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Securing the Pharma Supply Chain – RFID, 2-D Barcodes and ePedigree

tom.singer posted on 6. August 2010, 03:58
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As Paul Faber pointed out in his recent blog post, Walmart will soon begin applying removable RFID tags to individual items to improve inventory control and visibility inside stores. The theory is that tagging individual articles should reduce stock outs, shrinkage, and misplaced inventory while increasing labor productivity and shelf availability. 

This move toward item-level tagging may very well help push RFID to the next level in the supply chain world. I have long seen the retail store floor as being a key factor in the technology’s adoption. But I also believe that product authentication is another key driver in making the case for RFID. The vision for its role is well delineated by GS1 and its affiliate EPCGlobal.  

This vision is based on assigning a serial number at manufacturing or packaging to each item or sellable unit. This serial number must be unique across the global supply chain. It is stored in a data repository that can be updated as the item changes hands throughout the supply chain. Anyone taking custody of the item would be able to query the serial number against the repository to see if the item is registered or if there is anything suspicious about its history. This vision needs a physical data carrier to accompany each item that can store rather lengthy item-level serial numbers and be easily read throughout the supply chain.  RFID tags are a good fit for this role.

This type of authentication should help reduce counterfeiting, theft, and fraud, which are a bane to many industries. But there are few places where combating this pestilence matters more than in the pharmaceutical industry – an industry that definitely could benefit from higher visibility and security. I’ve seen estimates on worldwide annual industry losses due to counterfeit drugs as high as $75B. 

Safety is another key concern, as counterfeiting impacts the content and potency of delivered product. Mass serialization at the sellable unit level has been positioned as a tool for product authentication by legislation, regulations, and industry and standards organizations.

Brazil and Turkey are currently in the process of deploying pharmaceutical product authentication through mass serialization. Various European countries have piloted similar programs utilizing a ‘book-end’ approach with a single commissioning and authentication event. The latter occurs at the hospital or pharmacy. 

In the US, states have been addressing the problem through ePedigree laws and regulations, which focus on tracking the chain of custody. California’s ePedigree requirements – due to go into effect in 2015 – require serialization at the sellable unit level. Given the effort required to be compliant, many pharmaceutical manufacturers are already pursuing solutions to support these requirements.

RFID is not the only data carrier capable of supporting a global standard for serialization at the unit level. High density or 2-D barcodes can also be used for mass serialization. Brazil’s and Turkey’s requirements are based on GS1 DataMatrix bar code symbology. Europe also appears to be embracing the DataMatrix bar code as the foundation for pharmaceutical product authentication. 

And I have a feeling that most US-based manufacturers and distributors are looking toward 2-D bar codes rather than RFID tags as the vehicle to meet serialized ePedigree requirements.

There are certainly RFID success stories in the pharmaceutical industry. But when 2015 finally arrives, I wonder if it will still be more of a niche player in pharma than a mainstream auto-id technology. 

In a high-margin industry, a $.08 to $.10 passive tag on each sellable package shouldn’t matter that much. So I find the limited enthusiasm for RFID in pharma somewhat perplexing, especially since it provides advantages over 2-D bar codes that go beyond regulatory requirements. But I appreciate performance concerns and challenges. 

More importantly, we tend to look at RFID’s cost purely from a tag perspective. Infrastructure must also be taken into account. Image scanners and cameras are much more commonplace in the supply chain than RFID readers and software.

I’m still a believer in RFID. I think the ‘Internet of things’ will have a major impact upon the supply chain. But I’m not sure the RFID adoption rate will be going into overdrive anytime soon. I think that RFID still remains more of an evolutionary proposition than a radical transformation agent within the supply chain world – at least for the time being.

-- Tom

Additional Resources:

Documenting Distribution Operations: FDA Validation Beyond the Laboratory and Manufacturing Facility (White Paper)
http://www.tompkinsinc.com/publications/monograph/white-papers/fda.asp
 
 
Photo Credit: midnightcomm 
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Category: rfid | Technology
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Supply Chain Technology News: RFID Revival at Walmart

paul.faber posted on 27. July 2010, 10:24
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The recent big news in supply chain information technology is the return of Walmart to industry leadership in retail RFID deployment. An article in the Wall Street Journal reports that Walmart is deploying RFID tags for individual clothing items at its US stores. Read the full story here.

To my knowledge, this is the first use of RFID technology for tagging individual pieces of mass market budget clothing. 

The RFID tags will be included on removable attachments (such as price or size tags) that the consumer can discard once the garment is purchased. This is in contrast to the practices of some high-end clothing retailers who sew RFID tags into the clothing as a means of protecting against counterfeit couture.

Walmart’s goal for this technology deployment is to increase sales by reducing out-of-stock conditions on the retail floor. That is, sales associates can use portable RFID readers to quickly scan an area to identify missing sizes or styles of clothing, and the missing SKUs can then be moved from backroom stock or ordered for replenishment from the warehouse. 

A secondary goal is to prevent “shrinkage” from the backroom stock; employees are less likely to steal from inventory if they know the items can be automatically tracked out the door. 

These goals are nothing new, of course. They have been part of the technology goals for RFID for years. 

Until Walmart’s announcement, the impediment to item-level RFID tagging has been the cost of the RFID tag. This has limited the use of RFID tags to case or pallet quantities – or to high-dollar-value individual items such as designer clothes and shoes. Therefore, from a technology and ROI perspective, the fact that Walmart is deploying item-level RFID tagging to low-cost clothing is big news. 

Speaking of ROI, I think the Wall Street Journal buried the lead in their article. They waited until the end of the article to note that Walmart is subsidizing the cost of the tagging program for their manufacturers, which means that we’ll have to wait for more data to decide if item-level tagging is economically justified when the full cost of each RFID tag is factored into the value proposition.

To give you an idea of the ROI that these types of projects could see, I would like to share with you some facts from a couple of articles that I have written over the past few years. In 2006, for example, the Mitsukoshi department store in Japan published the results of item-level tagging of high-end women’s shoes. The RFID tags allowed associates to accurately and quickly find the customer’s size (previously a problem in the stockroom), which resulted in a 10% increase in sales due to more accurate inventory data. (Read more in this IndustryWeek RFID Strategy Newsletter article.)

Likewise, the Walmart RFID pilot in 2007 reported a 13% reduction in out-of-stock conditions for the SKUs tracked. (Read more here.) So it is likely that the current RFID effort at Walmart will see improvements in the range of 10-15% prior to accounting for the cost of the tags.

Walmart has been a prominent pioneer in RFID technology. The company began to elicit interest in RFID several years ago by kicking off their retail pilot project, and this new development of item-tagging clothing is sure to lead to more interesting times in supply chain RFID.

-- Paul
 
 
Photo Credit: Myuibe  
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Category: rfid
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The ROI for RFID DCs

paul.faber posted on 19. February 2010, 07:40
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After working as a supply chain IT professional for many years, sometimes people start considering you an expert in certain areas. So, as it happens, whenever an RFID consulting opportunity comes our way at Tompkins Associates, heads usually turn in my direction.

As the resident RFID "expert," I recently spoke with Maida Napolitano at Logistics Management Magazine. She was working on the article, which ran in their February issue, Warehouse and Distribution Centers: RFID Revisited.

Her article focuses on the ROI of RFID, and she notes four key benefits that RFID-enabled warehouses and DCs can achieve within the first 12 months of deployment. They are:

Eliminate shipping and receiving errors,

Improve productivity,

Establish traceability, and

Achieve inventory control and accuracy.

RFID is not going away any time soon. So, if you want to get some ideas about the advantages of RFID and learn more about what Wal-mart is doing with their RFID initiatives, check out this article, or post comments and questions right here on our blog. I would like to hear your thoughts.

--Paul

 

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Category: rfid
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Let's Party Like IT's 1999

tom.singer posted on 30. December 2009, 07:20
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The ends of decades aren’t quite as good for reflection as millennium milestones.

But they’ll do in a pinch.

Remember the Y2K craze? Computer systems across the planet were going to crash and burn one second past midnight on December 31, 1999, plunging the world into chaos. Power grids would go black. Airplanes would drop out of the sky. Companies would fail as their core IT infrastructure became worthless piles of junk.

Well, it didn’t quite turn out this way.

Y2K made great press. It also gave software vendors a boost in making new sales. But as a disaster, it pretty much turned out to be a major bust.

One could attribute this to the foresight and diligence of countless IT departments and professionals who addressed a known problem in a measured manner with plenty of time to spare. But the normal replacement and upgrade of obsolete systems had something to do with it too.

Y2K’s roots were in an older generation of software and data structures. As the old gave way to the new, the magnitude of the problem diminished.

This doesn’t mean that some folks weren’t working right up to the stroke of midnight on vintage 1970s code. However, Y2K is still a great example of how flexible and adaptable the IT world is at addressing the known.

It’s the unknown that really tests the mettle of businesses and IT.

Roll back the clock to January 1, 2000. Who foresaw what the first decade of the 21st century would bring? We now worry about airplanes dropping out of the sky and companies failing for reasons that weren’t apparent in anyone’s crystal ball back then.

So as I wait to shout Happy New Year, I can’t help but wonder what’s next.

The prospect of the unknown doesn’t mean we are all flying blind. As anyone involved in demand forecasting can attest, the past and present can help predict the future.

We tend to view progress as a linear function, with some justification. What’s next in the supply chain information technology integration world can be discerned from the events of the past decade.

Despite the past worldwide recession, globalization is here to stay. The world will continue to get flatter and smaller from a supply chain perspective. Visibility, global trade management, and trading partner integration will play an increasingly important roll in successful supply chains.

Moore’s law as applied to the computing industry as a whole is still very much alive and well. The Internet, service-oriented architecture, mobile computing, voice recognition, and RFID all have made their mark on supply chain systems in the past decade.

But you ain’t seen nothing yet. The recession of 2008-2009 put quite a crimp in supply chain IT investments.

As the world recovers from the recession, IT as a strategic weapon that drives efficiencies in supply chains will be very much back in vogue.

I realize that I am being a bit light on details. But I don’t think I’ll find too many people disagreeing with these rather vague predictions. Given another 10 years, I’m not sure that any of us will be that shocked on how these trends play out.

But what about other developments? Sustainability for businesses, carbon footprint, and energy costs will matter to supply chains in the coming decade. How will supply chain systems respond?

Recent events drive home the importance of security in our highly interconnected world. What impact will this have on supply chain IT?

What else is lurking out there?

So as we count down the minutes to the New Year, let’s collectively wonder what’s next and party like IT’s 2009.

Happy New Year!

Tom Singer

 

Photo credit: hyperscholar

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Category: Technology | rfid | supply chain visibility
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