Spanning the Supply Chain: Why Microsoft Supports Radio Frequency Identification Technology

Satya Nadella, Corporate Vice President, Microsoft Business Solutions Group. Click image for high-res version.

CHICAGO, June 11, 2003 Working to make it easier for retailers and manufacturers to use technology to track and ship merchandise, Microsoft announced on June 10 that it will join the Auto-ID Center, a joint venture of the Uniform Code Council (UCC) and European Article Number (EAN) International.

The announcement signals Microsoft’s commitment to supporting the UCC in its efforts to create industry standards for Radio Frequency Identification (RFID) technology, which combines the benefits of the silicon chip and radio frequencies. The technology has drawn a great deal of interest from manufacturers and retailers for its potential to provide an unprecedented level of product visibility across the supply chain.

PressPass spoke with Satya Nadella , corporate vice president in the Microsoft Business Solutions Group, prior to the Retail Systems 2003 Conference and Expo, which runs June 9 – 12 in Chicago. Nadella shared his thoughts on the potential RFID-enabled technology has to transform the supply chain, and also provided Microsoft’s perspective on joining AutoID.

PressPass: What is the significance of RFID technology?

Nadella: The significance is all about increasing supply-chain efficiencies and improving consumer experience. RFID will significantly impact inventory management across the supply chain, from manufacturing to distribution right through to the store shelves and the consumer. Better product availability and improved visibility will lead to better, more efficient customer service. That, of course, would result in higher customer satisfaction. Retailers are already using the chips to detect shoplifters trying to leave the store with merchandise for which they haven’t paid. If widely adopted, we are confident that RFID-enabled technology will have the capability to greatly reduce human error from data collection, enable more real-time procurement scenarios that will ultimately reduce inventories, improve product availability and tracking requirements, identify and reduce loss and waste, and ensure safety and security.

PressPass: Why is Microsoft joining AutoID?

Nadella: Working closely with our colleagues at the Auto-ID Center offers Microsoft a unique opportunity to contribute to the development of standards for RFID-enabled technology. Having standards in place will help drive adoption of RFID technology, which ultimately will empower our customers and partners to take full advantage of this transformational new way of conducting business. As a provider of business applications, we are excited to be a part of efforts to truly streamline the entire value chain. Our role is to ensure that our platforms and applications support RFID, and, by doing so, enable our customers in retail, manufacturing and distribution to make optimal use of the technology.

PressPass: What’s the significance of the timing?

Nadella: Microsoft is lending its support to a movement that is already well underway. We believe that the technology is reaching an inflection point with regards to price and innovation. As a result, better business processes and greater supply-chain efficiencies are becoming more accessible to the mainstream. We believe RFID-enabled technology will experience considerable penetration, most of it in the retail sector.

How will Microsoft’s participation in this standards body benefit retail and manufacturing customers?

Nadella: Our purpose in joining is to ensure that we are developing and delivering products that support RFID technology. The standards being developed will go a long way toward making sure that RFID-enabled technology is available to the broadest audience possible, and that the technology is able to deliver maximum value. Standards are an absolutely critical requirement for the technology to take hold and for the industry and its customers to reap full benefit. Working together will help us reach conclusions on standards and adoption. We believe that working with our colleagues in the Auto-ID Center is beneficial to everyone.

We are confident that RFID-enabled technology will further drive business process efficiencies by providing significantly more real-time information. This real-time data is the key to offering businesses increased visibility into the supply chain and the opportunity to decrease costs, improve employee experiences and increase customer satisfaction. Microsoft will support the technology as a tool for companies to more efficiently and effectively manage their business processes.

PressPass: How will RFID-enabled technology benefit Microsoft customers?

Nadella: For Microsoft Business Solutions customers, we intend to make sure that all of our products related to inventory, retail management, manufacturing, distribution and point-of-sale include built-in support for RFID technology. The benefits include lower costs, improved efficiencies and a better experience for the customer.

Take a grocery store, for example: If grocery store merchandise includes an RFID tag, stores could deploy
“smart shelves”
that can read RFID tags, and automatically send a request to the purchasing system to order more. This means a grocery store clerk doesn’t have to spend time reviewing inventories and ordering more merchandise, which can save the store a great deal of time and money. This ability has the potential to reduce out-of-stocks and increase customer purchases. And if all the merchandise in a store is tagged, the grocery store’s customers won’t have to take it out of the cart and put it on the belt for it to be scanned and then bagged. The RFID-enabled point-of-sale system will total the bill for everything in the cart.

Deploying RFID to track pallets and cases in the supply chain would generate huge amounts of data that need to be captured, stored, analyzed and integrated into the enterprise systems for decision making. Microsoft, with its partners, will enable customers to realize the full potential of RFID. The total product visibility achieved would enable new business processes that were previously impractical or not cost justified. Microsoft is working with its partners to facilitate open business standards and make it easy for partners and customers to define and execute their enterprise business processes.

PressPass: What area is Microsoft focusing on initially?

Nadella: At this time, I can not go into the specifics, but suffice to say that Microsoft is taking a very comprehensive approach to understand and deliver based on the needs of our customers and partners. For Business Solutions, we’re focusing on building RFID-enabled technology into applications for the next generation of point of sale and supply chain management solutions. This technology plays an important role in the consumer experience in other areas as well. At the technology level, Microsoft will deliver solutions for our partners to develop RFID-enabled solutions.

PressPass: How is Microsoft addressing the concerns over the impact this technology could have on customer privacy?

Nadella: We respect the rights of consumers and can understand any concerns they might have. Microsoft recognizes that for people to benefit from this technology, they must be confident that the information in tags or associated with tags will not be detected or used inappropriately. We are committed to taking all steps to insure that information is controlled by its rightful owners. Microsoft has done significant work in the area of privacy on the Web and in stores. We are looking at this issue at a fundamental level and

I am confident that

we will be able to deliver solutions that will create value for businesses and consumers alike.

PressPass: What does Microsoft’s participation with this standards body mean to the company’s existing ISVs and reselling partners?

Nadella: We believe that our participation in the standards body will help move forward standardization and adoption of RFID-enabled technology. When that happens, our platforms, tools and applications will begin to include support for RFID technology. For our partners, the advances made with RFID will offer yet a new way to customize solutions they’re offering their customers. We believe RFID will be a compelling tool for developing and selling products with new technology incorporated while the same flexibility options they have today firmly in place.

PressPass: What effect do you expect geography to have on the adoption of RFID-enabled technology?

Nadella: RFID is a technology that is truly global in scope. We anticipate that the adoption of RFID-enabled technology will be worldwide. Already, retailers in Europe and North America are beginning to use the technology with overwhelmingly positive results. We are confident that having EAN.UCC driving the standards would ensure the global adoption and would address the needs and requirements of all the key global markets.

Related Posts