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  • 500,000 personnel in total, 220 countries, est. 66 Billion USD in equivalent revenue DHL Logistics/Solutions is now DHL Exel Supply Chain (except in US where it stays Exel) and DHL Global Forwarding. 144,000 employees and 3,000 operating locations around the world. 3 Contract Logistics regions and 5 Freight Forwarding regions. Global Sectors: Automotive, Healthcare, Retail & Consumer, Technology.
  • Total supply chain service dominance across air, ocean and contract logistics functions. One stop shopping for customers.
  • RFID has been around since the 1930s-1940s, but is only now expanding in terms of its use and adoption beyond defense and automotive applications (i.e. pharma, CPG companies). What business problem are you trying to solve? What are your priorities/opportunities? We are in a time of transition, product development and increased adoption regarding RFID technologies.
  • Many companies have been driven to compliance tagging as of 01/05, are doing pilots and are now beginning to understand the issues and opportunities regarding the use of RFID in the business processes.
  • The DPWN/DHL organization has been evaluating RFID technologies since the late 1990s. DHL is the only logistics company that sets on the Board of Directors for EPCglobal. DHL is also acting as co-chairman for the EPCglobal Transportation & Logistical Services Business Action Group (TLS BAG). Assisting customers around the globe, in various market verticals.
  • The DPWN/DHL organization has been evaluating RFID technologies since the late 1990s. DHL is the only logistics company that sets on the Board of Directors for EPCglobal. DHL is also acting as co-chairman for the EPCglobal Transportation & Logistical Services Business Action Group (TLS BAG). Assisting customers around the globe, in various market verticals.
  • While UHF RFID is most frequently mentioned in the logistics press, other options have been around longer and may be more viable for a given process. UHF ultimately fills the gap between HF and active solutions regarding read range and price, thereby giving end users a more options regarding RFID data collection.
  • AON Solution Providers– Symbol, Blue Vector Systems, Cisco ….Industrial Controls companies are also entering the fray!
  • DHL is working closely with Metro and their vendors concerning their RFID initiative. Legacy Exel has been working closely with Wal-Mart’s largest CPG vendors concerning their initiative. Aside from CPG products, Class II/controlled pharmaceuticals are also part of the Wal-Mart RFID initiative. US DOD – 40-60,000 companies potentially impacted in the next 2-3 years….deployment is by commodity class….depending on price point and packaging level, other auto-ID technologies may also be used …likely impact technology, aerospace, chemical and industrial sectors in the near term. Marks & Spencer –Initiative focuses heavily on returnable container/asset management. However, garment tracking has also been initiated. Prada – Beverly Hills & Manhattan RFID enabled stores …used for customer profiles, interactive marketing experience and visibility. Tesco – Trials in UK and Korea. Target – Similar initiative to Wal-Mart, but with a one year delay, using similar manufacturers in trials. Albertson’s – Grocer announced RFID program shortly after Wal-Mart and involved similar CPG companies in initial deployment. US FDA – no mandate yet, but expected in 2007. Frequency is still a question HF or UHF. Accenture gathered industry leaders in pharma space to do Project Jumpstart, RFID trials between manufacturers, wholesalers and pharma-retailers. Best Buy – began a trial with a limited number of their key vendors in mid-late 2005, focusing more on item-level tagging.
  • This is the traditional RFID path towards applications and eventual adoption.
  • Client focus is frequently in keeping the solution “cheap & cheerful” until price and performance changes. While popular, this is an application strategy and not an RFID integration strategy. Slow, labor intensive process for “slap & ship” (.21-.$1 tag + .25-.35 cents labor). Portal application creates pinch-points in operations and has a high cost for equipping entire facilities. Intelligent controls usually necessary to control reader on portal to limit the number and frequency of reads.
  • Less labor, more consistent application. Need to adjust applicator between SKUs. However, how do you scale this solution? Work cell deployment?
  • Less labor, more consistent application. Need to adjust applicator between SKUs. However, how do you scale this solution? Work cell deployment?
  • As standardization increases, there is more opportunity for more “open systems/networks”, instead of the current closed loop applications. As these open RFID networks develop, supply chain visibility will be enhanced. Given this situation, it makes sense that RFID tagging will be done at origin instead of as a postponement activity, as is being done today in the US. Tagging at origin will also give end users/customers the benefit of more discrete visibility and control across the longest leg of the supply chain (ex. 8 week ocean voyage from APAC to the US).
  • Our focus is on when and where it is appropriate to use RFID in supply chain applications. Exel’s ability to use RFID in a racked environment and experience with RFID mobility applications is unparalleled (i.e. in terms of the number of pieces of equipment and multiple trials.
  • Customer was not getting adequate deliveries to store because of traffic in the city. We proposed an after hours delivery solution that used RFID integrated with Close Circuit TV cameras and the customer’s security system.
  • Customer store sets idle after regular store hours with the security system monitoring the interior of the facility.
  • 433 Mhz active tags on truck (from Wavetrend) initiate security cameras filming and turn off passive security system the after hours delivery.
  • Mechanical locks are secondary security measure.
  • Opening of the dock door is a discrete event that is catalogued by the system.
  • Deliveries are made to a secure dock, preventing the driver from entering the facility beyond the dock.
  • Cameras have Pan-Tilt-Zoom (PTD) capability while taping activity live. Archived footage can be evaluated from our database.
  • Connect Logistics video represents a site that DHL Exel Supply Chain operates in Alberta, Canada. The site already uses ASRS and voice picking, but we wished to determine if RFID could add any value in a mature site that uses other best-of-breed technologies. Less than full-pallet picks and auditing functions were optimized. We are delivering +98-99% inventory accuracy, so incremental inventory accuracy comes at a high cost, thus shifting focus to other areas of opportunity. RFID hardware needed to be more resilient since it vibrated apart during some portions of the trial. In working with our SCEM partner, RedPrairie, we assisting in developing this pilot application into a WMS product extension, available to the market in 2006.
  • M6 - Hollis.ppt

    1. 1. Current State Of RFID A DHL Exel Supply Chain Perspective .... Tony Hollis – Director Innovation & Technology Management
    2. 2. <ul><li>Introduction To DPWN/DHL & DHL Exel Supply Chain </li></ul>Agenda <ul><li>Current RFID Deployment Strategies & Future Considerations </li></ul><ul><li>Brief Overview Of Wireless & RFID Technologies </li></ul><ul><li>Real Examples Of RFID Deployments In The Supply Chain </li></ul><ul><li>Summary & Closing Remarks </li></ul><ul><li>Q & A </li></ul>
    3. 3. The New DPWN / DHL Organizational Structure * *Note: For the North American Contract Logistics business, we will continue to use the Exel brand. Group Corporate Divisions Brands Brand areas Mail Germany Finance Logistics Express Worldwide Worldwide (Only USA) Worldwide Germany
    4. 4. Leadership Across The Logistics Market <ul><li>Reaching the top is the one thing ....Staying there, depends on your/our logistics know-how </li></ul>DHL K+N Schenker Panalpina DHL K+N Nippon UPS TNT Wincanton UPS Ocean Freight (Market Volume: 20.5MM TEU) Market share percentages 2004 Contract Logistics (Market Volume: €156bn) Market share percentages 2003 Air Freight (Market Volume: € 23.0 bn) Market share percentages 2004 + Exel 3.6% = 4.8% DHL 1.2% 2.6% 1.6% 1.1% 6.8% 5.6% 3.2% 3.1% 5.6% 8.1% 4.3% 4.2% Re-define the market Re-shape the market Increased buying power + Exel 3.1% = 8.7 % + Exel 4.8% = 11.6%
    5. 5. Supply Chain Technologies Considerations RFID references Source: Gartner Group … much work remains to be done.
    6. 6. RFID Maturity Related To Specific Applications Source: : Gartner Group Current Phase
    7. 7. Why Is DHL Exel Supply Chain Using RFID? <ul><li>Customer Considerations </li></ul><ul><ul><li>New Market Vertical Solutions? </li></ul></ul><ul><li>Operations Considerations </li></ul><ul><ul><li>Are There Efficiencies To Be Realized? </li></ul></ul><ul><li>Integration Considerations </li></ul><ul><ul><li>How Does This Impact Existing And/Or Future Technology Integrations </li></ul></ul><ul><li>Competitive Considerations </li></ul><ul><ul><ul><li>Lead? </li></ul></ul></ul><ul><ul><ul><li>Lag? </li></ul></ul></ul><ul><li>Assisting Customers With Compliance / Mandates </li></ul>
    8. 8. Future RFID Opportunities Considered? Representative RFID Solutions Potentially, RFID tools and solutions can be used to address the challenges of supply chain Increased Data Flow Increased Collaboration Lack of Visibility Increased Complexity Supply Chain Challenges <ul><li>Real-time demand planning </li></ul><ul><li>Item-level track and trace </li></ul><ul><li>Reverse supply chain </li></ul><ul><li>Automatic replenishment </li></ul><ul><li>Real-time tracking of transportation </li></ul><ul><li>Automatic goods receipt & confirmation of proof-of delivery </li></ul><ul><li>Automatic cross docking </li></ul><ul><li>Item authentication </li></ul>Select Deployment Benefits <ul><li>Increased sales </li></ul><ul><li>Reduced out-of-stocks </li></ul><ul><li>Increased labour productivity </li></ul><ul><li>Reduced shrinkage </li></ul><ul><li>Reduced inventory levels </li></ul><ul><li>Improved customer service </li></ul>
    9. 9. Why RFID Now ? <ul><li>Price </li></ul><ul><li>Prices are falling fast </li></ul><ul><li>Readers now less than $1,000 </li></ul><ul><li>Tag pricing in the range $0.50 falling to less than $0.10 on multi –million volumes </li></ul><ul><li>New materials and processes are becoming available </li></ul><ul><li>Industry Adoption </li></ul><ul><li>FDA recommendation for drug traceability </li></ul><ul><li>USA Military announced that all suppliers must use RFID by 2007 </li></ul><ul><li>Wal-Mart has announced that it wants its top 100 suppliers to be RFID capable @ Pallet/Case by January 2005 and will have a total of 300 vendors using RFID as of January 2007. Wal-Mart is also working with pharmaceutical suppliers regarding the tagging of Class II products. </li></ul><ul><li>Tesco introduce RFID at case level starting in 2005; all suppliers by 2006 </li></ul><ul><li>Directive 2003/94/EC lays down traceability requirements for investigational medicinal products (art.15). </li></ul><ul><li>Standards & Software Development </li></ul><ul><li>ISO 18000-6 UHF --- Just ratified! </li></ul><ul><li>ISO 15694 HF </li></ul><ul><li>EPC- Global Gen. 2 Standard </li></ul><ul><li>EPC Network </li></ul>RFID Acceptance and Adoption <ul><li>Performance </li></ul><ul><li>New Frequencies for chips & readers </li></ul><ul><li>Longer read range, up to 15 Ft. USA 3 Mtrs Europe using ‘Passive low cost tags’ </li></ul><ul><li>Faster anti-collision – EPC Gen 2 </li></ul><ul><li>Faster data transmission – EPC Gen 2 </li></ul><ul><li>More memory available – EPC Gen 2 </li></ul><ul><li>Increased security – EPC Gen 2 </li></ul><ul><li>Advances in manufacturing techniques should produce better yields. </li></ul>After 15 years of tests and trials RFID is currently experiencing a heightened level of attention and momentum due to the following factors:
    10. 10. End Users Have Many Wireless Technology Options <ul><li>GPS / GLS </li></ul><ul><li>Cellular Technologies </li></ul><ul><li>Ultra Wideband – UWB </li></ul><ul><li>Wi-Fi </li></ul><ul><ul><li>802.11 Compatible </li></ul></ul><ul><li>RFID (multiple frequencies) </li></ul><ul><ul><li>Active / Semi-Active / Passive </li></ul></ul><ul><ul><li>LF, HF, UHF … </li></ul></ul>Items Cases Pallets/ULDs Modes Of Transport Inner Packs Customer Driven Government, Industry Or Provider Driven
    11. 11. Considerations when choosing an RFID technology Three factors to consider: Technology Legislation Cost Matching performance with business requirements The spectrum is finite, crowded and subject to local regulations Higher performance e.g. reading range comes at a cost UHF (800-900 Mhz) applications are not the only choices available for RFID applications, prompting the consideration of other RFID solutions as well.
    12. 12. Wireless Convergence Also Is Taking Place <ul><li>Hybrid Solutions Are Evolving </li></ul><ul><ul><li>Cellular Technology </li></ul></ul><ul><ul><li>RFID </li></ul></ul><ul><ul><li>GPS </li></ul></ul><ul><li>Examples of convergence: </li></ul><ul><ul><ul><li>Fluensee </li></ul></ul></ul><ul><ul><ul><li>PINC Solutions </li></ul></ul></ul><ul><ul><ul><li>Skybitz </li></ul></ul></ul><ul><ul><ul><li>@Road </li></ul></ul></ul><ul><ul><ul><li>Wherenet </li></ul></ul></ul>
    13. 13. Data Volumes Could Increase Significantly <ul><li>Key Challenges: </li></ul><ul><li>This data will challenge system infrastructure, application performance and processes. </li></ul><ul><li>Batch systems will limit benefit realisation. </li></ul><ul><li>Complex Issues: </li></ul><ul><li>What happens when the item contains many RFID enabled components? </li></ul><ul><li>How will one manage mixed pallets? </li></ul>Tracking Benefit Pallet load (example 4 pallets) Pallet (holds 16 cases) Case (holds 6 inners) Inner case (holds 10 items) Item 10 items + 1 inner = 11 EPC codes 10 3840 items + 384 inner + 64 case + 4 pallets = 4292 EPC codes 3840 960 items + 96 inner + 16 case + 1 pallet = 1074 EPC codes 960 60 items + 6 inner + 1 outer = 67 EPC codes 60 1 EPC code 1 Number of EPC codes Number of Items Adoption
    14. 14. IT Strategies Could Also Change RFID Tagged Product Integration software ERP, WMS, TMS, database, or other systems ERP, WMS, TMS, database, or other systems Device Mgt software Infrastructure Layer In The Future ERP, WMS, TMS, database, or other systems ERP, WMS, TMS, database, or other systems Infrastructure Layer Application Oriented Networking (AON)
    15. 15. RFID Representative Benefits/Deployments As firms are able to tag at the item-level, RFID benefits will become more substantial Short-term Pallet / Case Tagging Mid-term Pallet / Case Tagging Long-term Item Tagging Level of Benefit <ul><li>Reusable Containers </li></ul><ul><ul><li>Increased asset utilization </li></ul></ul><ul><ul><li>Reduced shrink </li></ul></ul><ul><li>Inbound Receiving </li></ul><ul><ul><li>Improved efficiency & accuracy </li></ul></ul><ul><li>Supply Planning / Production Scheduling </li></ul><ul><ul><li>Improved order fill rate / accuracy </li></ul></ul><ul><ul><li>Reduced inventory & WIP </li></ul></ul><ul><li>Pallet Location & Tracking </li></ul><ul><ul><li>Ability for product diversion </li></ul></ul><ul><ul><li>Increased asset utilization </li></ul></ul><ul><li>Inventory Management / Visibility </li></ul><ul><ul><li>Increased asset utilization </li></ul></ul><ul><ul><li>Reduced inventory </li></ul></ul><ul><ul><li>Increased inventory availability </li></ul></ul><ul><li>Loss Prevention (Back room) </li></ul><ul><ul><li>Reduced shrink </li></ul></ul><ul><li>Pick, Pack and Ship </li></ul><ul><ul><li>Improved order fill rate / accuracy </li></ul></ul><ul><ul><li>Improved labour efficiency </li></ul></ul><ul><li>Demand Planning (DC & Store) </li></ul><ul><ul><li>Reduced out-of-stocks </li></ul></ul><ul><ul><li>Increased service levels </li></ul></ul><ul><ul><li>Reduced inventory </li></ul></ul><ul><li>Demand Planning (Store shelf) </li></ul><ul><ul><li>Optimized promotions & pricing </li></ul></ul><ul><ul><li>Elimination of out-of-stocks </li></ul></ul><ul><ul><li>Reduced inventory obsolesce </li></ul></ul><ul><ul><li>End-to-end demand chain visibility </li></ul></ul><ul><li>Inventory Counts </li></ul><ul><ul><li>Improved inventory accuracy </li></ul></ul><ul><ul><li>Improved pick/pack accuracy </li></ul></ul><ul><li>Loss Prevention (Store shelf) </li></ul><ul><ul><li>Reduced shrink </li></ul></ul><ul><li>Safety & security </li></ul><ul><ul><li>Traceability of contaminated product (regulatory compliance) </li></ul></ul><ul><ul><li>Reduced counterfeiting </li></ul></ul><ul><li>Reverse Supply Chain </li></ul><ul><ul><li>Efficient product recalls/returns </li></ul></ul><ul><li>Self check-out </li></ul><ul><ul><li>Reduced labour cost </li></ul></ul><ul><ul><li>Improved consumer experience </li></ul></ul>
    16. 16. RFID Adoption Drivers Metro Wal-Mart U.S. Department Of Defense Albertson’s Marks & Spencer PRADA Target Tesco U.S. Food & Drug Administration Best Buy Ace Hardware Who’s Next ? ASDA, Kroger, CVS, Home Depot..
    17. 17. RFID Application Approaches Many different approaches are possible, each having different cost / benefit characteristics associated with the implementation results Level of Integration Return on Investment High Low High Low Slap & Ship 3PL Solution Pilots Do Nothing Integration (*) vs. ROI End-to-end Implementation (*) Supply-chain process and system integration Selected Deployment <ul><li>Slap & Ship </li></ul><ul><ul><li>Simple process of applying compliant tags to cases & pallets with no back-end integration or reading </li></ul></ul><ul><li>Third-party Logistics (3PL) Solution </li></ul><ul><ul><li>Outsourcing of order fulfilment for RFID-mandated products/operations to a 3PL for processing, tagging & shipping </li></ul></ul><ul><li>Pilots </li></ul><ul><ul><li>Design and build of a small-scale, controlled RFID tests in a live operating environment </li></ul></ul><ul><ul><li>Leverage pilots as basis for full roll out </li></ul></ul><ul><li>Selected Deployments </li></ul><ul><ul><li>Prioritized deployments of working RFID solutions in a scaleable, pragmatic fashion with sound cost and benefit fundamentals </li></ul></ul>Most popular application strategy
    18. 18. Primary Driver Of Adoption – Compliance! RFID Readers/Antennas (Validate Portal RFID Label) Visual Read Indicator Operator Enters/Scans Pallet LPN and (Carton Barcode) Operator Corrects Pallet Count (as required) Print/Apply Case/Pallet Label (Manual) Photo-eyes (Triggers barcode/RFID readers) RFID Reader Typical “Slap & Ship” Solution
    19. 19. How Can A Slap & Ship Strategy Be Improved? Pallet Line (Good/Bad RFID Labels) Photo-eyes (Triggers barcode/RFID readers) RFID Readers/Antennas (Validate RFID Label) RFID Encode(Print) Label Attach Visual Read Indicator Operator Enters/Scans Pallet LPN and (Carton Barcode) Operator Corrects Pallet Count Print/Apply Pallet Tag (Manual/Auto) Buffer if bad labels Pallet (Bad Labels) Pallet (Good Labels)
    20. 20. Does Slap & Ship Make Sense Long-Term? Pallet Line (Good/Bad RFID Labels) Photo-eyes (Triggers barcode/RFID readers) RFID Readers/Antennas (Validate RFID Label) RFID Encode(Print) Label Attach Visual Read Indicator Operator Enters/Scans Pallet LPN and (Carton Barcode) Operator Corrects Pallet Count Print/Apply Pallet Tag (Manual/Auto) Buffer if bad labels Pallet (Bad Labels) Pallet (Good Labels) What about RFID tags being applied at the plant?
    21. 21. Wireless & RFID Technologies Are Just The Tip Of The Iceberg! RFID & Wireless Technology Supply Chain Execution Applications Data Synchronization Enterprise Resource Planning Applications Collaborative Forecasting & Planning Applications Data Transfer / Visibility Applications Customer Resource Planning Applications
    22. 22. International Supply Chains...At A Glance … but I already have a visibility solution!
    23. 23. International Supply Chains...At A Glance Increasing Levels Of Data Collection Sophistication Data Quality, Latency & Security
    24. 24. International Supply Chains...At A Glance Movement To Tag At Source / Tag At Origin
    25. 25. Beyond RFID Compliance & Asset Management Dock Door RFID Portal Fork-lift Mounted RFID Garment On Hanger RFID Portal RFID Enhanced Stretch Wrap Machine RFID Enabled Rack RFID Enabled Yard Operations
    26. 26. Retail Supply Chain RFID Deployment Example Customer Opportunity Assessment: <ul><li>To reduce the costs associated with store deliveries by increasing vehicle fill. This needs to be achieved with minimal infrastructure requirements. </li></ul><ul><li>The driver needs to: </li></ul><ul><ul><li>be monitored whilst making the delivery (stock integrity) </li></ul></ul><ul><ul><li>be safe whilst making the delivery (health & safety) </li></ul></ul><ul><ul><li>deliver ideally to an unmanned store (reduce labor costs) </li></ul></ul><ul><ul><li>deliver to a secure area (no public access) </li></ul></ul><ul><ul><li>have easy access to the delivery area (no key/security issues) </li></ul></ul>
    27. 27. Retail Supply Chain RFID Deployment Example Store secure and awaiting delivery. Cameras act as ‘Airlock alarm system’ - Video Motion Detection (VMD).
    28. 28. Retail Supply Chain RFID Deployment Example Arrival of vehicle and driver releases the electronic lock and enables the CCTV to start recording locally. Also disables ‘Airlock alarm’; and sends a signal to central monitoring station to notify arrival. Electronic lock RFID keyfob RFID Tag on Vehicle
    29. 29. Retail Supply Chain RFID Deployment Example Driver unlocks mechanical lock using standard key to gain full access to ‘isolation chamber’. Mechanical lock
    30. 30. Retail Supply Chain RFID Deployment Example Sensor on door logs the time of entering ‘isolation chamber’. Door contact sensor
    31. 31. Retail Supply Chain RFID Deployment Example All activity during the delivery is recorded locally in digital format by CCTV cameras. This is automatically time and date stamped.
    32. 32. Retail Supply Chain RFID Deployment Example Any situation that results in the driver being at risk, a ‘panic’ signal can be sent to the central monitoring station by the driver pressing a panic button on the key-fob. Panic Button Initiated
    33. 33. Retail Supply Chain RFID Deployment Example Once delivery complete driver closes doors and secures the mechanical lock. Time of door closure captured. Mechanical lock
    34. 34. Retail Supply Chain RFID Deployment Example Departure of driver and vehicle automatically locks the electronic lock, re-enables the ‘Airlock alarm’ and stops the recording. Signal sent to central monitoring station to notify of departure.
    35. 35. Retail Supply Chain RFID Deployment Example Sample shots from loading bay cameras
    36. 36. RFID Enabled Yard Management
    37. 37. RFID Enabled Yard Management Graphical Management Console Browser Visibility Mobile computing task dispatch
    38. 38. RFID Enabled Yard Management Graphical Management Console Browser Visibility
    39. 39. RFID Enabled Yard Management
    40. 40. RFID Enabled Yard Management Graphical Management Console Browser Visibility GPS Module
    41. 41. RFID Enabled Yard Management
    42. 42. RFID Enabled Order Fulfillment Example Go To Movie On D: Drive
    43. 43. Summary <ul><li>The “hype” may help us after all! </li></ul><ul><li>Outside of RFID mandates or compliance initiatives, asset tracking is still the leading RFID application </li></ul><ul><li>High value products will likely be the biggest near-term business case for RFID application (ex Pharmaceuticals, technology & aerospace) </li></ul><ul><li>Additional mandates are anticipated, especially from the US government (Food & Drug Admin., Dept Homeland Security) </li></ul><ul><li>LF, HF, UHF, active and semi-passive RFID technologies are all very active and undergoing further standardization and product development </li></ul><ul><li>The Americas & Europe have been heavily engaged regarding RFID. However the APAC region is showing tremendous activity (ex. Japan & Korea) </li></ul><ul><li>Standardization efforts regarding RFID technologies will assist in will continue to make the technology more interoperable and less costly, thus enabling wide spread adoption </li></ul><ul><li>Exel & DHL Exel Supply Chain has been and continues to be brought into RFID projects to assure operational viability and proper execution of RFID initiatives </li></ul>
    44. 44. Questions?