EPC, which is based on Radio Frequency Identification (RFID) technology, is based on the concept of “an Internet of things”. By applying the new identification technology, enterprises can trace their products continuously. The arrival of EPC means big changes for business, and opens a new chapter in supply-chain management.

EPC was developed - and is managed - by EPCglobal, a subsidiary of the International Association of Product Codes. EPC - and RFID - is an extension of bar codes that not only enhances the quality of supply-chain management, but also reduces costs.

The Article Numbering Centre of China (ANCC) is the only authorized Mainland organization and legal entity representing the International Association of Product Codes and EPCglobal. The centre is responsible for organizing, coordinating and managing all Mainland bar codes and EPC.

On 22 April 2004, Beijing established EPCglobalChina to follow EPCglobal regulations and contribute to the establishment of an internationally recognized standard for EPC.

A global revolution

Some professionals believe the impact of EPC is not limited to solving the problems of stock accumulation, supply shortage or unequal product distribution, more importantly, EPC will speed up economic globalization and quality of life.

In other words, EPC is not simply an advanced technology - it represents a global revolution.

Wal-mart, the world’s largest retailer, recently asked its 100 largest suppliers to use RFID for all cargoes and packages starting in January 2005.

The Hong Kong Airport Authority announced in October that EPC technology would be used to trace luggage starting January 1, that 120 EPC readers would be installed in the airport and that the authority had ordered 1.5 million pieces of EPC class codes.

The system, which is expected to commence operations in 2005, will be the largest RFID project in Asia. Shanghai’s Pudong Airport is treating the Hong Kong move as a model for its own plans to implement a similar scheme in the near future.

Distributors and supply-chain managers point out that development of EPC in China offers significant opportunities to various industries, including system suppliers, packagers, publishers, electronics and information technology. EPC is likely to lead to further developments in the manufacturing and retailing industries.

Although EPC technology is clearly superior to bar codes, the two technologies will certainly coexist for a certain period of time.

Efficiency at lower costs

Chris Adcock, chairman of EPCglobal, said applications of electronic codes are currently still limited to such industries as wholesaling, packing, large packaging and shipment of exceptional products.

In such applications, electronic codes integrate all the elements in the supply chain into a unified system, boosting the efficiency of logistics and reducing costs. Significant benefits also accrue in terms of product monitoring, tracing and information availability.

Mr Adcock said, however, that it was still too early to discuss EPC for consumer products. The chief obstacle in the Mainland, he said, is cost. The price of using electronic code ranges between US$0.20 and US$0.25 per piece.

The most optimistic estimates are for costs to ease to US$0.10 in three to five years, making the cost of EPC still relatively higher than that of bar codes. As such, EPC is unlikely to replace bar codes for some time.

Some experts believe cost reductions depend on the pace and scope of technology development. Although EPC is not in wide commercial use, the technology was originally developed more than 50 years ago, meaning it has benefited from years of research and development. Significant additional breakthroughs are not expected soon, however.

Even in the case of mature technology, practical application requires manufacturers with imagination and vision. Profitability is contingent upon mass production.

How long are EPC and bar codes likely to coexist in China? Zhang Haiwai, deputy general officer of ANCC, said the general view in the industry is for a period of between 30 to 50 years. He pointed out that EPC has yet to be applied in areas dominated by bar codes, even in developed countries.

An international standard

From a global perspective, the International Association of Product Codes and EPCglobal encourage EPC applications. The two organizations plan to establish an international EPC standard, which they expect to approve internally by the end of the year and submit to the International Organization for Standardization in 2005.

Both Mr Adcock and Mr Zhang said China was quickly becoming an international manufacturing giant.

This trend, they agreed, would enhance development of EPC across China. As the nation’s manufacturing industry involved increasing numbers of multinational companies, the technology would be likely to find wide adoption across such varied industries as product delivery and packaging, as quickly as 2006.