Anatomy Of The EPC Value Model

The EPC Value Model is a comprehensive report that includes spreadsheet tools that allow manufacturers to assess the value of implementing Electronic Product Code (EPC) technology in their businesses. It was developed by EPCglobal US along with nine global consumer products manufacturers, three international retailers and two academic institutions (MIT and Stanford University).

The spreadsheet tools, which are designed for use by large-- and medium--sized consumer--products manufacturers, accept unique variables and assess the quantifiable value of implementing EPC technology at the case and pallet level.

Here is how the model works:

Manufacturers enter such data as annual revenue, profit margin, expected business growth rate, annual cost of capital and average inventory level as a percentage of sales. Also, they identify areas that they believe EPC technology can address, including out--of--stocks, shrinkage or counterfeiting. Finally, companies enter information about operational areas of interest in implementing EPC technology, such as production planning, inventory management or track--and--trace abilities.

The model then generates a spreadsheet analysis with estimates of the one--time and annually recurring benefits of an EPC implementation as they relate to the key challenges and business drivers identified. A summary will include the expected costs and benefits over five years, and the expected five--year discounted net--present--value of an EPC implementation, as well as qualitative analysis.

For subscribers who cannot enter all of the requested data, default values are available, along with an explanation of the assumptions on which they were based.

The model is included in a 49--page report called "Assessing the Value of RFID Technology and EPCglobal Standards for Consumer Good Manufacturers." It was prepared by a team of researchers led by Dr. Hau Lee, co--director of the Stanford University Global Supply Chain Forum.

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