goods that talk - xiamen universityboya.xmu.edu.cn/emwbexp/innovation/rfid/rfid presentation...

Online Seminar: “Meeting the Retail RFID Mandate”Online Seminar: “Meeting the Retail RFID Mandate”

February 26, 2004 February 26, 2004

Goods That TalkGoods That TalkStrategic Impact of RFIDStrategic Impact of RFID

Copyright 2004, A.T. Kearney, Inc. All rights reserved.

A.T. Kearney 7/41344/A 2

Agenda (10:00 – 11:00 AM CST)

Opening Remarks – Omar Hijazi, A.T. Kearney – 5 minutes

Presentation of RFID Findings – David Donnan, A.T. Kearney – 20 minutes

Guest Speaker Comments – 5 minutes each• Vinay Gokhale, Vice President RFID Products, Impinj• Liz Churchill, Director of Life Sciences Solutions, Matrics• John Thorn, General Manager, Checkpoint Systems

Panel Questions & Answers – Omar Hijazi, A.T. Kearney (Moderator) – 15 minutes


Today’s Speakers

Omar HijaziPrincipal, A.T. [email protected]

David DonnanVice President, A.T. [email protected]


Today’s Speakers

Liz ChurchillDirector of Life Sciences Solutions, [email protected] x146

John ThornGeneral Manager, Checkpoint [email protected] x3105

Vinay GokhaleVice President RFID Products, [email protected]


RFID — An Idea Whose Time Has Come

MIT AutoID Center has established a foundation for the RFID/EPC technologies

Various case and pallet trials undertaken

June 10 2003 – Linda Dillman of Wal-Mart sets a target for EPC implementation throughout Wal-Mart operations (case and pallet)

Department of Defense establishes their timetable to parallel Wal-Mart for EPC implementation.

Metro AG and Tesco announce their initiatives

EPC standard approved by global retailers and manufacturers


A Simple Tag, Powerful Results

A thin, low cost, wireless communications deviceCapable of transmitting and receiving dataConsists of a computer chip and antennaCan be powered or un-poweredRange in capabilities from simple, unique ‘license plate’ to encryption, memory and read/write capabilityWorks with a wireless radio frequency reader, which relays the tag information to management systems


Benefits Across Supply Chain…

Manufacture Warehouse Retail DC Retail Store Retail Shelf

Labor Efficiency OOS Management

Inventory Management

Receiving Shipping Accuracy

Reduced UnsaleablesReduced Claims

Reduced Diversion

Product Recall Management


The Future Holds Great Promise

($MM)

Estimated RFIS Market Growth 2000 — 2012e for Europe & North America

$4,389

Accelerated Revenue GrowthDriven by Adoption of Item

Level Tagging

Other(1)

CPG

Transportation

Pharmaceutical

Defense & Homeland SecurityDiversified Mfg

Retail

CAGR(2)Segment

55%

30%

61%

23%

33%24%

21%

Total 28%

2000 2003 2006e 2009e 2012e

N.A. Europe

Sources: ABI research “RFID emerging applications”; AMR Research, A.T. Kearney analysis


But, the Benefits Require Collaboration

Drivenwithin Mfg.FourWalls

• Inventory visibility The tags will allow better tracking of case and pallets throughout the warehouse and distribution systems

• Labor efficiency Reduced cycle counting, manual recording and even bar code scanning will result in lower labor costs.

• Better fulfillment Reduced shrinkage, improved dock and truck utilization and improved product traceability and more precise product recall capabilities are all benefits to the manufacturer

Drivenby

TradingPartnerActivity

• Reduced store level out-of-stocks (OOS) Tagging of pallets and cases will allow for better tracking of goods within stores, reducing times when goods are in-house but not available to consumers

• Reduced claims Tracking of pallets will reduce unwarranted claims; claims processing costs will also be reduced

• Reduced unsaleables Goods with expiration dates can be better managed (moved more quickly when code dates are near), reducing need for write-offs due to spoilage


For Suppliers, Forward Visibility is Key

Claims

Labor

Inventory HoldingCosts

Diverting

Unsalables

Out-of-stocks

Reduced store level out-of-stocks (OOS) Tagging of pallets and cases will allow for better tracking of goods within stores, reducing times when goods are in-house but not available to consumersReduced claims Tracking of pallets will reduce unwarranted claims; claims processing costs will also be reducedReduced unsaleables Goods with expiration dates can be better managed (moved more quickly when code dates are near), reducing need for write-offs due to spoilageReduced diversion Tracking and reporting compliance critical to success along with revised promotion incentives

Benefits to Manufacturers


For Retailers, Labor Efficiency and Stock Control

Labor in WarehouseReceiving ProductsChecking Products

on to TruckOrder Checking

Back of StoreCheck in Product

Find InventoryReplenishment

Reduce Back Room Shrink

Reduce Out of Stocks Reduce Inventory Levels

Ensure Availability


But, Benefits are Not Evenly Distributed

• Sell more expensive goods and experience significant out-of-stocks, shrinkage, and unsaleables

• Relative lower number of cases sold per $ of sales

• Example : Pharma. OTC, consumer electronics, high fashion, cosmetics

High Value, Low Volume• Sell less expensive goods

and, as a result, experience limited shrinkage

• High number of cases per $ of sales

• Example: Dry grocery, perishables, beverages, frozen goods, soaps and cleaners

Low Value, High Volume


…And There are Still Major Hurdles

Privacy advocacy groups worry that product tagging could potentially be used to violate individual’s privacy, by tracking movements of buyers inside and outside of stores

Current technology cannot achieve acceptable read reliability and significant challenges with tag “physics” remain for broad product categories

Price points and costs of implementation for emerging technology may push out any reasonable payback

A single universal standard for tag and interface protocols has not been ratified


So What is the Path Forward?

Source: Gartner “Hype Cycle”

Maturity

Visi

bilit

y

Vision

EPC

Transition Years

EDI

GDS

WMS

Exchanges


Manufacturers Consider Alternate Approaches

Slap & Tag• Minimum compliance• No investment in infrastructure

Tighten Your Belt• Absorb as a cost of doing business• Manage down operating costs and

investments

Accelerate Benefits• Get behind the EPC rollout – Focus on

realizing benefits• Engage other retailers to start implementation• Secure information sharing agreements • Promote consumer level benefits

Slap & Tag

Tighten your belt

Accelerate benefits


Managing the Transition 2004 – 2007

Complete data synchronization efforts. Without correct data – no benefits will be realized

Understand the drivers of benefits especially the retail collaboration benefits

Adapt business processes to take advantage of new supply chain data detail

Expect to manage parallel systems for several years. Ensure management systems are agile

Leverage the invested infrastructure – consider other EPC applications and uses of the product tracking information…


Some Simple Rules

This is not about technology… This is about improving consumer value and solving complex business issues.

Ensure there is a positive consumer point of view

Set goals and measure results.

Communications must be increased — Top level message must be consistent

Be realistic about costs and savings — don’t amplify the hype cycle

Maintain flexibility and technology options —Manage the pace of implementation

Be proactive


The Next 12 Months – What to Look For

Triggers to Watch forWill tag prices drop below $0.10?Will tag readability exceed 90%, 95%?What % of items will be ‘on line’ by 2005?Will EPC standards be agreed in U.S. and Europe?Will liquid, metal packaging (foil) issues be resolved?

Companies to WatchWhat new retailers will get on board?What other industry initiatives will follow?Will BIG technology firms join in?

Goods That TalkGoods That TalkPolling QuestionPolling Question


Please identify which stage best describes your company’s current approach to RFID adoption

A. No plans, but we are monitoring developments

B. We are in the process of developing a strategy

C. We are pursuing a “Slap & Tag” approach to ensure only minimum compliance

D. We see RFID as here to stay and are “tightening our belts” to absorb the technology as a cost of doing business

E. We see an advantage and are aggressively pursuing RFID to “accelerate benefits”


Poll Results

42.3%

11.5%

9.6%

1.9%

34.6%

A: No plans, but we are monitoring developments

C: We are pursuing a "Slap & Tag"

approach to ensure only minimal compliance

D: We see RFID as here to stay and are "tightening our

belts" to absorb the technology as a cost of

doing business

E: We see an advantage and are aggressively pursuing

RFID to "accelerate" benefits

B: We are in the process of developing a

strategy


VinayVinay GokhaleGokhaleVice President RFID ProductsVice President RFID Products

ImpinjImpinj, Inc., Inc.

Goods That TalkGoods That TalkGuest Speaker CommentsGuest Speaker Comments


Introduction to Impinj

Impinj’s technology enables high-performance rewriteable RFID tags in lowest-cost logic CMOS

Impinj will deliver products to the UHF Generation2 (Gen2) standard• The upcoming single worldwide RFID standard• Impinj is active in the HAG and Gen2 technical groups that

are finalizing Gen2

Impinj’s Gen2 pilot schedule (w/key partners): • Gen2 crossover pilots in May 2004• Gen2 pilots in Sept 2004• Gen2 in production volumes by year end 2004


Only Gen2 Meets User Requirements

Security

6A/6B

> 500 tags / second

Multi-Reader Operation

Class 0 Class 1

Q3/04Availability

Industry Endorsement

Rewriteable Nonvolatile Memory

Multi Source Availability

Worldwide Compliance

Gen2User Requirements

X ??X

X

X

X X X

X

X

X

X

X

X X


How OEMs Should Prepare

Join EPCglobal• Contribute to the Business Action Group• Monitor the Hardware and Software Action Groups

Plan for Gen2• The upcoming single worldwide RFID standard

Conduct independent analysis• There is as much disinformation as there is information

Invest in pilots• Understand strengths and limitations of RFID technology• Develop a business case for RFID deployment• Plan for Gen2’s improvements over current technology

— Security, selectability, dense-reader operation, more…

Liz ChurchillLiz ChurchillDirector of Life Sciences SolutionsDirector of Life Sciences Solutions

MatricsMatrics, Inc., Inc.



The Matrics Philosophy

Performance is critical

Performance = Range + Orientation + Speed

Customer wants performance• Wal-Mart Compliance

— 100% pallet reads— 100% reads at 600 ft/sec,

6 inch separation, 6 sides— 100+ tags in dock door

solution


READER READER READER

antenna antenna antennaantenna antenna

RS485RS485

antenna

antenna

antenna

TAG

TAGTAG

TAG

TAG

TAG

TAG

RFID TagsTAG

TAGTAG

TAGTAG

TAG

TAGTAG

TAG

TAGTAG

TAG

RFID Feeds Enterprise System Transport

MgmtOrderMgmt

VisibilitySystems

ProductionScheduling

WarehouseMgmt POS Shelf

Inventories

DataAppliance

MatricsVisibility Manager

EnterpriseApplication Interface

FeatureImplementation

Reader Interface

EnterpriseApplication Interface

FeatureImplementation

Reader Interface

XML

Antennas

Readers

Middleware

EnterpriseSystems

TAGTAG

TAGTAG TAGTAG

TAGTAG

TAGTAG

TAGTAG

TAGTAG TAGTAG

TAGTAG

TAGTAG

TAG


The Supply Chain Challenge

Supplier IngredientProvider

DistributionCenter

Customer

Supplier

Supplier

Manufacturer Distributor

Mass merchant

Drug Store

Healthcarefacility

Key Benefits of EPC RFID• Better Visibility • Reduced Supply Chain Shrink

• Reduced Inventory • Labor Saving

• Fewer Out of Stocks • Product Integrity


Factors Affecting PerformanceTag Sensitivity: • The ability of a chip to be “energized” and to maximize the signal strength to send its

identifier back to the reader. • The greater the chip sensitivity, the longer the read range. Tag Size: larger generally means longer range.Tag Shape: • Different tag antenna shapes provide remarkably different levels of performance. Number of tag antennas attached to the chip: • Two dipole antennas attached to a single chip results in tag performance that less

sensitive to orientation – important for random reading environments.Speed: the rate at which a reader collects tag identifiers. Rapid rates: • (1) Increase the reliability of tag reads; and • (2) Are less likely to impose burdens on business processes. Tight Tag Stacking: • When stacked closely together, tags may interfere with one another. • The best tags available today work effectively when even when situated within one-

half inch of one another.

John ThornJohn ThornGeneral ManagerGeneral Manager

Checkpoint SystemsCheckpoint Systems



Making RFID Useable

Converting RFID tags into labels

Associating the label with the asset

Deploying infrastructure to “track & trace” asset

Integrating infrastructure into business systems

EPC Solutionssource to shelf


Lets Get Clear About Risks

Technical• Radio Frequency Technology• Interoperability

Infrastructure• Network Scalability• Data Management and Usage

Business Risks• Re-engineering of Business Processes• Runaway Costs• Slow, Thin or Fractional ROI• Choice of Business Partner



How do I get started?

The best way to build the value model

is via a business focused pilot project



Characteristics of a Successful EPC Pilot

Supported from the top and across the organization• Intra-company teams with a business vision

Structured to validate a specific business premise• Engage business & trading partners

Designed to achieve specific, measurable and verifiable goals• Benchmark current process• Define criteria for success• Determine methodology for evaluation

Phased to mitigate impact on organization• “Controlled” trial engineered to replicate real-world conditions• “Live” trial deployed in the production environment leading to phased

roll-out

Designed to be scaleable



What to Look for in an EPC Pilot Partner

Proven capability in RF-technology

Track record in developing enterprise-level solutions

Proven enterprise-wide deployment and integration skills

Broad shoulders: ability to function as single source provider

Global capability


Goods That TalkGoods That TalkPanel Q&APanel Q&A

goods that talk - xiamen universityboya.xmu.edu.cn/emwbexp/innovation/rfid/rfid presentation...

Documents