Company adopts new technology to comply with Wal-Mart's requirement

Radio frequency identification (RFID) technology received a significant shot in the arm when Wal-Mart, the world's largest retailer, announced plans in 2004 to use it on a pilot basis.

Following some early glitches, the company has requested that many of its major suppliers around the globe become RFID compliant. Included is VTech Telecommunications, a Hong Kong-based supplier of corded and cordless telephones with a factory in Dongguan.

Using scanners in warehouses and tiny chips that are attached to products, the technology helps companies keep track of their goods along the supply chain - from the factory floor to the retailer's shelf. Benefits include an increase in the transparency of inventory, the prevention of loss during times of adversity, faster inventory turnover, a reduction in loss owing to obsolescence and enhanced product tracking.

'It is designed to provide end-to-end visibility along the entire supply chain,' said Philip Wong, consulting systems engineer at Cisco Hong Kong.

'This enables suppliers and retailers to track products in real time. In case it is necessary to recall a product - something that would previously have required a huge amount of time and effort - goods can be easily located.'

Cisco and Intel were chosen by VTech Telecommunications for its pilot participation in the Hong Kong EPCnetwork initiative, which is being directed by EPCglobal Hong Kong. This will allow the company to comply with Wal-Mart's request and will help improve the efficiency of warehouse operations and management through automation while enhancing visibility throughout the supply chain.

Alex Kwan, senior supply chain and logistics manager at VTech Telecommunications, said: 'I am sure the Cisco solution and the industry-standard, widely deployed Intel architecture will continue to sharpen our edge in the global marketplace.'

The Hong Kong EPCnetwork initiative is designed to bring end-to-end supply chain visibility to the Pan Pearl River Delta (PPRD) through the use of a common, standards-based data exchange allowing easy, secure, real-time communication between manufacturers, logistics companies and retailers. This will result in improved connections and better relationships between suppliers in the PPRD and retailers around the world.

The Cisco-Intel RFID solution will enable VTech Telecommunications to take advantage of next-generation RFID technology to track telecoms products from its factory to Wal-Mart distribution centres in the United States. Using EPC-based RFID tags and readers and a standards-based data exchange - the EPC Information Service - VTech Telecommunications will have a technology infrastructure that will increase warehouse efficiency and global supply chain visibility.

Until now, information between manufacturers in China and retailers around the world was communicated through electronic data interchange (EDI) or in worst-case situations via phone and fax.

Fredy Cheung, managing director of South China for Cisco Systems, said: 'The PPRD is one of the world's most important manufacturing hubs. To enhance its relationship with major retailers and expand its businesses, manufacturers in the region need to ride the RFID wave. VTech Telecommunication's pilot participation in the Hong Kong EPCnetwork project testifies to the trend whereby the region's manufacturing firms are rapidly transforming themselves by deploying technologies such as RFID.

'Cisco is pleased to support EPCglobal Hong Kong's EPCnetwork initiative to help manufacturers in the PPRD increase their competitiveness and maintain their leading status in many different fields.'

According to Mohsen Moazami, vice-president of retail-consumer products-distribution at Cisco and a member of the board of governors for EPCglobal, the company's participation in the scheme underpins its commitment to supporting enterprises in different sectors, including manufacturing, to use the latest technologies better.

'RFID is gaining strong momentum because of the benefits it offers. These include end-to-end supply chain visibility, improved business flow and enhanced operating efficiency. Cisco's RFID solution empowers customers such as VTech Telecommunications to join the growing RFID community easily and cost-effectively,' he said.

VTech Telecommunications is one of the world's largest suppliers of corded and cordless telephones and a leading supplier of electronic learning products.

EPCglobal Hong Kong, formed under the auspices of GS1 Hong Kong, is a not-for-profit organisation dedicated to establishing and supporting the EPCglobal Network as the global standard for real-time, automatic identification of information in the supply chain.

Intel is a leader in silicon innovation, develops technologies, products and initiatives. Cisco Systems is a leader in networking for the internet.