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The Serialization of Things

In Ridley Scott's 1982 cult classic movie Blade Runner, ex-cop Rick Deckard recovers a single animal scale from the apartment bathtub of an android he is hunting. After dropping the unusual find in a baggy, he calls on an elderly Cambodian street merchant in Animoid Row (a place where exotic pets are bioengineered) for help identifying the item. Using an electron microscope, the woman tells him it's a snake scale and is able to identify the maker by recovering a microscopic serial number. It's an important lead for tracking down his target.

It’s Not Only Science-Fiction

It’s standard to see serial numbers on complex, high-value products like TVs, computers, and automobiles. Serial numbers are affixed to products using one or more marking methods such as a barcode, RFID tag, or human-readable text. Sometimes, just like Deckard's snake scale, it's microscopically engraved and not visible to the naked eye (e.g. diamonds).

This number may be an internal-only value generated by the manufacturer or a globally unique value such as an EPC (Electronic Product Code) or VIN (Vehicle Identification Number). To ensure global uniqueness, manufacturers follow an established format standard and are assigned unique identifiers by industry-recognized assignment authorities. These formats contain a section for manufacturers to place internally generated values making each identifier globally unique.

Manufacturers serialize products to give every unit they produce an identity. Having identity means that detailed data may be collected about the items life, which may include one or more of the 4 W's:

  • Who - individuals who handled it

  • What - operations performed or data collected

  • Where - work cells, storage locations, facilities, geographic locations

  • When - activity timestamps

The serial number is the glue for keeping this data together and can be used for product traceability, operational analytics, and rooting out the source of issues.

All The Other Things

What about small ticket items such as food, pharmaceuticals, books, or garments? Generally, these items are assigned a "lot" or "contract" number that represents a batch or run of units or material. The number is often not in machine-readable form and is stamped or printed on the item's packaging. This value can lose its forward traceability along the way if the lot is split, mixed, or added as a component to other products. This can get messy if a recall is needed as the location can become a vast unknown.

So why do manufacturers use lot or contract numbers rather than individual identity? Historically speaking, the cost and overhead of serialization were too great vs. the value of the item. There was no readily apparent business case to justify the supporting infrastructure and data storage requirements to handle serialization.

Case for Serialization

What if our everyday low-cost products were serialized? What purpose or benefit could it provide? Let's look at a few possible use cases.

Inventory Accuracy and Auditing

Inventory accuracy has been a pervasive problem that began the day people started recording inventory. It’s a pain point for fulfillment centers and retail locations alike. How often have we heard "the system says we have one" yet it’s not there. Less than stellar inventory accuracy is all-around bad for business. It negatively affects order fulfillment, replenishment, planning, and the ability to execute cross-channel sales. All of these will lead to a bad customer experience and will cost you money to make it right, or even worse, cost you a customer.

Part of this problem is rooted in the inventory items lack of individual identity. You know you should have n of something, but you don’t know exactly which n. If you’re missing one, sold one, or found one, which one exactly? It's a subtle but important point.

Inventory will naturally be more accurate with serialized vs. non-serialized items. Why? Because in complete isolation, there is a guaranteed method of verifying if an item is accounted for or not. Further, inventory auditing will be faster and more accurate with serialized items. Combine this with RFID, and you can blaze through inventory audits and perform cycle counts with greater ease and frequency.

Brand and Consumer Protection

Counterfeit goods are a global, trillion-dollar a year problem that puts both consumers and brands at risk. A QR Code with embedded information on packaging or sundries could provide a rapid way for consumers to verify goods are authentic and don't have any active recalls - on-the-go, and from the convenience of a mobile phone.

Pick and Pack Fulfillment Accuracy

Combining serialization with RFID can be a powerful tool for pick-and-pack fulfillment centers. For example, a packed shipping carton can be scanned in a tunnel or by wand on its way to shipping and if all of the expected contents are not present the carton, it can be flagged and diverted for audit before it leaves the facility. This virtually guarantees the correct items are being shipped to the customer. It also has the side-effect of contributing to improved inventory accuracy.

Return Fraud

Return fraud costs the U.S. retail industry billions of dollars a year. This cuts deep into their already razor-thin margins at a time when they are struggling to compete against online retailers like Amazon. Many of the common return fraud methods such as returning stolen merchandise, receipt fraud, switch fraud, or cross-retailer returns could be completely eliminated by serialization.

Analytics in a Crisis

Analytics could be applied to help discover a pattern in a crisis. Consider a fringe case such as the 1982 Chicago Tylenol incident in which 7 people died from potassium cyanide-laced pain relievers. It caused a national panic and recall. The perpetrator was never caught and the method of contamination was never really uncovered. The working theory is the product was contaminated individually at various retail locations around Chicago. Perhaps serialization, in combination with tracking data, could have helped investigators make a connection that they wouldn't otherwise see. If nothing else, it could have helped rule out contamination within the supply chain.

The Future

Will we ever see a day where many of the items we buy have a globally unique serial number? I believe the answer is yes. It will be driven by:

  • Regulatory Requirements

  • Internal Manufacturing and Logistical Use-cases

  • Mandates From Large Box Retailers (similar to the now-defunct Walmart RFID mandate)

  • Consumer Safety Concerns

  • Brand Protection/Verification of Authenticity

  • Marking Methods that continue to get Smaller, more Flexible, and Cheaper

  • Falling Cost of Data Storage

In fact, many of the things described are already underway. Some garment manufacturers have started embedding/including RFID tags on garments at the sewing plants. Handbag makers are beginning to use serialization to offer consumers a method of verifying the authenticity of their products. By 2023, pharmaceutical companies will be required by law under the DSCSA act of 2013 to serialize each individual saleable unit of many drugs with a globally unique serial number that can be used by the FDA to trace detailed information about its origin and handling.

I believe there will be a continued trend towards the Serialization of Things and envision a future where many of the common items you buy will have a globally unique serial number. This number will provide detailed track and trace information that begins at manufacturing, through logistics, to the end consumer.

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