A year after winning the contract to manage the root of the EPCglobal Network, the company is planning to host an EPC developers’ conference this April to try to spur adoption of the technology.
The market is still evolving, said Brian Matthews, vice president of VeriSign’s Directory Services business. My characterization of 2005 is that it will be the year of the pilot from a network standpoint.
EPC, Electronic Product Code, is the numbering system that will be used by most radio frequency identification tags. It is similar to barcode numbering, but is big enough to enable products to be identified by unit, not just by type.
Unsurprisingly, it is retailers that are pushing for adoption of RFID and EPC. US retailer Wal-Mart is using its unmatched market power to compel RFID implementations at its suppliers. Wal-Mart put a January 2005 deadline on its top 100 suppliers to start using RFID and EPC. These suppliers were obliged to join EPCglobal, adding themselves to the VeriSign-run root, Matthews said.
This has resulted in what have been known as slap and ship RFID projects at these companies. They slap a tag on a pallet of goods before it leaves the warehouse, an act of corporate compliance to keep Wal-Mart happy.
Most companies have managed to identify ROI simply by taking people out of the processes, Matthews said, but he reckons 30% to 40% of companies looking into RFID are starting to appreciate the potential benefits of the data.
For retailers, apart from supply chain efficiencies, RFID will enable new kinds of applications, such as those relating to food and drug traceability and purchase pattern analysis. But for many companies lower in the supply chain, distributors and manufacturers, the benefits of RFID are not as obvious. There is the potential for benefits in recall management, but that alone might not build a case for adoption.
The ROI case is not helped by immature standards, incompatible equipment, and pricy tags and readers. Reportedly, frustrated Wal-Mart suppliers still don’t see the need for deploying RFID in such a hurry.
For ROI, we’re only going to see that through pilots, Matthews said. Personally, I believe we’re years away maybe three or five years from tagging individual items, especially low-value items.
For VeriSign, every company that signs up to EPCglobal is another entry in its root EPC directory and potentially another customer for its related EPC resolution services, where it will have to compete with other providers.
I believe a significant portion of market will choose to outsource to a provider such as VeriSign, said Matthews, likening outsource of EPC services to companies outsourcing their web hosting to an ISP.
For now, the company is concentrating on encouraging developers to investigate EPC. At the RFID World show this April, the firm will offer a parallel EPC developers’ show, with tracks catering to the novice and the expert.
