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Why RFID TIPP Grading is Great News for the Retailers Worldwide

Nov 23, 2015

What does EU tax harmonization, the war in Ukraine, and TIPP adoption have in common? All three appear to be stagnant battlefronts with plenty of hard work done behind the scenes but minor visible progress to outsiders. Is there something wrong with the world order, how to move forward? Relax, take a sip of Dr. Pepper and read on to see why and how TIPP will prevail.

What Do TIPP, Tire Sidewall Codes, and Automotive Oil Grades Have in Common?

TIPP is an acronym for Tagged Item Performance Protocol. The TIPP methodology was initially created in the USA to simplify and standardize the communication and accountability around RFID tagging. RFID tagging of retail items dramatically improves inventory accuracy. Without RFID, it is impossible to sustain accurate inventory, especially on the shop floor level, and without accurate inventory a retailer cannot effectively execute their omnichannel sales strategies.

With this said, TIPP is a significant leap forward for any RFID adopting industry that looks to cut tagging costs, simplify communications, and clarify accountability. This approach would equally well serve the RFID adopters in the healthcare, automotive, and aerospace industries. It comes gift-wrapped by the GS1 US, too!

Little something for our friends!

The TIPP approach bears an analogy to car tire codes. The standardized information on the tire sidewalls describes the fundamental characteristics of the tire and is mandated by US Federal Law and EU Directives. Adapting to this system, the car manufacturer carefully masters the product (car) design, sets the tire requirements with a few alternative sizes that the car owners then follow. Periodically there is the unbiased 3rd party to check that a particular car has tires that meet the specs, are not damaged nor too worn out. In all these technical affairs, the tire manufacturer’s responsibility is to come up with the numbers and put them on the product. The tire brand is devoted to the sales and marketing side of things.

Tire sidewall markings include plenty of information for the consumer. “Tire code – en” by F l a n k e r – Own work. Licensed under CC BY 3.0 via Commons.

I will take a second example also from the automotive industry: SAE oil grades. Most car makers don’t endorse Total, Shell, nor Valvoline above others, but simply specify multigrade SAE 5W-30 in the owner’s manual, perhaps with little twists as BMW-LL-04. These grades have temperature-viscosity built-in, which makes a real difference up here in the North Pole. This valuable classification work was done by the Society of Automotive Engineers – SAE, which also has set standards on the quality side. SAE oil grades lay the grounds for easy purchasing, healthy competition, and results in fewer engine problems for us all. In this setup, the oil brands play an important role that is simply fenced off from the underlying oil grading system.

These two examples illustrate how grading systems have made two major industries more transparent, efficient, and streamlined. Sure it took years to develop and enforce these common practices, but the outcome benefits everyone.

Maintaining Approved Inlay Lists Becomes Too Complicated as RFID Tagging Expands to New Product Categories

Before the TIPP was established, the early adopters of RFID came up with their ways of getting tagging done in a controlled manner. Often this meant countless hours of the trial-and-error type of testing, and the outcome in many cases was lists of approved inlays that are suited for a particular product category. Suppliers were then instructed to use inlays from those lists, and just for a while, the process seemed to be alright.

Gradually the pain started to manifest itself. Because an inlay product is in constant evolution, maintaining of inlay lists often turned out to be quite a burden. To make the situation even more uncomfortable, the amount of testing is dramatically increasing as RFID tagging expands to new product categories. Even suppliers were unhappy due to extra effort and expense because conflicting lists from different retailers lead to exception tagging.

Adopting TIPP Is Evident, But There Are a Few Speedbumps Left on The Road

GS1 US did a fantastic job in pulling retailers, suppliers, and RFID industry experts together, and as an outcome, the TIPP grading system with eight initial performance grades was introduced in January 2015. The test methodology was documented on the protocol, physical and practical levels. A logical and well-documented alternative to the approved inlay list processes had been introduced.

The TIPP Guideline also includes grades for stacked retail items.

So why is it that the US retail’s giants did not instantly adopt TIPP? I would list four factors:

  1. The TIPP grades are not intuitive – which one to pick, and what to do if none of the eight alternative grades meet the read scenario requirements;
  2. How to verify for the TIPP grades – RFID technology vendors have not yet introduced routine validation methods for TIPP graded retail items;
  3. Many retailers are managing global supply chains, and they would rather adopt a global standard around RFID tagging;
  4. From the perspective of a multi-billion dollar retail company, slowness is an integral part of “instant”.

All these issues can and will be resolved; it just takes time. The road ahead is, therefore, paved with education, training, convincing, waiting, and politics. This rough terrain is nothing new since most RFID vendors are ideally used to it already for a decade.

Even slow progress is progress. Image courtesy of Hold the Mustard Postcards ©1980.

The Industry Is Multitasking And Making Further Progress

The vital steps that technology vendors and GS1 should take include making the TIPP grades more understandable, adding new grades in the portfolio, and introducing validation methods. All these issues are being addressed as we speak. In fact, for validation, there are already the first out-of-the-box solutions available, as you can see from the videos below.

On top of this great news, the GS1 Global Office is making a strong effort to develop a TIPP global standard. Retailers in the US, Europe, and Asia should all contribute and support GS1 in getting the global standard out promptly.

All this takes time. Many stakeholders are working on it, and it’s going to turn out great. Please contact me (juho.partanen@voyantic.com) for further insight!

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Avoiding the Next RFID Hype Rounds by Learning from the Past

Oct 22, 2015

Omni-channel retail, pharma serialization, internet of things, M2M, NFC – the world never runs out of buzz words that get us all worked up and excited. Then come to the budgeting rounds, and so many again overestimate the next year’s revenue growth, setting the sails towards the future disappointment. What is so tricky about it – how to see the forest from the trees?

I would keep my nose directed forward but also take care to learn from the past. Read on to grasp some of the past mistakes.

As we look back at the strange days of the tremendous RFID hype in 2004-2007, one can only shrug and shiver. Can you remember the factors that drove up the inflated expectations curve ten years ago? I was a rookie in the RFID business in 2004 and couldn’t tell which were major and minor industry drivers. Now the following themes become highlighted as I try to make sense of the past.

Royalty-free ISO Standard Makes Your Day

In 2004, the Class 1 Gen2 was ratified by EPCglobal. As no patent constraints had been found, the EPC Gen2 standard was also declared royalty-free by EPCglobal. The significance of Gen2 was manifested in 2006 as the International Standards Organization ISO approved it as a part of the 18000-6 standard. Class 1 Gen2 fixed many shortcomings of the original Class 1 and 18000-6B standards, and this global standard certainly paved the way for a smoother ride for the industry.

Do NOT use this switch!

Wal-Mart flipped the hype boost to overdrive with its announcements in early 2004 for the top 100 suppliers to tag pallets and cases by January 2005. This drove the whole RFID industry, and those around it, practically insane. If Wal-Mart was doing this, wouldn’t this drag the other retailers to do the same? Also, venture capitalists woke up and became fully alarmed not to miss the train. Money started pouring in RFID companies that were set to make millions in the Wal-Mart ecosystem alone, had short or non-existent revenue history, a few patents perhaps, and a bullish burn rate. It was a roller-coaster ride during which marketing agencies, lawyers, and event organizers must have made big dollars.

Go Only with a Solid Standard

By 2007 nothing much had happened. One central cause for Wal-Mart not getting ROI in their RFID expedition was the timing related to standards – the transition from Class 1 to Class 1 Gen2 took a long time and effort for the technology vendors, which also had other worries to handle. As Wal-Mart gradually began to pull back on RFID and Nasdaq started to slide, it was clear that most RFID companies were firmly headed towards the biggest hangover of all times. RFID hype had peaked, and burst, too.

Healthy Competition, or Something Lurking Behind the Scenes

One thing the investor money managed to get done was to destroy the profit margins in UHF RFID. Even the few good looking companies in RFID were nearly pushed over the edge by their revenue-hungry-investor-backed competitors that sold their goods probably at a below-zero profit. As technology was still immature and quality standards non-existent, the door was open for low-quality and no-quality vendors that gradually ate off the left-over positive karma around RFID. End users learned to be cautious and consider quality aspects as well, which now at the later time has turned into a competitive advantage for companies that have quality processes well established.

2008 to 2010 were terrible times for everyone. I can imagine how so many sales funnels had steadily forward surfing high-rise edges. As the pressure eased off just slightly, then came December of 2011 and Round Rock. That horrid battle took long and was mostly fought behind the scenes. I feel lucky for not knowing all the details, but the dispute did plenty of harm! Among other casualties, the Impinj IPO was scrapped in 2012, but at the same time, Smartrac was awake and managed to execute some significant acquisitions. The one universal splendid outcome from Round Rock was the fact that RFID companies learned to co-operate in the name of a greater common good.

Less Hype, More Industry Collaboration

There may be a time to go solo – but not now

We arrive at the present day – RFID hype is long gone, technology has matured, and studies clearly show how the RFID adoption is streamlining processes, bringing ROI and making the world a better place. Omni-channel retail, lean manufacturing, passive sensors, and expanding industry collaboration, such as the RAIN Alliance and GS1, are some of the drivers that bring more and more business to the technology vendors and solution providers.

The future of the RFID market looks set to continue at double digits rate growth. I do not see any unjustified hype on the horizon as of now. If only the RFID industry would be able to avoid the next pitfalls, such as new patent disputes, proprietary national protocols, and especially the IoT hype. In general, I feel optimistic over all this; however, having been an entrepreneur for over ten years, I won’t be surprised.

Do let me know if your crystal ball reflects the future any differently, and with more clarity! Send me an email (juho.partanen@voyantic.com) and let’s talk more!

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