advancing public private partnerships for e business standards
TRANSCRIPT
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Advancing public-private partnerships for e-business standardsGeneva, 18-19 September 2008
Implementation of RFID in retailHenri Barthel, GS1
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© 2008 GS1
GS1 in a nutshell
GS1 is a not-for-profit organisation that develops global Identification, Automatic Data Capture and Communication standards for the supply chain
Global standards for electronic business messagingRapid, efficient & accurate business data exchange
The environment for global data synchronisationStandardised, reliable data for effective business transactions
Global standards for automatic identificationRapid and accurate item, asset or location identification
Global standards for RFID-based identificationMore accurate, immediate and cost effective visibility of information
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© 2008 GS1
108 Member Organisations140 Countries served
1,2 million member companies
Countries with a GS1 Member Organisation
Countries served on a direct basis from GS1 Global Office (Brussels)
GS1 Member Organisations
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© 2008 GS1
IT Infrastructure
RFID - Radio Frequency IDentification
RFID Reader
Electro-
magnetic
Field
RFID Tag/Transponder
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© 2008 GS1
Passive RFID market sizing
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© 2008 GS1
Where are standards required?
ID
reader computers
telemetry
Query services
dataID
telemetry
Internet
Information Services
Standard data
RFID
tag
Standard air
protocol
Standard software
Interfaces
Standard query
language
Standard network
architecture
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© 2008 GS1
Why are global standards important?
• Reduce complexity• Within organizations
• Between organizations
• For H/W and S/W production and purchase decisions
• Reduce cost• Implementation
• H/W, S/W and Integration
• Facilitate trading partner collaboration
• Allow organizations to focus more on how to use the
information than how to get information
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© 2008 GS1
Global Standards reduces complexity
Manufacturers sells common goods in multiple markets
Retailers are supplied by variousmanufacturers
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© 2008 GS1
EPC reduces the costs of the tags
Tag
Price
€ 0.05
€ 0.20
€ 0.40
€ 0.60
€ 0.80
€ 1.00
2001 2002 2003 2004 2005 2006
launched
EPC Gen 2
Standard
issued
Year
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© 2008 GS1
Supply chain visibility
• Potential to transform business process• bar code replacement alone will not deliver ROI
• The power of event related information • Improved customer availability
• Demand driven supply chain
• Reduced inventory
• Reduced counterfeit
• Improved ability to track and trace
• Shrinkage
• Returnable Assets
• Transformation of commercial relationships
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© 2008 GS1
Tangible Examples
• Electronic proof of delivery– Avoiding waste of resources.– EPC data was able to refute received amount 80% of occasions
• Department of Defense– Reduced order backlog form 92k to 11k orders– $1.7bn ROI over 7 years– Improving “confidence” in the supply chain
• Baggage tracking– Improving control and accuracy– 99% read rate helping to solve a $1.6bn problem
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© 2008 GS1
Tangible Examples
• Apparel– Improving customer availability– 20% improvement in accuracy (size and colours)
• Prompt movement of promotional items to sales floor
– Retailer 19% sales lift
– Supplier 26% sales increase
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© 2008 GS1
Business Case examples
• Metro– Process efficiency - 12% to 17% (incoming merchandise & shelving)
– Loss/theft - 11% to 18% (depends on category)
– Goods availability - 9% to 14% (reduction OOS)
– Incoming goods - € 8.5mio (German est. only)
• Lemmi Fashion (SME – 1 mio garments per year)
– Stock turnover before tagging - 5,000 to 10,000 items per day
– Stock turnover after tagging - 20,000 items per day
– Increase of 250%-300% in receipt and shipment of goods
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© 2008 GS1
The Business Case and the numbers
Increasing number of leading organizations are publicizing results, for example….
• Gillette – Improving product launches and promotion– “The Advantaged Strategy” – moving beyond an all or nothing approach
• Wal Mart– Improving on shelf availability– Broad based process improvements
• DoD– Improving “confidence” in the supply chain
• Baggage tracking– Improving control and accuracy
• Apparel– Improving customer availability through improved inventory accuracy
and control
• And many more…..
3 days3 days
16%16%
89%89%
99%99%
20%20%
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© 2008 GS1
Current process to EPC-enabled process
Current Process
EPC Process
5 seconds per pallet
20 seconds per pallet
Receiving
80 seconds to 20 minutes per
pallet
20 seconds per pallet
Checking
10 seconds per pallet
5 seconds per pallet
Shipping
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© 2008 GS1
RFID benefits at METRO Group
• Increased process efficiency by 12% to 17% (incoming merch. and shelving)
• Reduction of loss/theft by 11% to 18% (depends on category)
• Increased goods availability by 9% to 14% (reduction OOS)
• Incoming goods cost reduction of € 8.5mio (German estimation only)
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© 2008 GS1
Barcode business case
The 1975 barcode business case proved to be too conservative
Final benefits were double than anticipated
Final costs were half than anticipated
Source: Ahold
0.2% to 3.4%
Soft Benefits
Hard Benefits
Costs
3.1% to 3.5%
-2.5% to -1.3%
Per
cen
t o
f S
ales
1975
(McKinsey)
1997
(PwC)
- Automatic reorder
- Shrink control
- Improved warehouse operations
- Improved DSD control
- Inventory reduction
- Sales increase
- Faster check-out
- Reduced check-out errors/loss
- Prevention
- Elimination of price marking
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© 2008 GS1
Real savings
• A study conducted by Coopers & Librands based on the McKinsey calculations from the 70s shows that the net savings realised by the adoption of the Barcode at item level is equal to 5,69% of the retail price.
• Based on the 2006 figures of the global retail industry, this represents a saving of over €150 billion per year.
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© 2008 GS1
RFID business case
The RFID business case could also be too conservative (?)
Final benefits could also be double than anticipated (?)
Final costs could also be half than anticipated (?)
Soft Benefits
Hard Benefits
Costs
Per
cen
t o
f S
ales
Today Future
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© 2008 GS1
Contact detailsHenri Barthel
GS1 Global Office
Avenue Louise 326, bte 10
B-1050 Brussels, Belgium
T +32 2 788 78 23
W www.gs1.org
Thank you for your attention!