RFID Technology and EPC in Retail

Executive Summary

The ability to access information anytime,anywhere, is vital in today’s fast-pacedworld. More than ever, people needmobile information solutions to improveproductivity and operate more efficiently.Smart companies and organizations turnto Symbol Technologies for automaticidentification data collection solutionsat every point along the supply chainof modern commerce.

This technical brief discusses the extentto which RFID has been implemented inthe retail supply chain, identifies factorswhich have proved to be obstacles togeneral acceptance, and discusses issuesthat need to be addressed before thistechnology is widely adopted.

Introduction – Symbol and RFIDSymbol Technologies, Inc. has been participating in the development andadvancement of the state of the art in RFID (Radio Frequency Identification)technology for more than a decade. Thecompany has conducted numerous pilotapplications in a variety of different settings in retailing, manufacturing andother sectors.

RFID technology is used to mark, identifyand track individual objects as they movefrom the manufacturing floor through thesupply chain and into the hands of thebuyer or consumer. As the objects movethrough the supply chain, wireless RFIDreaders can communicate with an RFID tagon the object, collect information about theobject (such as a unique number), andmatch that number in a database to access acomplete record about the object.

Symbol views RFID as a subset of the suiteof automatic data capture technologies, and includes RFID in the core competenciesthe company deploys as a leading supplierof enterprise mobility solutions. Symbolenvisions that RFID will become a complementary technology to bar codetechnology as the number of commercialimplementations increase. With its background and experience in auto ID andenterprise mobility, Symbol looks forwardto adding RFID to the range of productsand solutions it offers to its customers.

For North America, Latin America and CanadaSymbol TechnologiesThe AmericasOne Symbol PlazaHoltsville, NY 11742-1300TEL: +1.800.722.6234/+1.631.738.2400FAX: +1.631.738.5990

Symbol WebsiteFor a complete list of Symbol subsidiaries andbusiness partners worldwide contact us at:www.symbol.comOr contact our pre-sales team at: www.symbol.com/sales

Corporate HeadquartersSymbol Technologies, Inc.One Symbol PlazaHoltsville, NY 11742-1300TEL: +1.800.722-6234/+1.631.738.2400FAX: +1.631.738.5990

For Asia Pacific AreaSymbol Technologies Asia, Inc.(Singapore Branch)Asia Pacific Division230 Victoria Street #05-07/09 Bugis Junction Office TowerSingapore 188024TEL: +65.6796.9600FAX: +65.6337.6488

For Europe, Middle East and AfricaSymbol TechnologiesEMEA DivisionSymbol Place, Winnersh Triangle Berkshire, England RG41 5TPTEL: +44.118.9457000FAX: +44.118.9457500

Part No. EPCBRIEF Printed in USA 09/03 © Copyright 2003 Symbol Technologies, Inc. All rights reserved. Symbol is an ISO 9001 and ISO 9002 UKAS, RVC, and RAB Registered company,as scope definitions apply.

For system, product or services availability and specific information within your country, please contact your local Symbol Technologies office or Business Partner.

EPCBRIEF 09/03

Specifications are subject to change without notice. Symbol® is a registered trademark of Symbol Technologies, Inc. Allother trademarks and service marks are proprietary to their respective owners.

Symbol Enterprise Mobility Services

Symbol’s global services organization offersa full range of professional and customersupport services—from project planning andnetwork design through integration andinstallation to ongoing service and support.

Professional services address the followingphases of a systems implementation:

� Planning: consulting services, networkdesign services, site survey, and projectmanagement.

� Development: system integration, customtraining, custom hardware development,and application development.

� Implementation: physical installation ofhardware and software, as well as configuration and test of the system bothbefore and after installation.

Contact Symbol to ensure a customized,innovative mobility solution that not onlyaddresses your specific business issues butalso exceeds your expectations.

About Symbol Technologies

Symbol Technologies, Inc. (NYSE:SBL)delivers enterprise mobility solutions thatenable anywhere, anytime data and voicecommunication designed to increaseproductivity, reduce costs and realize competitive advantage. Symbol systems andservices integrate rugged mobile computing,advanced data capture and wirelessnetworking for the world's leading retailers,transportation and logistics companies andmanufacturers as well as government agencies and providers of healthcare,hospitality and security. More informationis available at www.symbol.com/rfid

S e p t e m b e r 2 0 0 3 T e c h n o l o g y B r i e f S y m b o l T e c h n o l o g i e s

References:1. The Auto-ID Center—http://www.autoidcenter.org/aboutthetech_indepthlook6.asp

Additional Resources: 1. Uniform Code Council (UCC)—http://www.uc-council.org/2. EAN International—http://www.ean-int.org/

Pallet with EPC tag

Image courtesy of the Auto-ID Center: http://www.autoidcenter.org

RFID and the Retail Supply ChainRFID is a relatively mature technology thathas been in use for well over a decade. Lookaround and you can see RFID at work inthe world around you—ranging from E-ZPassSM road tolling systems to accesscontrol badges at your place of work, toautomobile immobilizer chips built intoyour car key, and the SpeedpassTM key fobyou use to buy your gas. Clearly, RFIDworks—which prompts the question:“Why, despite years of interest, hasn’t itworked in the retail industry?”

Interest in RFID technology is driven by the desire of companies to achievegreater visibility to their supply chains,with the goal of increasing operationalefficiency. An efficient supply chain operation helps to ensure that goods canbe bought at the place and time consumersare ready to purchase. Potential gainsfrom the visibility RFID generatesinclude lower inventory levels, reducedlabor costs and increased sales—the bottomline: increased profitability.

However, there are a number of reasonswhy RFID has not been widely implementedin the retail supply chain, including:

� StandardsThere is no definitive globally-accepted standard for the data format,communications technology, data interchange and other interoperability factors that would enable seamless integration between manufacturers, distributors and retailers.

� FunctionalityThere are many different kinds of RFIDtechnologies and tags, each of which has

significantly different functional characteristics. Some tags have batteries,some don’t. Some tags have short-readranges, some have long-read ranges.Popular tags operate on at least six differentfrequencies, often with many competingprotocols at each frequency. In short, formany buyers, there are just too manychoices, and it is difficult for them todetermine the best technology and tag fortheir application.

� High Cost of RFID tags A side effect of the lack of a definitivestandard is that no single RFID technologybenefits from economies of scale whichcould result in reduced tag pricing, whichin turn leads to even greater volumes.Often, buyers cannot cost-justify implementation at current tag prices.Without confidence that future tag prices would decline as usage increases,buyers are hesitating to undertake large-scale implementations.

� PerformanceRetail supply chain applications of RFIDare demanding, requiring, for example,reliable reads in varied and extreme environments like fast paced outdoorloading docks. There is some questionregarding the reliability of low-cost tags,and this hinders acceptance for retail supply chain applications.

� Systems and SoftwareWithout end-to-end integration of RFIDinto the information technology (IT) systems of the supply chain, the hoped-for efficiency benefits cannot be achieved.In the past, the emphasis was almostexclusively on tags and readers, withalmost no emphasis on the software andsystems needed to manage and integratethe RFID data once captured.

These issues have combined to slow thegrowth of RFID solutions and acceptanceof RFID as a useful tool by retailers. Buthope is on the horizon, in the form of standards adoption across the industry.

EPC—The Emerging StandardEPC (Electronic Product Code) is theemerging standard for RFID applications inthe retail supply chain. It represents anindustry consensus on the best technologicalapproach to successful implementation ofRFID. The overall EPC concept is designed to work in a range of retail supplychain applications—from “backroom”applications such as pallet and carton tracking to “selling floor” applications suchas item level tagging.

At its most basic level, EPC is a codingscheme for RFID data that will identify anindividual item’s manufacturer, product category and unique serial number. But the EPC concept encompasses much morethan data structures—it’s a complete networkof integrated technologies, software and systems combined to take full advantage ofRFID technology.

EPC emerged from the Auto-ID Center, apartnership between almost 100 companiesand five of the world's leading research universities including the MassachusettsInstitute of Technology (MIT). Retailersinclude many globally recognizablenames—Wal*Mart®, Target Corporation,Home Depot®, Procter & Gamble,Unilever, Tesco plc—just to name a few.

EPC Impact So FarIn the past, RFID standardization effortshad been driven primarily by technologyvendors. But the Auto-ID Center changedthe focus of research from esoteric

technological debates to a study of technology requirements specific to theretail supply chain.

In fact, this is probably the single biggestreason why EPC matters—because it is astandard driven by retail supply chain usersfor retail supply chain users.

For example, users made it clear that tagsneeded to be both low cost and high performance (specifically, robust read distanceand reliability) to be useful in the retail supply chain. Vendors responded withinnovative technologies that significantlyincreased performance, while also pointingthe way to much lower cost.

Early in the development of EPC, end usersidentified the challenge of management andintegration of RFID data into their IT systems. As a result, EPC was developed notjust as a tag technology, but rather as a system, which includes software elements tomake EPC data more manageable. The system includes components developed bythe Auto-ID Center: ONS (Object NameService) for tag identification and Savant,the “nervous system”1 of the EPC network,for intelligent data filtering and management.

Similarly, new tag and reader protocol standards were developed, not only toincrease performance, but also to provide aclear focus for the industry’s product andmarket development. By focusing on a clearset of interoperable standards, the goal isnot only to provide more choice to the enduser community, but also to alloweconomies of scale to go to work, reducingboth tag and reader costs over time.

Finally, and most importantly, end usersrecognized that in order for EPC to be successful, it needed to be developed and

managed on an ongoing basis by an entitywith strong credentials in developing andimplementing real-world retail automaticidentification standards. For this reason,responsibility for the ongoing managementof EPC has been transferred to Auto-IDU.S., LLC a wholly owned subsidiary of theUCC (Uniform Code Council) and EANInternational. UCC and EAN are wellknown for their long track record of managing UPC (Universal ProductCode)—the seminal and predominant retail bar coding standard in use today.

The Impact of EPC on RetailersEPC is a foundation on which real-worldsolutions can be built. Already, severalmajor retailers and CPG (consumer packaged goods) companies have publiclyannounced their intent to pilot the technology. Some have even announced target timeframes for initial implementations.You can expect to see the scope of theseefforts grow as companies seek the exactbusiness and process models that will maximize their ROI (Return onInvestment) for EPC implementation.

In the near term, the emphasis is on “backroom” applications—tagging pallets, cartons,and reusable containers to track the movement of goods throughout the distribution system. Longer term, users arejust beginning to assess the impact of taggingindividual items on the retail sales floor.While there may be exceptions, most userswant to drive EPC to success in the backroom before moving to item level tagging on the retail sales floor.

In general, EPC appears well positioned tobecome a foundation for RFID technologyin the retail supply chain over the next severalyears, with great potential to deliver bottom-line business benefit on a mass scale.

The FutureAs EPC stands ready to make its impact onthe world of RFID, it is clear that it haspotential to address the long-standing problems of visibility in the retail supplychain. As with any new technology, however,there will be some bumps along the road—some we can anticipate today andsome that we cannot. Planning for thesebumps with a world-class technology partneris a key to success.

Symbol, a world leader in enterprise mobilitysolutions with core strength in ruggedmobile computing, wireless networking andadvanced data capture is a trusted partnerto our customers for integrated mobilitysolutions. As an EPC open standardsfounder and endorser, Symbol is workingwith leading RFID technology providers tocreate RFID-capable product platforms thatwill enable its customers to benefit fromintegrated technology solutions employingan optimum mix of RFID, and 1D and 2Dbar code technologies.

SummaryAutomatic data capture is a key technologycomponent of realizing the vision of enterprise mobility solutions. RFID is acomplementary data capture technologythat is part of the suite of core competenciesthat Symbol deploys to realize our vision.As the commercial impact of RFID grows,Symbol is well positioned to help our customers add this capability to the rangeof products and solutions they implementin their supply chain.

About the authorAlan Melling is Senior Director of EPCSolutions at Symbol Technologies, a leadingprovider of automatic data capture andmanagement solutions. He may be reachedat melling@symbol.com.

RFID and the Retail Supply ChainRFID is a relatively mature technology thathas been in use for well over a decade. Lookaround and you can see RFID at work inthe world around you—ranging from E-ZPassSM road tolling systems to accesscontrol badges at your place of work, toautomobile immobilizer chips built intoyour car key, and the SpeedpassTM key fobyou use to buy your gas. Clearly, RFIDworks—which prompts the question:“Why, despite years of interest, hasn’t itworked in the retail industry?”

Interest in RFID technology is driven by the desire of companies to achievegreater visibility to their supply chains,with the goal of increasing operationalefficiency. An efficient supply chain operation helps to ensure that goods canbe bought at the place and time consumersare ready to purchase. Potential gainsfrom the visibility RFID generatesinclude lower inventory levels, reducedlabor costs and increased sales—the bottomline: increased profitability.

However, there are a number of reasonswhy RFID has not been widely implementedin the retail supply chain, including:

� StandardsThere is no definitive globally-accepted standard for the data format,communications technology, data interchange and other interoperability factors that would enable seamless integration between manufacturers, distributors and retailers.

� FunctionalityThere are many different kinds of RFIDtechnologies and tags, each of which has

significantly different functional characteristics. Some tags have batteries,some don’t. Some tags have short-readranges, some have long-read ranges.Popular tags operate on at least six differentfrequencies, often with many competingprotocols at each frequency. In short, formany buyers, there are just too manychoices, and it is difficult for them todetermine the best technology and tag fortheir application.

� High Cost of RFID tags A side effect of the lack of a definitivestandard is that no single RFID technologybenefits from economies of scale whichcould result in reduced tag pricing, whichin turn leads to even greater volumes.Often, buyers cannot cost-justify implementation at current tag prices.Without confidence that future tag prices would decline as usage increases,buyers are hesitating to undertake large-scale implementations.

� PerformanceRetail supply chain applications of RFIDare demanding, requiring, for example,reliable reads in varied and extreme environments like fast paced outdoorloading docks. There is some questionregarding the reliability of low-cost tags,and this hinders acceptance for retail supply chain applications.

� Systems and SoftwareWithout end-to-end integration of RFIDinto the information technology (IT) systems of the supply chain, the hoped-for efficiency benefits cannot be achieved.In the past, the emphasis was almostexclusively on tags and readers, withalmost no emphasis on the software andsystems needed to manage and integratethe RFID data once captured.

These issues have combined to slow thegrowth of RFID solutions and acceptanceof RFID as a useful tool by retailers. Buthope is on the horizon, in the form of standards adoption across the industry.

EPC—The Emerging StandardEPC (Electronic Product Code) is theemerging standard for RFID applications inthe retail supply chain. It represents anindustry consensus on the best technologicalapproach to successful implementation ofRFID. The overall EPC concept is designed to work in a range of retail supplychain applications—from “backroom”applications such as pallet and carton tracking to “selling floor” applications suchas item level tagging.

At its most basic level, EPC is a codingscheme for RFID data that will identify anindividual item’s manufacturer, product category and unique serial number. But the EPC concept encompasses much morethan data structures—it’s a complete networkof integrated technologies, software and systems combined to take full advantage ofRFID technology.

EPC emerged from the Auto-ID Center, apartnership between almost 100 companiesand five of the world's leading research universities including the MassachusettsInstitute of Technology (MIT). Retailersinclude many globally recognizablenames—Wal*Mart®, Target Corporation,Home Depot®, Procter & Gamble,Unilever, Tesco plc—just to name a few.

EPC Impact So FarIn the past, RFID standardization effortshad been driven primarily by technologyvendors. But the Auto-ID Center changedthe focus of research from esoteric

technological debates to a study of technology requirements specific to theretail supply chain.

In fact, this is probably the single biggestreason why EPC matters—because it is astandard driven by retail supply chain usersfor retail supply chain users.

For example, users made it clear that tagsneeded to be both low cost and high performance (specifically, robust read distanceand reliability) to be useful in the retail supply chain. Vendors responded withinnovative technologies that significantlyincreased performance, while also pointingthe way to much lower cost.

Early in the development of EPC, end usersidentified the challenge of management andintegration of RFID data into their IT systems. As a result, EPC was developed notjust as a tag technology, but rather as a system, which includes software elements tomake EPC data more manageable. The system includes components developed bythe Auto-ID Center: ONS (Object NameService) for tag identification and Savant,the “nervous system”1 of the EPC network,for intelligent data filtering and management.

Similarly, new tag and reader protocol standards were developed, not only toincrease performance, but also to provide aclear focus for the industry’s product andmarket development. By focusing on a clearset of interoperable standards, the goal isnot only to provide more choice to the enduser community, but also to alloweconomies of scale to go to work, reducingboth tag and reader costs over time.

Finally, and most importantly, end usersrecognized that in order for EPC to be successful, it needed to be developed and

managed on an ongoing basis by an entitywith strong credentials in developing andimplementing real-world retail automaticidentification standards. For this reason,responsibility for the ongoing managementof EPC has been transferred to Auto-IDU.S., LLC a wholly owned subsidiary of theUCC (Uniform Code Council) and EANInternational. UCC and EAN are wellknown for their long track record of managing UPC (Universal ProductCode)—the seminal and predominant retail bar coding standard in use today.

The Impact of EPC on RetailersEPC is a foundation on which real-worldsolutions can be built. Already, severalmajor retailers and CPG (consumer packaged goods) companies have publiclyannounced their intent to pilot the technology. Some have even announced target timeframes for initial implementations.You can expect to see the scope of theseefforts grow as companies seek the exactbusiness and process models that will maximize their ROI (Return onInvestment) for EPC implementation.

In the near term, the emphasis is on “backroom” applications—tagging pallets, cartons,and reusable containers to track the movement of goods throughout the distribution system. Longer term, users arejust beginning to assess the impact of taggingindividual items on the retail sales floor.While there may be exceptions, most userswant to drive EPC to success in the backroom before moving to item level tagging on the retail sales floor.

In general, EPC appears well positioned tobecome a foundation for RFID technologyin the retail supply chain over the next severalyears, with great potential to deliver bottom-line business benefit on a mass scale.

The FutureAs EPC stands ready to make its impact onthe world of RFID, it is clear that it haspotential to address the long-standing problems of visibility in the retail supplychain. As with any new technology, however,there will be some bumps along the road—some we can anticipate today andsome that we cannot. Planning for thesebumps with a world-class technology partneris a key to success.

Symbol, a world leader in enterprise mobilitysolutions with core strength in ruggedmobile computing, wireless networking andadvanced data capture is a trusted partnerto our customers for integrated mobilitysolutions. As an EPC open standardsfounder and endorser, Symbol is workingwith leading RFID technology providers tocreate RFID-capable product platforms thatwill enable its customers to benefit fromintegrated technology solutions employingan optimum mix of RFID, and 1D and 2Dbar code technologies.

SummaryAutomatic data capture is a key technologycomponent of realizing the vision of enterprise mobility solutions. RFID is acomplementary data capture technologythat is part of the suite of core competenciesthat Symbol deploys to realize our vision.As the commercial impact of RFID grows,Symbol is well positioned to help our customers add this capability to the rangeof products and solutions they implementin their supply chain.

About the authorAlan Melling is Senior Director of EPCSolutions at Symbol Technologies, a leadingprovider of automatic data capture andmanagement solutions. He may be reachedat melling@symbol.com.

RFID Technology and EPC in Retail

Executive Summary

The ability to access information anytime,anywhere, is vital in today’s fast-pacedworld. More than ever, people needmobile information solutions to improveproductivity and operate more efficiently.Smart companies and organizations turnto Symbol Technologies for automaticidentification data collection solutionsat every point along the supply chainof modern commerce.

This technical brief discusses the extentto which RFID has been implemented inthe retail supply chain, identifies factorswhich have proved to be obstacles togeneral acceptance, and discusses issuesthat need to be addressed before thistechnology is widely adopted.

Introduction – Symbol and RFIDSymbol Technologies, Inc. has been participating in the development andadvancement of the state of the art in RFID (Radio Frequency Identification)technology for more than a decade. Thecompany has conducted numerous pilotapplications in a variety of different settings in retailing, manufacturing andother sectors.

RFID technology is used to mark, identifyand track individual objects as they movefrom the manufacturing floor through thesupply chain and into the hands of thebuyer or consumer. As the objects movethrough the supply chain, wireless RFIDreaders can communicate with an RFID tagon the object, collect information about theobject (such as a unique number), andmatch that number in a database to access acomplete record about the object.

Symbol views RFID as a subset of the suiteof automatic data capture technologies, and includes RFID in the core competenciesthe company deploys as a leading supplierof enterprise mobility solutions. Symbolenvisions that RFID will become a complementary technology to bar codetechnology as the number of commercialimplementations increase. With its background and experience in auto ID andenterprise mobility, Symbol looks forwardto adding RFID to the range of productsand solutions it offers to its customers.

For North America, Latin America and CanadaSymbol TechnologiesThe AmericasOne Symbol PlazaHoltsville, NY 11742-1300TEL: +1.800.722.6234/+1.631.738.2400FAX: +1.631.738.5990

Symbol WebsiteFor a complete list of Symbol subsidiaries andbusiness partners worldwide contact us at:www.symbol.comOr contact our pre-sales team at: www.symbol.com/sales

Corporate HeadquartersSymbol Technologies, Inc.One Symbol PlazaHoltsville, NY 11742-1300TEL: +1.800.722-6234/+1.631.738.2400FAX: +1.631.738.5990

For Asia Pacific AreaSymbol Technologies Asia, Inc.(Singapore Branch)Asia Pacific Division230 Victoria Street #05-07/09 Bugis Junction Office TowerSingapore 188024TEL: +65.6796.9600FAX: +65.6337.6488

For Europe, Middle East and AfricaSymbol TechnologiesEMEA DivisionSymbol Place, Winnersh Triangle Berkshire, England RG41 5TPTEL: +44.118.9457000FAX: +44.118.9457500

Part No. EPCBRIEF Printed in USA 09/03 © Copyright 2003 Symbol Technologies, Inc. All rights reserved. Symbol is an ISO 9001 and ISO 9002 UKAS, RVC, and RAB Registered company,as scope definitions apply.

For system, product or services availability and specific information within your country, please contact your local Symbol Technologies office or Business Partner.

EPCBRIEF 09/03

Specifications are subject to change without notice. Symbol® is a registered trademark of Symbol Technologies, Inc. Allother trademarks and service marks are proprietary to their respective owners.

Symbol Enterprise Mobility Services

Symbol’s global services organization offersa full range of professional and customersupport services—from project planning andnetwork design through integration andinstallation to ongoing service and support.

Professional services address the followingphases of a systems implementation:

� Planning: consulting services, networkdesign services, site survey, and projectmanagement.

� Development: system integration, customtraining, custom hardware development,and application development.

� Implementation: physical installation ofhardware and software, as well as configuration and test of the system bothbefore and after installation.

Contact Symbol to ensure a customized,innovative mobility solution that not onlyaddresses your specific business issues butalso exceeds your expectations.

About Symbol Technologies

Symbol Technologies, Inc. (NYSE:SBL)delivers enterprise mobility solutions thatenable anywhere, anytime data and voicecommunication designed to increaseproductivity, reduce costs and realize competitive advantage. Symbol systems andservices integrate rugged mobile computing,advanced data capture and wirelessnetworking for the world's leading retailers,transportation and logistics companies andmanufacturers as well as government agencies and providers of healthcare,hospitality and security. More informationis available at www.symbol.com/rfid

S e p t e m b e r 2 0 0 3 T e c h n o l o g y B r i e f S y m b o l T e c h n o l o g i e s

References:1. The Auto-ID Center—http://www.autoidcenter.org/aboutthetech_indepthlook6.asp

Additional Resources: 1. Uniform Code Council (UCC)—http://www.uc-council.org/2. EAN International—http://www.ean-int.org/

Pallet with EPC tag

Image courtesy of the Auto-ID Center: http://www.autoidcenter.org