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3rd December 2005   @Copyrights Reserved 2005 - RFID Team : INFS 640
Wal*Mart Case Study:RFID & Supply Chain Management                     TEAM MEMBERS                     •Angrish, Sangita ...
Agenda    Introduction to RFID    Introduction to Supply Chain Management     (SCM)    Introduction to Wal*Mart and its...
Introduction What is RFID ? Why RFID over Bar-Code ? RFID Working and Infrastructure3rd December 2005   @Copyrights Res...
What is RFID?     Electronic tagging technology that allows an     object, place, or person to be automatically     identi...
RFID•    40 years old technology•    Why being Used NOW?             •      right time to use the technology             •...
Why RFID over Barcode ?    Ability to read without line-of-sight    Serialized numbering scheme enables more powerful   ...
RFID Components                                      RFID            Reader                                               ...
Working of RFID    Reader generate signals that are dual purpose: provide     power for a tag, and create an interrogatio...
RFID Infrastructure        Existing software systems           UNABLE to handle serial numbers             Solution – RFI...
RFID Infrastructure (contd.)    Lower level devices such as motion sensors,     programmable logic arrays and human     i...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
Introduction to Supply Chain                     Management       Supply Chain Management      1.     Coordination of a n...
Introduction to Supply Chain                 Management (contd.)        Three levels of supply chain management      1.  ...
Introduction to Supply Chain                 Management (contd.) Overall Goal         Optimize supply chains         Pro...
Introduction to Supply Chain                 Management (contd.)       RFID and Supply Chain            Provide real tim...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
Wal-Mart Introduction and             Business Processes3rd December 2005   @Copyrights Reserved 2005 - RFID Team : INFS 640
Operations        Wal Mart Stores      1.       Largest segment accounting to about 67.3% of 2005 fiscal               sa...
Business Model of Wal*Mart    Market Strategy of Wal*Mart      1.   Everyday Low prices (EDLP)      2.   Employs both “Cl...
Supply Chain Management at                  Wal*Mart Procurement and Distribution Logistics Management Inventory Manage...
Procurement and DistributionProcurement       Procurement involves getting goods from        different manufacturers     ...
Procurement and DistributionDistribution           Distribution centre is divided in different groups depending on the   ...
Logistics Management    Involves managing transportation & delivery of products    More than 7000 company owned trucks s...
Inventory Management    Wal*Mart set up its own satellite system in 1983    Reducing unproductive inventory as far as po...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
RFID in Wal*Mart Initiated the plan to implement RFID in its  supply chain in June 2003 Subsequently, reinforced the RFI...
RFID in Wal*Mart Specification of RFID Components TAGS EPC Why RFID? EFFICIENCY WAL*MART SUPPLIERS3rd December 2005 ...
Specification of RFID Components EPC Type of Chip TAG Distribution Centers to accept RFID  tagged products3rd December...
Specification of RFID Components    EPC       96 bit unique number to identify an item in the        supply chain.      ...
Specification of RFID Components    TAGS          Operates in the UHF spectrum                        868 MHz to 956 MH...
WHY RFID?         OBJECTIVE: To increase the efficiency          of its supply chain.         It will      -        Enha...
Efficiency    Wal*Mart aims to reduce the practice of     manually placing the order    Has achieved 10% reduction in th...
RFID COSTCost Benefit Analysis     Initial Research indicated cost of RFID tag was above     $1.     At present, TAG costs...
Wal*Mart Suppliers 130 major suppliers ship merchandise to  Wal*Mart distribution centers with about  5.4 million tags B...
Wal*Mart Suppliers Major             Suppliers:     Gillette     Hewlett-Packard     Johnson & Johnson     Kimberly C...
Wal*Mart Suppliers Kimberly-Clark          Manufacturer of paper goods products              Eg:   Kleenex, Huggies    ...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
Successful Implementation of RFID   Harvard Research suggests a seven step    model for successful implementation of    R...
Seven Step Model1.       Understand our visibility requirements2.       Query other end users about         recommendation...
Major Companies implementing RFID               technology    Volkswagen    Gillette    Tesco supermarket tries out sma...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
Limitations of RFID    Why the implementation of a 40 year old     technology is taking so long?    As pointed out earli...
Limitations and Challenges of RFID              (contd.)1.       Global standards            Variety of RFID standards an...
Limitations and Challenges of RFID              (contd.)1.        Industry Standards              Privacy advocates are i...
RFID Practices that Should be Prohibited Merchants must not force their customers  into accepting RFID tags in the produc...
Up Next…… Introduction to RFID Introduction to Supply Chain Management  (SCM) Introduction to Wal*Mart and its Business...
Future of RFID3rd December 2005     @Copyrights Reserved 2005 - RFID Team : INFS 640
Future of RFID    For Retailers ??          The technology will bring a revolution.          It will be widely used in ...
Key Factors for RFID Setting up more standards in the industry Bringing down the cost of RFID Level of understanding an...
Demonstration Of Wal*Mart SCM                                                                          Wal*Mart           ...
Movie Time http://www.future-store.org/servlet/PB/- s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html3rd De...
THANK YOU                    Questions &                    Suggestions                    ?3rd December 2005   @Copyright...
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  1. 1. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  2. 2. Wal*Mart Case Study:RFID & Supply Chain Management TEAM MEMBERS •Angrish, Sangita •Chivukula, Venkata S. •DeWitt, Brendon •Patel, Raxesh •Shamsi, Shazeb •Yellapragada, Ramachandra3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  3. 3. Agenda Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  4. 4. Introduction What is RFID ? Why RFID over Bar-Code ? RFID Working and Infrastructure3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  5. 5. What is RFID? Electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-of- sight, using an electromagnetic challenge/response exchange.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  6. 6. RFID• 40 years old technology• Why being Used NOW? • right time to use the technology • Benefits OUTWEIGH the Deployment Costs3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  7. 7. Why RFID over Barcode ? Ability to read without line-of-sight Serialized numbering scheme enables more powerful  Understanding  Diagnosing  Controlling of Supply Chain Serial numbers provides individual entity tracking and much more detailed behavior of SCM than UPC or EAN used in Bar codes No duplicate reading of the same tag – a possibility in Bar codes More powerful sensor-network and monitoring-system than bar-code systems.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  8. 8. RFID Components RFID Reader TAG Antenna Silicon Chip Substrate3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  9. 9. Working of RFID Reader generate signals that are dual purpose: provide power for a tag, and create an interrogation signal. Tag captures the energy from Reader and executes commands sent by the Reader Tag sends back a signal containing a unique digital ID (96-bit serial number) that can be looked up in a database available to the reader to determine its identity, perhaps expressed as a name, manufacturer, SKU (stock keeping unit) number, and cost. Tags are generally passive because they require no batteries or maintenance.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  10. 10. RFID Infrastructure Existing software systems UNABLE to handle serial numbers Solution – RFID Middleware RFID Middleware : Layer between RFID readers and the application software Consists of : 1. Lower level device and data management 2. Higher Interpretation level Context generation and Interpretation Device Data Management Management3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  11. 11. RFID Infrastructure (contd.) Lower level devices such as motion sensors, programmable logic arrays and human interfaces fetch data and provides to Data management layer Data management layer provides some functionality of filtering data due to intermittent appearances and disappearances After the data management layer yields data, the Interpretation layer extracts inference from such data and forwards it to the applications that deploy RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  12. 12. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  13. 13. Introduction to Supply Chain Management Supply Chain Management 1. Coordination of a network of facilities and distribution options 2. Includes procurement, processing and distribution Five core processes 1. Planning 2. Sourcing 3. Making 4. Delivering 5. Returning Integration of these processes to maximize benefits3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  14. 14. Introduction to Supply Chain Management (contd.) Three levels of supply chain management 1. Strategic – linked to corporate strategy 2. Tactical 3. Operational – involve day to day activities3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  15. 15. Introduction to Supply Chain Management (contd.) Overall Goal  Optimize supply chains  Provide more accurate and time sensitive information  Maximize sales and profits3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  16. 16. Introduction to Supply Chain Management (contd.) RFID and Supply Chain  Provide real time information  Better readings of customers and markets  Ability to provide right products at the right times Deloitte & Touché benchmark initiative  Only 7% of companies managing supply chain effectively  These 7% are 73% more profitable than other companies3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  17. 17. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  18. 18. Wal-Mart Introduction and Business Processes3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  19. 19. Operations Wal Mart Stores 1. Largest segment accounting to about 67.3% of 2005 fiscal sales 2. Super centers 3. Discount stores 4. Neighborhood Markets SAM’s Club 1. Consists of membership warehouse clubs accounting to 13% of 2005 fiscal sales Wal-Mart International 1. Accounted to 19.7% of 2005 sales3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  20. 20. Business Model of Wal*Mart Market Strategy of Wal*Mart 1. Everyday Low prices (EDLP) 2. Employs both “Clicks & Bricks” and “Bricks & Mortar” strategy Organizational Development 1. Specialty Division 2. Retail Division Competitive Advantage 1. Price match guarantee Market opportunity 1. B2B Single firm network 2. B2C E-Tailer Business Model3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  21. 21. Supply Chain Management at Wal*Mart Procurement and Distribution Logistics Management Inventory Management3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  22. 22. Procurement and DistributionProcurement  Procurement involves getting goods from different manufacturers  Involves reducing the purchasing costs as far as possible  Goods procured directly from the manufacturers, bypassing all intermediaries3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  23. 23. Procurement and DistributionDistribution  Distribution centre is divided in different groups depending on the quantity of goods received  Goods to be used internally in US arrive in pallets & imported goods arrive in re-usable boxes.  Employees have access to the inventory levels of all the products  Employee makes two scans- 1. For identifying the pallet 2. For identifying the location from where the stock had to be picked up  Bar codes & RFID used to label different products, shelves & bins  The hand held computers guide employee to the location of the specific product.  The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server.  computers enable packaging department to get accurate information such as storage, packaging & shipping,  Saves time in unnecessary paperwork.3rd December 2005  Enables supervisorsReserved 2005 - RFID Team : INFS 640 closely @Copyrights to monitor their employees
  24. 24. Logistics Management Involves managing transportation & delivery of products More than 7000 company owned trucks services Distribution centers This enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves twice a week “Private Fleet Driver handbook” – tracking drivers activities “Cross Docking” – from Manufacturer to Customer Cross Docking enabled “demand chain” “Demand chain” - Customers ‘pull’ the products instead of retailers having to “push” them3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  25. 25. Inventory Management Wal*Mart set up its own satellite system in 1983 Reducing unproductive inventory as far as possible Use of Bar-code & RFID technologies for easy packing and counting of the inventories, efficient picking and receiving & proper inventory control of the products “Massively Parallel Processor “ - enables easy tracking movement of goods & stock levels across all distribution centers and stores Use of “Magic Wand” to keep track of inventory in stores Use of sophisticated algorithm and technology infrastructure to forecast the quantities of each item to be delivered, based on inventories in the store and customer needs Centralized inventory database3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  26. 26. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  27. 27. RFID in Wal*Mart Initiated the plan to implement RFID in its supply chain in June 2003 Subsequently, reinforced the RFID standards and specifications in November 20033rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  28. 28. RFID in Wal*Mart Specification of RFID Components TAGS EPC Why RFID? EFFICIENCY WAL*MART SUPPLIERS3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  29. 29. Specification of RFID Components EPC Type of Chip TAG Distribution Centers to accept RFID tagged products3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  30. 30. Specification of RFID Components EPC  96 bit unique number to identify an item in the supply chain.  Global Trade Identification Number. EPC data format on the chip is Class 1 Version 2 communication protocol. Class 0: Factory programmable protocol Class1: Provides the capability to write serial numbers on the chip3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  31. 31. Specification of RFID Components TAGS  Operates in the UHF spectrum  868 MHz to 956 MHz  Carries the 96-bit serial number  Is field programmable  Allows suppliers to write serial numbers to the tags while being applied to the products3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  32. 32. WHY RFID? OBJECTIVE: To increase the efficiency of its supply chain. It will - Enhance Transparency of supply chain - Help in minimizing cost and labor - Strengthen inventory control3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  33. 33. Efficiency Wal*Mart aims to reduce the practice of manually placing the order Has achieved 10% reduction in the case Implementation of RFID tags in Wal*Mart’s inventory has helped boost sales by keeping shelves better stocked Usage of RFID has reduced out-of-stock merchandise by 16% at the stores that have implemented RFID tags for more than a year.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  34. 34. RFID COSTCost Benefit Analysis Initial Research indicated cost of RFID tag was above $1. At present, TAG costs about 30 cents Cost will drop to less than 5 cents, if deployed on a large scale Analysts suggest that the tag should be approx. 1 cent for small ticket items3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  35. 35. Wal*Mart Suppliers 130 major suppliers ship merchandise to Wal*Mart distribution centers with about 5.4 million tags By 2006, Wal*Mart aims to mandate RFID implementation for all its suppliers3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  36. 36. Wal*Mart Suppliers Major Suppliers:  Gillette  Hewlett-Packard  Johnson & Johnson  Kimberly Clark  Kraft Foods  Nestle  Proctor and Gamble3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  37. 37. Wal*Mart Suppliers Kimberly-Clark  Manufacturer of paper goods products  Eg: Kleenex, Huggies  Tagged Scott paper Towels shipment with RFID tags  First supplier to use RFID – April 20043rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  38. 38. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  39. 39. Successful Implementation of RFID Harvard Research suggests a seven step model for successful implementation of RFID.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  40. 40. Seven Step Model1. Understand our visibility requirements2. Query other end users about recommendations for trials3. Move into the action phase in a real-world setting in a pilot/trial mode4. Evaluate technical performance5. Consider the economic benefits6. Understand the impact7. Decide whether or not to move forward with a larger scale implementation3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  41. 41. Major Companies implementing RFID technology Volkswagen Gillette Tesco supermarket tries out smart tagging Sun Microsystems sets up RFID test centre in Scotland I.B.M. Expands Efforts to Promote Radio Tags to Track Goods Texas Instruments3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  42. 42. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  43. 43. Limitations of RFID Why the implementation of a 40 year old technology is taking so long? As pointed out earlier, benefits are gradually outweighing the deployment costs Limitations and challenges: Barriers to Quick Deployment3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  44. 44. Limitations and Challenges of RFID (contd.)1. Global standards  Variety of RFID standards and technologies2. Technology problems  Read-range distances not sufficient to allow for consumer surveillance  Defective and poorly performing RFID tags  Damaged RFID tags Data management  Lack of development of right information management tools5. Cost  Tags, Tag Readers, Databases3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  45. 45. Limitations and Challenges of RFID (contd.)1. Industry Standards  Privacy advocates are insisting the companies to state their intended use of the technology due to lack of industry standards2. Privacy and civil liberties  RFID tags can be embedded into/onto objects and documents without the knowledge of the individual3. Complex programming4. Potential job losses3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  46. 46. RFID Practices that Should be Prohibited Merchants must not force their customers into accepting RFID tags in the products they buy. RFID must not be used to track individuals absent informed and written consent of the data subject – directly or indirectly.3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  47. 47. Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  48. 48. Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  49. 49. Future of RFID For Retailers ??  The technology will bring a revolution.  It will be widely used in retail and consumer goods, automotive, healthcare, military, postal department and other scientific uses. For Customers??  If the consumers think the technology is too complex, confusing or threat to their privacy… Will the technology survive?3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  50. 50. Key Factors for RFID Setting up more standards in the industry Bringing down the cost of RFID Level of understanding and experience3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  51. 51. Demonstration Of Wal*Mart SCM Wal*Mart StoreManufacturer Wal*mart Warehouse 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  52. 52. Movie Time http://www.future-store.org/servlet/PB/- s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  53. 53. THANK YOU Questions & Suggestions ?3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
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