P&G REPORTS ON RFID PROGRESS AT BARCELONA SHOW

BARCELONA, Spain -- Having played a key role in creating the Auto-ID Center at MIT, birthplace of the electronic product code, Procter & Gamble continues to be a major player in the burgeoning field of RFID.That much was made clear earlier this month by Milan Turk, director of global customer eBusiness, P&G. Turk spoke here at the Global Retail Technology Forum about his company's plans to transform

BARCELONA, Spain -- Having played a key role in creating the Auto-ID Center at MIT, birthplace of the electronic product code, Procter & Gamble continues to be a major player in the burgeoning field of RFID.

That much was made clear earlier this month by Milan Turk, director of global customer eBusiness, P&G. Turk spoke here at the Global Retail Technology Forum about his company's plans to transform its supply network through adoption of the EPC.

Probably P&G's prime impetus for getting so involved with RFID is its potential to help resolve one of the most bedeviling problems and biggest costs for manufacturers: out-of-stocks. With nearly 300 brands in its portfolio, P&G and its retail outlets find "there's always one brand missing -- the one that's out of stock up to 12% of the time," he said. "EPC is about putting the right product in the right place at the right time and at the right price."

Among P&G's main learnings to date are that product technology is the most critical overall variable, and that "we can read any case in single file on a conveyor, or any single pallet tag through a dock door," said Turk. However, he acknowledged that the technology was not yet capable of "auditing mixed pallets, multiple cases on a pallet, or multiple pallets through a dock door."

Turk described the EPC Network as a five-part system comprising cheap tags, agile readers, a network to channel the information about the item, a PML language, and an EPC information service. Tag cost projections are becoming much clearer (between 40 cents and $1.50 apiece), "but are still above target price points," he said.

The goal of P&G's eBusiness division for 2004, he said, is to validate the business case for RFID through pilots and trials now taking place in the United States. Turk made it clear that identifying and capturing the benefits of RFID will require collaboration between trading partners. Comparing future use of the EPC network to that of the Internet in the late 1990s, Turk said two to four times as much savings are projected for the company once this technology becomes fully operational.

Committed to playing a leading role in understanding how this technology creates value for both retailers and manufacturers, P&G is field-testing it through a central multi-functional team. According to Turk, this should provide "an opportunity for IT managers to sit and meet with the manufacturing side." The current testing should help the company understand retailer performance requirements, assess costs, and diagnose conveyor case and pallet levels.

In 2005 and 2006, P&G's implementation strategy will focus on an integration plan and timetable. This will comprise the search for clear value propositions, and high-speed manufacturing and line solutions for different business units.

While tag and reader interoperability (as well as its cost reduction) is essential to the implementation of new RFID technologies, the key challenges remain non-technical. Turk stressed the importance of sharing information between retailers, manufacturing partners and systems suppliers. In addition, consumer benefits must be identified and customer concerns -- mainly privacy, health and safety -- need to be addressed in the race to worldwide standards.

The Global Retail Technology Forum, held March 10 and 11, was sponsored by Retail Systems Alert Group Inc., Newton Upper Falls, Mass.