronics industry have had access to supply chain data – mostly point-of-sale data – from big-box retailers, through proprietary extranets such as Wal-Mart’s RetailLink. While these tools have greatly enhanced a manufacturer’s retail sales visibility, they do not provide accurate and timely information about where inventory is in the supply chain. A supplier needs answers to questions such as, “Are my products at the manufacturer’s distribution center or the retailer’s? Or are they in transit, in the back rooms of individual stores, or on store shelves?”

This is one of the key reasons that Wal-Mart and other retailers began RFID initiatives in 2004. Providing the data was an important step, however, it was not satisfactory for the manufacturers to deal with each retailer’s data according its own proprietary format and interface. RFID data, in standard formats, needed to be transmitted back to the manufacturers. Therefore, Wal-Mart and other big box retailers, active members of EPCglobal, helped to develop the Electronic Product Code Information Services (EPCIS) specification, ratified in early 2007.

These large retailers now can provide data in standard formats, enabling manufacturers to see the movement of products through the supply chain, from their own distribution center (DC), to their customer’s DC, into the back rooms at the individual retail outlets, and then onto the shelves. This way, they can make better replenishment decisions, and can also alert the customer if inventories need to be redeployed to prevent out of stock situations.

Patients’ safety and business value

In the life sciences industry, counterfeit pharmaceutical products and diverted shipments are growing causes for concern, in terms of patient safety and also in terms of lost revenue. Federal and regional governments around the world have introduced legislation to detect and prevent counterfeiting by tracking and tracing the pedigree of prescription drugs: From manufacturer through the wholesale channels, to the dispensing pharmacies and hospitals.

EPCglobal has developed a standard to enable companies to meet these legislative mandates, called the Drug Pedigree Message Standard (DPMS), an XML-based pedigree document schema. The organisation is also developing a similar standard for an electronic pedigree using a data exchange model based on the EPCIS.

These standards not only allow industry to ensure patients’ safety, they also provide enormous opportunities to drive business value by leveraging the information collected into EPCIS repositories. For example, today, a manufacturer ships product to a wholesaler, but has no visibility into what product was shipped from the wholesalers to their pharmacy and hospital customers. With enhanced visibility data exchange via EPCIS, manufacturers will be able to track specific batches (or even individual serial numbers) of product in order to carry out a targeted recall of suspicious product. Such visibility will also permit companies to monitor and validate the complex chargeback and rebate system that is used in the US healthcare market.

SAP plattform enables collaborative scenarios

To enable the scenarios that RFID and serialization make possible, a business suite with a collaborative serialization capability is key. The SAP Auto-ID Enterprise is precisely that solution. It enables organizations to integrate real-world and serialized data into a collaborative business process through its two components:

The SAP Auto-ID Infrastructure (SAP AII) captures events from within the enterprise, and integrates with back end systems to support the execution of business processes.

The SAP object event repository, released in 2007, supports serialization and collaboration. It is the centralized system that records uniquely identified objects and their associated events. This facilitates the tracking of these objects – regardless of whether they are within a company or between partners.

The SAP object event repository harmonizes internal tracking events with signals from outside trading partners – all within an active, real time event driven engine. The SAP object event repository can support any number of SAP Auto-ID Infrastructure instances. The main elements of the SAP object event repository are:

  1. Capture and query interfaces based on the EPCglobal EPCIS specification, to facilitate the tracking and tracing of business objects and processes within and beyond enterprise boundaries.
  2. A data repository to store events associated with uniquely identified objects, and associated business information. The repository also supports the capture and storage of aggregations of serialized objects, such as items in a case and cases on a pallet. It also features a rich services layer to provide business context, for these objects.
  3. An event processor that maintains each serialized object as an event handler to track its entire lifecycle. The processor also enables the configuration of alert notifications if a process does not execute as expected.
  4. Central number range management to distribute valid and unique serial number ranges to various points where they would be commissioned, such as the SAP Auto-ID Infrastructure, from which they can be distributed down to edge devices.
  5. Analytics, including predefined content for the SAP NetWeaver Business Intelligence (SAP NetWeaver BI) for the tracking of a range of critical key performance indicators (KPIs) such as tag read/write statistics or supply chain metrics including cycle times and dwell times.

A new class of applications

The SAP object event repository is the basic platform upon which this new generation of collaborative applications rests. Here are two examples of applications recently developed for this platform:

SAP’s Product Tracking and Authentication (PTA) application is designed to help companies ensure the safe production and distribution of their products. It enables tracking and tracing the flow of products at multiple levels of hierarchy (item, case, pallet, etc.) across the enterprise and extended supply network. It also detects discrepancies between expected and actual product flow, such as differences between quantities shipped versus received, or diverted product movement. Finally, it enables automated authentication of products against the SAP object event repository and validation during any kind of goods movement to ensure product legitimacy.

The Product Introduction and Promotions application from SAP partner Infosys enables manufacturers to track the deployment of serialized product containers (such as end-aisle displays) inside retail customers’ stores, to ensure that they are properly deployed in time for the promotional event.

Already in the pipeline are other RFID and serialization-based tools, including applications addressing chargeback and recall in the healthcare industry, and applications addressing supply chain analytics and replenishment in the consumer products industry.

Enabling collaboration

RFID and serialization applications have moved beyond of the pilot stage to the value-generation stage, and are now entering a new phase of collaboration scenarios. From a technology perspective, these trends provide critical insights that should guide any major enterprise considering the deployment of serialized processes. Customers who are deploying these technologies are encouraged to plan and architect their projects with the goal of enabling these collaborative scenarios, which will drive significant business value.