Two varieties: Passive tags and active tags with (battery) power source
RFID readers can “read” many tags
Line of sight not required
Anti-collision prevents interference
RFID readers may be
Handheld or stationary
What is RFID? How does it work?
Beyond Barcode 01. 0203D2A . 916E8B . 0719BAE03C ePC 96 bits Header Object Class ePC Manager Serial Number Header: 8 bits = 256 ePC Mgr: 28 bits = 268, 435,456 Object Class: 24 bits = 16,777,216 Serial Number: 36 bits = 687,194,767,361 268 million companies can each categorize 16 million different products and each product category may contain over 687 billion individual items !!
Beyond Barcode 1 million companies who are current members of UPC / EAN can manage over 100,000 different products and each product may contain over 16 million items !! ePC 64 bits (Type I) 01. 0203D2A . 916E8B . 0719BAE03C Header Object Class ePC Manager Serial Number Header: 2 bits ePC Mgr: 21 bits ~ 1 million Object Class: 17 bits Serial Number: 24 bits ~ 16 million
The RFID Opportunity Spectrum Source: GARTNER RESEARCH Automate Existing WMS Functions Carrier Level Track and Trace RFID Retail Compliance Goods Authentication and Tracking Supranet RFID Retail Merchandising and Replenishment Enterprise Focus Integrated Supplier-to- End-User Use of Standards-Based RFID Privacy and Security Issues Emerge Supply Chain Focus Standards Maturity Extensive Cost of Tags $ 0.01 2007
Benefits co-related to adoption rates Benefits Increases as more Items are Tagged
Store level promotions and pricing
Product recall/warranty process
Pick, Pack & Ship
Physical counts & reconciliation
Inventory control and storage
Real-time ATP Inventory
6 months Time +5 years PALLET TAGGING CASE TAGGING ITEM TAGGING Low High Opportunities & Benefits Source: SAP
Sample RFID Implementations to date Uses Of RFID Span Numerous Industries Implementations of RFID 90% reduction in the number of containers required 1994/ rollout Read/Write Active433 MHz Shipping containers Department of Defense Automated rerouting of baggage and increased accuracy (99.5% up from 70-85% accuracy with bar codes) to ensure that they send each bag back to the right airline 2003/ deployment Read/Write Passive 905-928 MHz Airline baggage tags Las Vegas Airport Compliance with the TREAD act and recall management 2003/ running Read/Write Passive 905-928 MHz Tires Michelin Avoid contamination by ensuring proper cleaning, asset visibility 2002/ implemented Read/Write Passive 905-928 MHz Reusable plastic containers for carrying biohazardous waste Raxel Improved customer service through better inventory management on shop floor; increase supply chain efficiency and data accuracy 2001/ pilot Read/Write Passive 13.56 MHz Denim apparel through the supply chain and onto store shelves Gap Reduction of lost and misdirected paper rolls 2003/ running Read Only Passive 915 MHz Cores of larger paper rolls moving through the warehouse International Paper Improved demand forecasts and increase efficiency; identification of black-market sales and elimination of misdirected shipments 2001/ rollout Read/Write Passive 125-128 MHz Beer kegs as they move through the supply chain TrenStar Streamlined manufacturing and vehicle tracking; saves on interest charges 2001/ rollout Read/Write Passive 13.56 MHz Carriers containing car frames as they move through paint stations during production Toyota Phase 1 Automatically displayed manufacturing instructions for employees at each stage of the assembly process 1998/ rollout Read/Write Passive 13.56 MHz Bins carrying parts of custom motorcycles during assembly Harley Davidson Outcome Year/stage Read/Write Type of tag/chip Item tagged Company
Provide complete visibility of each items' location, state and context throughout the entire supply and demand chain
Implement build-to-demand manufacturing systems vs. build-to-forecast
Improve demand and forecasting accuracy
Accelerate New Product Introduction (NPI) cycles
Improve on-shelf availability to prevent stock-outs
Enable mass product customization by integrating customer usage and product information in adaptive CRM, SCM and PLM applications
Reduce costs and improve item management
Increase data quality and speed and prevent incorrect and incomplete orders
Provide security enhancements, such as real-time asset and personnel monitoring
Real-time event/process management and situational awareness
Potential Areas of Benefits from RFID Short-Term Potential Prioritization of Opportunities Mid-Term Long-Term 4.5% Improved efficiency Retail Replenishment 16.3% Automated inventory management Retail Storage 2.8% Reduced paperwork Retail Receipt 30% Improvement in asset Utilization All Asset Utilization 8.1% Total savings from a RFID linked supply chain cost compared to barcode driven supply chain cost structure 11% Reduced loss (out of code, overstocking) from inventory visibility Retail Losses 55% Reduced inventory due to visibility through chain All Inventory Cost 21.7% Automated accurate inventory RDC Storage 5% Automated checking process RDC Dispatch 20.8 Automated, accurate data records decrease claims generated RDC Claims Management 9.4% Automated checking RDC Receipt 18% Automated checking, reduced paperwork decrease admin Hub Cross-Docking 18.5% Automated, accurate data records decrease claims generated Supplier Claims Management 26% Automated checking process Warehouse Dispatch 28% Automated, accurate inventory management Warehouse Storage % of Cost Reduction Benefits of RFID over Barcode Area Activity
Several companies like Intel, P&G and Michelin have completed pilots and are identifying the benefits of the technology for their value chain initiatives
Explore other uses of RFID and X-Internet Technologies
Evaluate RFID within the context of a larger trend
Extended Internet>> That connect Information systems to physical assets, products and devices
Clearly define the benefits, costs, ROI and Risks through Pilots
The costs can add up very quickly (billions of tags, readers, network equipment, printers, storage, etc.)
Training, implementation, data analysis and process optimization initiatives will cost even more than the hardware costs
Thus it is imperative to clearly understand the business benefit of RFID
Figure 4 Companies Are Taking RFID Mandates Seriously “ At what stage is your company in adopting RFID?” In production or upgrading Rollout underway or piloting Considering No Plans Don’t know Base: 528 IT decision-makers at North American companies (percentages may not total 100 because or rounding) Source: Forrester’s Business Technographics® November 2003 North American Benchmark Study 7% 5% 12% 64% 12% 13% 8% 23% 44% 13% 20% 12% 16% 38% 14% 26% 10% 15% 38% 12% Going into 2004 Distribution Manufacturing Retail All other Industries Source: Forrester Research, Inc.
What developments can you expect to see on the RFID front in 2005?
RFID traffic will flow to existing applications and networks
Future >>> IP Networks
Short to Mid Term >> Existing VAN to ERP/WMS
The major benefits of ROI will come from event triggering based on RFID data
Multi-vendor strategy to RFID solutions
Maturity in dealing with the privacy issues that derailed the early pilots
Example vendors Manugistics Manhattan Associates RedPrairie SAP Oracle ConnecTerra DataBrokers GlobeRanger OAT Systems IBM Savi Technology Sun Symbol Tech. RF Code SAMSys Intermec ThingMagic Tyco Int. Philips Semi- Alien Tech. Conductor Matrics Texas Instruments Zebra Tech. Avery Dennison Applications Data Management Hardware/readers Chips/tags Source: Forrester Research, Inc. Figure 5 A Collection Of Vendors Is Necessary For EPC Pilot Design
Many of the business cases currently publicized as justification for RFID have nothing to do with RFID. They are more to do with data synchronization or systems integration and can be achieved without RFID
Vigorously assess the incremental benefits of RFID to incremental cost of RFID. If RFID is not intrinsic to the benefits, do without it.
The real benefits of RFID will be realized by re-engineering processes around RFID
Short to Mid Term >> Manufacturing and Warehousing
Longer Term >> Retail Store
Keep away from initiatives that are defined solely by RFID’s ability to share data across the enterprise
Use a critical eye on these “RFID Poster Boy” business justifications as they can be realized without RFID in most cases
Improving POS data through the use of RFID
Most POS issues are related to POS infrastructure not data collection
The trust and strategic issues of sharing data between manufactures and retailers will not be resolved with new technology
End-to-End Supply Chain Visibility – This is an integration problem that will not be solved through RFID
Lot Traceability – This again is an integration problem that can be resolved through barcode. It can be enhanced by RFID but RFID is not the “silver bullet”
Visibility into Receipts – This issue can be managed with enforcement of stricter ASN (Advanced Ship Notice) transactions
What is it? : What are the benefits? : What is hype and what is real? : How will it impact the industry?
RFID Strategic Opportunity Assessment - Proposed Engagement Approach
Tasks, Timelines, Personnel, Deliverables and Pricing
RFID Pilot Compliance
RFID Deployment Solution Center Offering
Overview of Our Approach Understand the existing & future business environment & supply chain strategy for integration & collaboration with business partners Analyze the business across a complete set of KPI’s and leverage opportunities through the application of RFID Tie the resulting opportunities to a set of business problems and/or objectives Define a strategy, prioritization & categorization, and roadmap to leverage RFID opportunities
Areas of Assessment? Technology Strategic Intent Process Review Personnel Review Preliminary Solution Road Map Measurement Framework Process Design Technology Architecture Detailed Road Map Strategic Renewal Process Realization Organizational Alignment Technology Delivery Scorecards RFID Assessment RFID Solution Delivery Business Architecture RFID Solution Design Strategy Process Organization Management Client – Supply Chain & Enterprise Solutions strategy
Why use this Approach? Leading Through Business Review and Assessment of Business Strategy Identify & Qualify the Business Benefits Link Business Processes to Business Value Define Deployment & Enabling Tools Identify the business benefit in terms of growth and market positioning, and determine the drivers behind growth over the short/long term. Ensure the business model has the requisite FLEXIBILITY to adapt to changing business needs. Assess what are the key business competitive advantages that reduce operational costs or enhance revenue generation or improve customer service ability through the leverage of RFID. Identify the key business processes that will need re-alignment to secure the business benefits. Identify the supporting technology and leverage components from existing investments
The Deliverables are Classified Under… Deployment Strategy Measurement Strategy Growth Strategy Identify key business goals/objectives over the next 0-4 years to ensure the RFID based SCM evolution plan provides the required flexibility to evolve with business needs also provides the framework for the logical growth in coverage of the supply chain initiatives that drives the value back to the enterprise and its value-chain partners Provides the framework to measure financial and non-financial value creation through the evolution of the supply chain efforts within and outside the four walls of the enterprise through the use of RFID Provides the necessary exit points within the Operational Model to extend the process of collaborating with the value-chain partners
What Influences the Deliverables? Deployment Strategy Growth Strategy Measurement Strategy
Client needs to ensure that management commitment & executive sponsorship exists to see the project through.
Accurate and timely delivery of information required from Client.
End-user empowerment and support/insight to make necessary changes in business process and practices.
Client will have to assign key functional and technical resources to the project for effective knowledge transfer and project success (project commitment).
Both scope and functional requirements of the project need to be clearly defined at the beginning of the project in order to ensure that all team members understand what exactly needs to be done (scope creep) for the successful completion of the project.
The Client project leader needs to have the adequate organizational and executive support necessary to gather, organize and provide all the data and resources required for the successful completion of the project (visible executive support).
Project visibility within the organization needs to be high in order to ensure proper departmental support & involvement when needed (visibility & internal communication).
The RFID Deployment Solution is designed to assist Wal-Mart suppliers with RFID compliance, pilot programs and shipment preparation to the three Wal-Mart DC’s located in North Texas (Cleburne, DeSoto and Sanger). In order to accomplish this, the RFID Deployment Solution has an integrated offering, partnering with several providers of RFID technology, hardware and software to provide a single-sourced solution that will allow:
Suppliers to meet the RFID requirements mandated by Wal-Mart and other retailers
Technology vendors (RFID, hardware and software) to showcase their solutions by providing a working system to continuously evolve RFID solutions for the marketplace
Provide a model for national and global roll-outs by suppliers to the retail RFID enabled community. We will encourage participation of the vendor community.
Expand beyond Texas with this unique business model that can be duplicated beyond the Dallas marketplace in other 3PL warehouses
Through the RFID Deployment Solution Center, RFID product and service firms act as a single-source solution for Wal-Mart suppliers that want to achieve compliance with Wal-Mart’s Texas vendor requirements or deploy RFID to other applications.
Our pallet and case tagging, cross docking, conveyor tag testing and consolidation services make the RFID Deployment Center the first full-function RFID deployment facility for distribution environments.
It provides systems, test environments, warehousing distribution operations and transportation solutions to Wal-Mart supplier organizations. We offer the unique ability to seamlessly integrate disparate RFID technologies into a comprehensive solution that meets the specific logistical needs of each customer.
THE RFID DEPLOYMENT SOLUTION CENTER The RFID Deployment Solution Center is a 150,000 sq. ft. distribution facility for designing, testing, validating and deploying RFID logistics systems, hardware, software and other technology components. This state-of-the-art technology center is designed to simulate distribution center environments. RFID solutions can be independently verified as compliant with Wal-Mart and other RFID mandates.
RFID Deployment Solution Center - Portfolio Of Offerings
Tagging to meet the requirements of Wal-Mart, the DoD or other channel members. Our Deployment Center offers high-quality RFID equipment-testing facilities meeting the Wal-Mart specs.
Tag Type (between vendors, active versus passive, etc.)
Reader configuration and antennae placement
We provide warehousing, tagging and support services to ensure Wal-Mart compliance
We offer quality, non-asset based logistics solutions and strategic support services.
On-Going RFID Compliance
Ideal environment for suppliers to develop, test and roll-out RFID solutions for on-going compliance with Wal-Mart and other retailers.
Business Process Modeling and Solution Design
Model your business processes and design integrated RFID solutions that will reduce a supplier’s investment in
Complete, custom solutions for reading/exchanging data in real-time environments.
Educate members on RFID technologies, applications, solutions and advancements.
Complete Program Management
Assess, Plan, Implement and Operate a complete turnkey RFID Deployment Solution