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What Is the Electronic Product Code

Why Does It Matter?

Dr. Florian Michahelles


I f
Information
ti Management,
M t Auto-ID
A t ID LLab
b ETH Z
Zurich/St.
i h/St Gallen
G ll
Department of Management, Technology and Economics
ETH Zurich

Prague / November 3, 2008


About Us

50% 50%
Prof. E. Fleisch
Dr. F. Michahelles Dr. T. Staake A. Bereuter Dr. F. Thiesse
~15
15 research assistants

What Is the Electronic Product Code Slide 2


Florian Michahelles © ETH / HSG
Industrie Partner seit 2001

ƒ Retail

ƒ Manufacturers

ƒ Financial services

ƒ Telecommunications

ƒ Technology providers

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
Rich world of objects:
IT was born to manage products and processes

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Florian Michahelles © ETH / HSG
Today’s Internet is an island in the gulf of physical objects:
only connected through human (manual) inputs

10000 bio

6 5 bi
6.5 bio

2 bio
1 bio
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Florian Michahelles © ETH / HSG
The Internet (of information) expands to the real world:
an Internet of Things emerges

10000 bio

6 5 bi
6.5 bio

2 bio
1 bio
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Florian Michahelles © ETH / HSG
Today’s computers have no eyes and ears and thus a rather blurred, low
resolution mapping of the physical world they are supposed to manage

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Florian Michahelles © ETH / HSG
Better measuring instruments change the way we see, understand and
influence the world

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Florian Michahelles © ETH / HSG
Just as X-Rays and ultrasound advanced medicine, and as microscopes
changed physics, biology, material sciences etc …

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Florian Michahelles © ETH / HSG
… machine sensing advances the way ...

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Florian Michahelles © ETH / HSG
… we do business

01.23G3D00.8886A3.365000A03

01.23G3D00.8886A3.365000A03
01.23G3D00.8886A3.365000A04

01.23G3D00.8886A3.365000A03
01.23G3D00.8886A3.365000A04
01.23G3D00.8666A3.000000A04
01.23G3D00.8886A3.365000A04
01 23G3D00 8666A3 000000A04
01.23G3D00.8666A3.000000A04
01.23G3D00.8666A3.000000A05
01.23G3D00.8666A3.000000A04
01.23G3D00.8666A3.000000A05

01.23G3D00.8666A3.000000A05

01.23G3D00.0111A3.000000A05

01.00555A2.8666A3.000000A05
01 00555A2 8666A3 000000A05
01.23G3D00.8886A3.365000A03

01.23G3D00.8886A3.365000A03
01.23G3D00.8886A3.365000A04

01.23G3D00.8886A3.365000A04
01.23G3D00.8886A3.365000A03 01.23G3D00.8666A3.000000A04

01.23G3D00.8886A3.365000A04
01 23G3D00 8886A3 365000A04 01 23G3D00 8666A3 000000A04
01.23G3D00.8666A3.000000A04
01.23G3D00.8666A3.000000A05
01.00555A2.8346A3.000000A05
01.23G3D00.8666A3.000000A04 01.23G3D00.8666A3.000000A05

01.23G3D00.8666A3.000000A05

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
EPCglobal Network with RFID

EPC and RFID

Track & Trace Product Anti-Counterfeiting


g
Recall Applications

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Florian Michahelles © ETH / HSG
EPCglobal Network with RFID

ƒ Tracking:

ƒ the ability to know where an item is located.

ƒ Tracing:

ƒ the ability to know the history of an item.

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Florian Michahelles © ETH / HSG
EPCglobal Network with RFID

ƒ Product recall

ƒ products in the supply chain cannot be consumed because of errors


during production, storage, or even transport.
ƒ They have to be returned to the retailer or manufacturer

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Florian Michahelles © ETH / HSG
EPCglobal Network with RFID

ƒ Anti counterfeiting applications


Anti-counterfeiting

ƒ Counterfeits are products that have been copied illegally without


manufacturer's knowledge and approval.

ƒ The EPCglobal Network combined with RFID gives the possibility to


inquire about the origin of products
products. Moreover
Moreover, counterfeited
products do not have EPCs or have invalid EPCs or EPCs that are
duplicates of authentic products.

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Florian Michahelles © ETH / HSG
EPCglobal Network with RFID

ƒ New applications

ƒ The management of books in a bookshop.


bookshop

ƒ Each book is equipped with an EPC tag.


ƒ Tags are read and the location of books can be provided.
ƒ This provides a better service to the consumer.

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Florian Michahelles © ETH / HSG
EPC / RFID can now impact your business processes

PROCESSES ARE KEY


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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
How to cope with semantic integration issues?

Mini world of Mini world of


Computer 1 Computer 2

Price Price
incl. VAT excl.
and VAT and
rebate rebate

Price?

13 99
13.99

Computer 1 Computer 2

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Florian Michahelles © ETH / HSG
Driving the Auto-ID Technology –The Auto-ID Center

ƒ Large consortium
– several of the world
world’s
s leading (Fortune 500) companies
– standardization organizations
– academic institutions
– systems integrators
– technology hardware & software providers

ƒ Mission: create standards & technologies for smart objects


– Low cost tags and readers
– Electronic Product Code (EPC)
– a network infrastructure and middleware to support billions of tags

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Florian Michahelles © ETH / HSG
Auto-ID Center: Eine Welt smarter Dinge ist die Vision vieler
Unternehmen

ƒ Gillette ƒ Sun
ƒ Wal-Mart ƒ Philips
ƒ P&G ƒ Intel • USPS
• UPS
ƒ Unilever ƒ ST Micro • DoD
ƒ Kraft ƒ Canon • UCC/EAN
• Accenture
ƒ Philip Morris ƒ Alien
• IBM
ƒ N tl
Nestle ƒ BT • Coca-Cola
ƒ Best Buy ƒ NTT • Pepsi
• Kodak
ƒ Target ƒ Metro
• NCR
ƒ Tesco ƒ Mitsui • SAP
ƒ Home Depot ƒ Pfizer • Symbol

Florian Michahelles
ƒ
What Is the Electronic Product Code Slide 23
CVS
© ETH / HSG
ƒ Sara Lee
Benefits of Tag Data Standards

Versatility: EPC’s allow for the identification of a wide variety of


objects (trade items
items, shipments
shipments, assets
assets, etc
etc.))

Global system:
y the structure of the EPC ((through
g the use of an
EPC manager number) ensures globally unique identification
numbers

Consistency: the same EPC manager number can be used for


different types of EPC’s

Compatibility: EPC’s are built on the existing GS1 identification


keys thereby providing compatibility with your existing barcode
keys, barcode-
based systems.
Total = 309,485,009,821,345,000,000,000,000
, , , , , , , , item identities

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Florian Michahelles © ETH / HSG
Transition to

ƒ Auto-ID Center ceased to exist November 2003

ƒ Mission of EPCglobal
– Standards Development and Management
– Manage EPC Numbers
– Certification
C tifi ti and dC
Compliance
li T
Testing
ti

ƒ From research to implementation

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
The Secrets of RFID

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Florian Michahelles © ETH / HSG
The Secrets of RFID

R.F.ID.

Radio
Frequency
IDentification

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Florian Michahelles © ETH / HSG
The Secrets of RFID

ƒ 1. The reader sends energy and data in the form of


radio waves
a es to the tag
tag;
ƒ 2. The tag transmits its identity back;
ƒ 3. The reader receives and decodes.
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Florian Michahelles © ETH / HSG
The Secrets of RFID

ƒ RFID Tag components:

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Florian Michahelles © ETH / HSG
The Secrets of RFID

ƒ Components of a reader:

- Module (transmit /receive)


- Control Unit
- A t
Antenna

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Florian Michahelles © ETH / HSG
Benefits of RFID

ƒ No line of
sight
ƒ q
required

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Florian Michahelles © ETH / HSG
Benefits of RFID Applications

ƒ RFID readers can capture up to several hundreds of


tags per second
second.
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Florian Michahelles © ETH / HSG
Benefits of RFID Applications

RFID enables the capture of a lot of information at low cost.

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Florian Michahelles © ETH / HSG
The EPC Concepts

Identification

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Florian Michahelles © ETH / HSG
The EPC Concepts

Data Capture

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Florian Michahelles © ETH / HSG
The EPC Concepts

Data Exchange

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Florian Michahelles © ETH / HSG
The EPCglobal
g Standards

Exchange

EPCglobal
Architecture
Framework Capture

Identify

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
What is the Electronic Product Code?

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Florian Michahelles © ETH / HSG
What is the Electronic Product Code?

The EPCglobal Network

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Florian Michahelles © ETH / HSG
RFID EPC standard coding scheme

ƒ GS1 codes such as serialised GTINs, SSCCs, can be embedded in EPCs :


ƒ No migration to a new coding scheme necessary.
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Florian Michahelles © ETH / HSG
Technical Information

ƒ EPC Building Blocks

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Florian Michahelles © ETH / HSG
Technical Information

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Florian Michahelles © ETH / HSG
Technical Information

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Florian Michahelles © ETH / HSG
Technical Information

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Florian Michahelles © ETH / HSG
Technical Information

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Florian Michahelles © ETH / HSG
Technical Information

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Florian Michahelles © ETH / HSG
Tag Data Standards

Tag Data Standards is a “cookbook”. It provides the various “recipes” for


how to put the different identification keys into an EPC tags.
Header Filter Partition Company Serial Unallocated
Value Prefix Reference
SSCC- 96 8 bits 3 bits 3 bits 20-40 bits 38-18 bits 24 bits
0011 0001 8 8 999.999 – 99.999.999. [Not used]
(actual (decimal (decimal 999.999.99 999 –
value) capacity) capacity) 9.999 99.999
(decimal (decimal
capacity)
it ) capacity)
it )

Tag Data Standards defines how to convert between the human-readable


and the binary (on-tag) representation of an EPC

urn:epc:id:sgtin:0614141.100743.123456789

001100000111010000100101011110111111010001100010010111111000000000000111010110111100110100010101

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Florian Michahelles © ETH / HSG
Identify – The EPC Tag Data Specifications

EPCglobal Core Services


and other
Shared Services

Shared Service
Interactions

Exchange of data
about EPCs
A
Co

Co
B
ompany

ompany

1010101010101

Identify
Tag Data

Exchange of
Physical objects
withProduct
What Is the Electronic EPCsCode Slide 50
Florian Michahelles © ETH / HSG
The Representation of EPC

urn:epc:id:sgtin:0037000.112345.400
id ti 0037000 112345 400

Text Representation
p in Information
Systems
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Florian Michahelles © ETH / HSG
The Representation of EPC

00110000011
10100001001010111101111110100011000100101111110000000000000
00000000000000000110010000

Bi
Binary Representation
R t ti on th
the T
Tag

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
Implementation - Examples of Projects

ƒ Hong Kong international airport


– System to tag and read tags on luggage
luggage.
– 17 million items are tagged yearly.

ƒ The primary objectives:


– -improve operational efficiency
– -improve customer service.

ƒ On average, a lost bag costs $ 100.


ƒ Currently 2 per cent of all baggage is lost each year.
ƒ The system directs the right piece of luggage to the right direction automatically
instead of manually.
ƒ A RFID label is attached to the regular baggage label and is read on conveyor lines.
What Is the Electronic Product Code Slide 54
Florian Michahelles © ETH / HSG
Implementation - Examples of Projects

ƒ Food traceability

ƒ The Ministry of Agriculture in Japan


ƒ has developed a project to tag fruit and vegetables.

ƒ Primary objectives:

ƒ - to ascertain the country of origin of the products


ƒ - to trace the items that are coming from contaminated regions.

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Florian Michahelles © ETH / HSG
Implementation - Examples of Projects

ƒ High Value
ƒ Products

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Florian Michahelles © ETH / HSG
Implementation - Examples of Projects

ƒ Healthcare

ƒ drugs are tagged


ƒ in order to prevent
ƒ counterfeiting
t f iti

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Florian Michahelles © ETH / HSG
Agenda

ƒ Business Vision: Internet of Things


ƒ Driving Applications
ƒ Background of EPC
ƒ Principles of RFID
ƒ C
Concept
t off EPC
ƒ Examples of Implementation
ƒ Adoption

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Florian Michahelles © ETH / HSG
History of the barcode

ƒ 1948 – Silver & Woodland (Drexel Institute of Technology) start developing


novel scanner technologies

ƒ 1951 – First prototype (500 Watt bulb + oscilloscope)

ƒ October 20th, 1952 – Patent registration

ƒ 1966 – The National Association of Food Chains puts out a call to equipment
manufacturers for systems that would speed the checkout process
– 1967 – First installation of a RCA scanning system at a Kroger store in Cincinnati
– 1969 – Proposal for an industry-wide bar code system by NAFC and Logicon, Inc.

ƒ 1970 – Formation of the Ad-hoc Committee (aka UCC) by five US retailers


and five grocery manufacturers

ƒ April 1st, 1973 – Official ratification of the Universal Product Code

ƒ June 26th, 1974 – First scan of a UPC-equipped product


at Marsh Supermarkets, Troy (Ohio)

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Florian Michahelles © ETH / HSG
Choice of technologies

Source: Business Week, April 7th, 1973

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Florian Michahelles © ETH / HSG
35 years later…

ƒ March 22nd, 1976 – Business Week: 'The


The Supermarket Scanner that failed'
failed
– 1978 – ¾ of all products carry barcode labels; number of scanner installations is <1%
– 1980 – First tests by Wal-Mart in one store
– 1984
98 – Wal-Mart,
a a , Kmart,
a , and
a doothers
e s issue
ssue ba
barcode
code mandates
a da es o
on their
e supp
suppliers
es
– 1986 – Nongrocery retailers switch from OCR to Barcode identification
– 1993 – More than 80% of retail stores use UPC scanner systems

ƒ 1977 – Foundation
F d ti off the
th European
E Article
A ti l Numbering
N b i (EAN) System
S t

ƒ Diffusion in Germany
– 1977 – First POS scanner in a supermarket in Augsburg
– 1979 – Nine installations in the entire country
– 1982 – 535 installations in 66 markets
– Approximately 100% saturation by 1990 (except hard discounters)

ƒ 1990s – Increasing deployment of interorganizational systems for Electronic


Data Interchange, e.g. Wal-Mart Retail Link, Metro Link, among others

ƒ January 1st, 2005 – Fusion of UCC and EAN into GS1 ('Sunrise Date')
What Is the Electronic Product Code Slide 61
Florian Michahelles © ETH / HSG
Characteristics of adoption

ƒ Technology
gy and standards
– Drivers: Price decline and miniaturization of ICs and laser technology
– Barriers: Package redesign, Printing errors, Read rates, 'Golden Chicken' problem
– Competing technologies: Electronic cash registers, OCR
– C
Competing
ti standards:
t d d e.g. Code
C d 39 (A (Automotive,
t ti D
DoD)
D)
– Time until ISO standarization: 27 years (ISO 15420)
ƒ Business drivers
– Target ind
industry:
str Grocery
Grocer retail
– Expected benefits: Faster checkout process, Reduced labeling cost
– Cost factors: Printing, Scanners, Systems integration
– Object
j identification level: Sales units
ƒ Diffusion process
– Early adopters: Manufacturers
– Time until retailer mandates: ~10 years
y
– Cross-industry diffusion: ~10 years
ƒ External forces
– Positive: Nutrition labeling (FDA)
– Negative: Consumer concerns / Price indication legislation

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Florian Michahelles © ETH / HSG
Influence of the UPC

Estimates of the business case for the barcode at different points in time
(in % of sales)
1975 1997 Factor

„Hard
Hard“ benefits
benefits* 3 13
3.13 3 45
3.45 x 1.1
11
„Soft“ benefits** 0.29 3.44 x 12
Cost 2.50 1.25 x 0.5

Net benefits 0.92 5.64 x6


(USD 0.1 Mrd.) (USD 16.4 Mrd.)

A llarge part off the


h savings
i was passed
d on to end-consumers:
d
„[T]he grocery industry is still earning the same 1 percent to 1.25 percent on sales.“
(Alan Haberman, 1999)

* Main benefits: Faster check-outs, reduced check-out errors / loss prevention, elimination of price marking
** Main benefits: Automatic reorder, shrink control, improved warehouse operations, improved DSD control,
inventory reduction and sales increase
Source: PwC, in: Haberman (1999)

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Florian Michahelles © ETH / HSG
Review: Annual UPC registrations 1971-1998

RFID/EPC adoption
is about here!

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Florian Michahelles © ETH / HSG

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