A.T. Kearney, Kurt Salmon: Data Synchronization Fundamental to RFID Success

Report details action plan based on input from execs at consumer-packaged goods companies

Report details action plan based on input from execs at consumer-packaged goods companies

Washington — February 20, 2004 — Retail and consumer products companies must continue to drive implementation of data standards, item registry and data synchronization if they are to take full advantage of advanced collaborative technologies such as the electronic product code (EPC) and radio frequency identification (RFID), according to a new action plan for electronic collaboration in the industry.

The plan, "Connect the Dots: Harnessing Collaborative Technologies to Deliver Better Value to Consumers," was commissioned by Grocery Manufacturers of America (GMA), the Food Marketing Institute (FMI) and the National Association of Chain Drug stores (NACDS) and developed by consulting firms A.T. Kearney and Kurt Salmon Associates (KSA). It is based on interviews with more than 100 executives at 80 retail and consumer packaged goods (CPG) companies.

Recent analysis confirms that industry executives view global data synchronization — in the form of common data standards, a single item registry (Global Registry) and party/item synchronization — as the foundation for electronic collaboration. There is broad consensus that global data synchronization is the first step toward maximizing the cost, efficiency and productivity benefits of EPC and RFID.

"While RFID and EPC can provide more detailed, accurate and frequent data messages, these messages are not useful unless the data they transmit is correct," said Pamela Stegeman, vice president, supply chain and technology, for GMA. "Without clean, synchronized data, RFID and EPC technology will just enable faster transactions of the wrong information."

Broad trading partner implementation of data synchronization is another critical factor in realizing benefits, according to the action plan. Savings by any one company will depend on its ability to encourage its trading partners to be part of the collaborative solution. This underscores the urgency for retail and CPG companies to get involved in the adoption of EPC and RFID technology, according to the report.

"With a few major retailers and CPG companies involved in the EPC and RFID standards debate, it's tempting for smaller and mid-sized companies to sit back and await formal standards," said Patrick Walsh, director, industry relations, for FMI. "Instead, companies should begin preparing now to adopt that technology. The benefits to the industry are contingent upon the participation of all in global data synchronization (GDS), the EPC and RFID. It is about building an integrated system."

The action plan outlines a series of immediate actions companies should take to achieve the promise of electronic collaboration, including:
* Commit to the GDS vision and define a systems plan for implementation
* Cleanse product data and secure trading partner agreements
* Adopt enhanced metrics for measuring GDS and include these on the corporate scorecard
* Form a cross-functional EPC/RFID team to assess the impact to all aspects of operations
* Develop the EPC business case and pilot programs
* Create an inventory of existing wireless systems and evaluate for potential interference problems