Electronic Product Code (EPC): An overview
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Position
The implementation of the electronic product code (EPC) and radio
frequency identification (RFID) technology promises important benefits to
consumers and businesses alike. EPCglobal supports the responsible
development and implementation of EPC and RFID technology. Premature or
inappropriate regulation or legislation of EPC or RFID technology could
have the effect of stifling innovation and adoption, and preventing future
benefits from reaching consumers and businesses.
Background
The EPC is a unique number that is used to identify a specific item in the
supply chain. The EPC is stored on a RFID tag, which combines a silicon
chip and an antenna. Once the EPC is retrieved from the tag, it can be
associated with the data held in a secured database, such as where an item
originated or the date of its production. Much like a global trade item
number (GTIN) on the barcode or vehicle identification number (VIN), the
EPC is the key that contains the information used within the EPCglobal
Network. An EPC tag does not carry personally identifiable
information.
Several major retailers and product manufacturers are testing EPC
technology as a way to improve supply chain management. Similar to the VIN
on a car, an EPC is a way to uniquely identify a pallet, case, or
individual product. It is the next generation of the bar code, but unlike
the barcode, which needs “line of sight” to be read, EPC tags use radio
waves to read product information faster and more efficiently.
Policy Rationale
Benefiting Consumers and Businesses
For consumers, the EPC promises to enhance consumer service, reduce
out-of-stocks, and provide better product selection. In addition, it has
the potential to provide better protection from counterfeit products
(including medications), to monitor product freshness for dated goods, and
to provide easier identification for recalls. According to the U.S. Food
and Drug Administration’s Combating Counterfeit Drugs Report (February
2004), “radiofrequency identification (RFID) tagging of products by
manufacturers, wholesalers, and retailers appears to be the most promising
approach to reliable product tracking and tracing.” The EPC also offers
the potential for easier returns and streamlined warranty
processing.
For businesses, the EPC can help correct inefficiencies in the
marketplace and bring price value to consumers. Each year billions of
dollars are lost due to poor supply chain visibility. By dramatically
improving this process, the EPC has the potential to provide significant
annual savings, reduce the need for inventory held in “safety stock,”
increase sales by reducing the number of out-of stock products, reduce
transportation costs and shipping volumes, and provide more accurate
forecasts and stock replenishments. In addition, the EPC implementation
could significantly reduce theft in the supply chain and increase the
competitiveness of companies using the technology.
Generating Economic Growth
As with any new technology, the EPC and RFID have the potential to
generate economic growth by creating jobs, spurring high-tech investment,
and paving the way for new applications in the future.
Ensuring Consumer Privacy
EPC tags are created for businesses to manage products, not people. They
contain product information – not personal information. Privacy has been a
focus of EPCglobal and its subscribers since the earliest stages of the
effort to commercialize RFID. Licensing agreements for the EPC
specifically prohibit its use for tracking or identifying people, except
in very specific cases and with full transparency relating to patient or
troop safety. In addition, EPCglobal subscribers have adopted
self-regulating guidelines that can evolve as the technology continues to
develop.
Many EPCglobal subscribers are businesses that produce products or sell
directly to consumers. They value the relationship with their consumers
above all else and are committed to consumer privacy. EPCglobal
subscribers have established the EPCglobal Guidelines on EPC for Consumer
Products to address privacy issues related to the evolution and
implementation of EPC. The Guidelines state that consumers will be given
clear notice of the presence of EPC on products or their packaging. They
will also be informed of the choices available to either discard, remove,
or in the future disable EPC tags from the products they acquire. (See
EPCglobal Guidelines for EPC on Consumer Products.)
Through its multi-industry, global Public Policy Steering Committee,
EPCglobal subscribers interact with key stakeholders, ensuring an ongoing
dialogue that will allow EPCglobal to make any necessary changes to the
Guidelines on EPC for Consumer Products as the technology evolves. The
Guidelines, coupled with existing strong governmental protections for
privacy and consumer protection, are already in place to protect and
educate consumers.
