Shari wishes to thank Sanjay Mathur for his contribution to this month's column.

Businesses that rely heavily on their supply chains often contend with high labor costs, inaccurate inventories, improperly filled orders, product shrinkage and low inventory velocities. Although business intelligence is frequently used to understand these issues, granular real-time information is needed to respond to the dynamically changing marketplace.

Many companies are exploring the benefits of sensing and tagging technologies such as radio frequency identification (RFID) tags. Combined with wireless communication and sensors, these tags enable what Accenture has dubbed silent commerce: objects communicating directly with customers, suppliers, employees and even each other to create business value.

Almost any physical item can be embedded with electronic tags and sensors to establish a unique, verifiable identity; store a wealth of information; and sense environmental changes. RFID readers will track inventory flow and update inventory quantities accordingly. The current labor-intensive quantity check-in process will be virtually eliminated, as will many of the supporting clerical functions.

Organizations use information from silent commerce technologies to maintain more accurate inventory, resulting in greater warehouse efficiency, more accurate order fill rates, improved customer service and faster inventory turns. Damaged products can be removed on the fly from production and logistical chains. Products can tell you when they've been misplaced, lost or stolen so that shrinkage is reduced and security is enhanced. Greater data volumes combined with increased processing power could allow enterprises to identify patterns earlier than they can now. In addition, that data can then be used in forecasting and replenishment applications.

Silent commerce implementations and their related analytic capabilities require enterprises to anticipate and accommodate data management issues such as standards, distribution and ownership, and privacy and security.

Standards: Companies need a standard way to identify and describe products regardless of the manufacturer that tags them. The Auto-ID Center, comprised of more than 90 leading manufacturers and universities, is currently developing an electronic product identification code (EPC) that will supercede the universal product code (UPC) and give companies a globally standardized, integrated and automatic way to track products in real time along the entire supply chain. However, the EPC is just the beginning. Enterprises should proactively agree on common semantics with all the partners in their own value chains.

Distribution and Ownership: Although most RFID pilots currently exist in a closed system environment, the ultimate goal is to track items through the entire supply chain. Initially, many companies may be hesitant or unwilling to share data with their trading partners. However, Accenture believes that as companies see the revenue gains or cost savings realized by early adopters ­– even from closed systems –­ they will be inclined to share information. The Uniform Code Council, through its UCCnet not-for-profit organization, is facilitating the creation of contractual obligations for data sharing among trading partners and exchanges. A related issue is the "ownership" of the massive amounts of event information associated with an object passing though a supply chain. Enterprises must examine the value of data ownership throughout the product's life cycle and understand the value trade-offs between sharing data or remaining in a closed system.

Privacy and Security: The issue of privacy for consumers and businesses is tied to data ownership. Understanding technology limitations can ameliorate concerns such as RFID tags in clothing. Although the Auto-ID Center is organizing a privacy and security special interest group to address these issues, there will not be a "silver bullet" answer. Companies should communicate what they intend to do with the data they collect. Wherever data is personal or proprietary, enterprises need to build trust with the data owners, understanding their unique concerns and motivations. Based on that understanding, organizations can develop and publish guidelines to protect personal customer information while differentiating themselves in the marketplace.

Accenture recommends that companies that want to use silent commerce to generate new supply chain insights begin pilot applications in a specific operating area. Pilots help companies identify processes that need improvement and requirements for integrating silent commerce technologies with legacy applications and processes. To define data needs and solve data management issues, companies must know which questions they want to ask about their supply chain and understand how the answers will help to improve their business.

Because RFID tracks objects in real time, it offers an unparalleled level of data granularity to enable greater insight into supply chain processes.

For information about Accenture Technology Labs' research into silent commerce and Information Insight, visit www.accenture.com/techlabs.

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