BOSTON -- A new group of retailers, distributors and manufacturers is being formed to develop ways to improve distribution efficiencies for prescription pharmacy products through the application of RFID technology, SN has learned.
The effort is being led by Accenture, according to James Hintlian, a partner, based here, in Accenture's health and life sciences practice.
The program would employ RFID (radio frequency identification) technology based on the EPC (electronic product code), a new digital identification standard developed at MIT and now under the direction of EPCglobal, a division of the Uniform Code Council. If implemented, the program would represent one of the first multiple-company projects devoted to applying EPC-based RFID technology since version 1.0 was formally released in September.
The companies forming the group include two drug chain retailers, three pharmaceutical manufacturers and two distributors. One of the retailers, CVS, is on record as supporting the effort. Accenture declined to confirm the names of the other participating companies.
Hintlian said food retailers with in-store pharmacies are encouraged to join the group, but would need to do so by the end of 2003 in order to participate in decisions regarding technology and processes. He said the group has been in discussions with major food retailers.
Jack DeAlmo, vice president, store replenishment and inventory management, CVS, said the project is modeled on similar efforts by retailers, manufacturers and wholesalers to work together, such as CPFR, improving fill rates and the Industry Loss Reduction Team, a program focused on source tagging of EAS (electronic article surveillance) labels (SN, Nov. 24, 2003, Page 77).
According to Hintlian, the group expects to address three needs concerning pharmaceutical distribution: securing the supply chain to prevent counterfeiting, theft and shrink; establishing efficient reverse logistics to expedite recalls and to minimize returns due to expiration of product; and developing more efficient distribution of product.
"Rather than just producing a white paper, the group felt that this was a unique opportunity to get in front of supply chain innovation, address real industry issues and begin to deploy technology and infrastructure that would deliver value," Hintlian told SN. "They felt it was important to do this as an industry group rather than as individual companies [to establish] common processes for adopting RFID in pharmaceuticals."
Under the group's expected plan, EPC-based RFID tags will be placed by manufacturers or packagers on bulk bottles of individual prescription drugs (which are opened at retail to create prescriptions), as well as on cases of those drugs, said Hintlian. Prescription bottles sold to consumers at retail will not be tagged.
Tags will be read by stationary RFID readers in distribution centers and stores, generating information on product location and movement throughout the supply chain. Products will also be linked to stored information on date of manufacture, expiration date, quantities produced and other data. Technology vendors have not yet been chosen.
Hintlian said the project will be comparable to the systems and processes Wal-Mart is using in its RFID supply chain program.
In addressing counterfeiting (as well as theft and shrink), RFID tags could be used to verify, for example, that quantities received match those shipped, explained Hintlian; if they don't, alerts would be triggered and sent to appropriate parties.
Hintlian said the Food and Drug Administration has sought input from the group on emerging technologies used to defeat counterfeiting of drugs.
In support of its goal to minimize returns, the program is espousing strict adherence to FIFO (first in, first out) principles, said Hintlian. That would help reduce the risk of delaying shipment of product until after its expiration date and thus causing it to be returned.
RFID gives retailers "better visibility of inventory position, which reduces incidents of returns," he noted. The technology can also facilitate recalls of product by creating "an electronic audit trail of where product has been," he added.
RFID technology can bring about the third goal of the program -- more efficient distribution of product -- by allowing virtually instantaneous receiving of product at DCs and stores. Rather than checking in each case or item individually, retailers could simply pass them by readers, much as cars equipped with RFID tags can flow easily through a toll plaza, noted Hintlian. "Each case or bottle is verified in fractions of a second instead of an hour."