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  • 1. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. Introduction What is RFID ? Why RFID over Bar-Code ? RFID Working and Infrastructure3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. 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. RFID Components RFID Reader TAG Antenna Silicon Chip Substrate3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. Wal-Mart Introduction and Business Processes3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. Supply Chain Management at Wal*Mart Procurement and Distribution Logistics Management Inventory Management3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Future of RFID3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. 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. Demonstration Of Wal*Mart SCM Wal*Mart StoreManufacturer Wal*mart Warehouse 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
  • 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. THANK YOU Questions & Suggestions ?3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640