Profit and security will drive supply chain evolution in 2005

Dec. 7, 2004
As government and private industry ramp up efforts to strike a balance between security and profit, experts at Unisys Corp. predict that the infrastructure

As government and private industry ramp up efforts to strike a balance between security and profit, experts at Unisys Corp. predict that the infrastructure and standards needed to drive velocity in global logistics networks will begin to fall into place throughout 2005.

According to Unisys, containers will begin to evolve into virtual warehouses that span oceans and continents. This evolution will emerge as track-and-trace technologies, such as RFID, merge with refined business processes and industry-wide standards and regulations designed to address supply chain efficiencies, global security and product counterfeiting.

Unisys has more than a decade of auto-identification experience, including managing one of the world's largest RFID implementations for the U.S. Department of Defense and piloting technologies and processes for the global supply chains of Motorola Inc., and two divisions of Sara Lee Corp.

Peter Regen, vice president of global visible commerce at Unisys, believes the following five factors will come into play over the coming year:

1. Counter-terrorism and other security initiatives and port modernization efforts will accelerate, as will the implementation of auto-identification solutions.
Regulators and policymakers will seek industry expertise and partnerships to develop regulations and legislation that protect and enable the economic use of auto-ID and other track-and-trace technologies.

2. Speed-to-value of supply chain/logistics process improvements will be top priority.
Visibility into the status and movement of goods throughout the supply chain will be a prerequisite, and a new focus on optimizing product lead times will emerge. Visibility is particularly vital in supply chains for highly perishable goods, medicines and market-timed commodities such as apparel. Increased visibility into goods-in-motion will support novel approaches to manufacturing and distribution.

3. Next-generation federal and state/local supply chain improvements will emerge. Preparedness -- that is, material acquisition and stockpile management initiatives to support "first responders" -- and homeland defense will grow in number and breadth. These initiatives will cut across federal, state, county and municipal organizations, involving nearly every commodity. Cost versus readiness will become the key driver for material planning and logistics process excellence.

4. Secure, passive RFID will be ready for primetime.
EPCglobal's "gen2" tag will be approved by both EPCglobal and the International Standards Organization (ISO) by the end of 2005. This tag, which carries an electronic product code (EPC), will be readable worldwide and will be more secure than existing passive tags based on its use of encryption and other protocols.

5. "Big buyer" compliance will expand; leading suppliers will achieve real business benefits.
Current big buyer mandates will be expanded to more distribution centers and stores, while additional organizations -- including government entities -- will establish mandates. Leading suppliers to multi-billion dollar companies like Wal-Mart will derive real business benefits across their supply chains. EPCglobal's information systems network will go live in 2005, enabling data sharing across enterprises. Business and trade networks will invest in greater visibility into the position, movement and status of goods, including the ability to track, demonstrate product pedigrees, prove chain of custody, and optimize stocking and positioning for best possible order fulfillment. This visibility will depend upon integrated data flowing through a seamless, secure infrastructure chain as the leaders move beyond the current "slap and ship" approach. RFID tag reading accuracy, reliability and repeatability will continue to improve along with unit cost reductions.

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