Hdm Woks

The University of California, Berkeley Haas School of Business

The Mu Chip

October 20, 2002
This case was prepared by Andrew M. Isaacs, Executive Director of the Management of Technology Program at UC Berkeley, solely as a basis for class discussion and is not intended to serve as an endorsement, source of primary data, or illustration of effective or ineffective management. The authorwishes to express his gratitude to the UC Berkeley graduate students listed in the Appendix who participated in studies associated with the technologies described in this case; errors and omissions contained in this case are, however, exclusively the author’s. Copyright © 2002 by the University of California Regents. No part of this publication may be reproduced, stored in a retrieval system, ortransmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise – without permission from the Haas School of Business.

The End of Bar Codes? Chip-Embedded Radio Tags Could Revolutionize Retailing The future of inventory tracking could be near. Business Week reports that chip-embedded radio tags are poised to revolutionize retailing by replacing barcodes, the30-year-old system now used to track inventory. The new radio-frequency identification (RFID) systems require less manipulation by humans and hold more data than bar codes. They have tiny antennae that communicate with receivers. In stores, RFID systems allow salespeople to find and read tags at a distance. In warehouses, RFID systems can inventory an entire warehouse with little humansupervision. This year, Marks & Spencer, a large British retailer, began replacing bar codes with an RFID system on the plastic containers it uses to transport food from suppliers to stores. Suppliers used to print bar-coded labels for the 7 million bins the company handles weekly. Now, when suppliers pack bins, the new system encodes shipment data, such as product codes, quantity and expiration dates, ontoRFID tags embedded in the cartons. About 50 plastic containers can be read at once, reducing each one's scan time from 29 seconds to five seconds. Thanks to saved time, less spoiled food and fewer lost shipments, M&S expects to recoup its $3 million smart-tag investment in three years. For now, RFID tags are too expensive to use on individual food items. But several companies, including Coca-Colaand Wal-Mart, are backing a Massachusetts Institute of Technology project that could change that. The goal is to develop a common language of electronic product codes to identify billions of items and cut the cost of RFID tags, making them cheap enough to embed a tag on a softdrink can. Excerpted from Business Week July 8, 2002

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From the MIT Auto-ID Center Web site: Auto-ID technologywill change the world by merging bits and atoms together to form one seamless network that interacts with the real world in real time. Physical objects will have embedded intelligence that will allow them to communicate with each other and with businesses and consumers. Auto-ID technology offers an automated, numeric system of smart objects that revolutionizes the way we manufacture, sell, and buyproducts. An Electronic Product Code (ePC) is embedded onto individual products and physical objects on memory chips known as "smart tags" that connect objects to the Internet. Auto-ID technology will allow the Internet to extend to everyday objects. Everything will be connected in a dynamic, automated supply chain that joins businesses and consumers together in a mutually beneficial relationship. A96-bit code of numbers called an Electronic Product Code (ePC) is embedded in a memory chip (smart tag) on individual products. Each smart tag is scanned by a wireless radio frequency "reader," which transmits the product's embedded identity code to the Internet, where the "real" information on the product is kept. That information is then communicated back from cyberspace to provide whatever...