Presentation at the launch of the RFID Association of Australia in Sydney 2006

1. Table Of Contents
 Introduction
 The momentum created by global trends
 The Australian environment
 Opportunities to exploit RFID as an enabling technology
1

2. Table Of Contents
 Introduction
 The momentum created by global trends
 The Australian environment
 Opportunities to exploit RFID as an enabling technology
2

3. Visibility is today’s value chain problem … seeing a problem is 90%
of fixing it!
 Poor visibility across the supply chain
 Lack of transaction velocity
 Inefficient capacity to optimise and synchronise supply chain
activity
 Poor supply chain control and accountability
 Black holes and high costs
3

4. The pace of change in the Auto ID business environment is
breathtaking .….. the tsunami effect!
Likely move
4

5. Table Of Contents
 Introduction
 The momentum created by global trends
 The Australian environment
 Opportunities to exploit RFID as an enabling technology
5

6. Global business trends
 Search for greater enterprise visibility - realisation that timely information is
necessary for better decision making
 Move toward collaboration and connectivity by extending the supply chain
 Increased outsourcing of supply chain functions
 Focus on global supply chain security increasing – Secure Tradelanes Initiative*
 Increased use of RFID in end-use markets - last mile analytics
 Increasing awareness of benefits of RFID
 Current ERP, SCM and internal technologies generating diminishing benefits
 Competition for higher margins and lower prices in increasingly global market
 Vertical industry adoption to demonstrate ROI*
 Significant growth in healthcare, pharmaceutical industries and aerospace*
6

7. Global Auto-ID technology trends
 RFID technology is maturing and dynamic - Smart tagging*
 Significant increase in testing and piloting
 Advances in microelectromechanical (MEMS) and sensor systems
 Cooperative standard setting – ISO approval of EPC Gen 2 Class 1 UHF*
 Mandates creating momentum. Opportunity for competitive advantage*
 Momentum on item level tagging
 Falling prices
 Growing and broadening applications with pilots emerging on a daily basis*
 Technology integration*
 Partner eco-systems to deliver end-to-end RFID solutions
 Market improvement in RFID security and encryption
 Realisation that architecture is important and that one size does not fit all*
7

8. Whilst there is geographical imbalance in RFID, international
growth has been significant with positive moves in both Asia and
Europe
Case Studies per Country
No Case Studies
Adapted from IDTechEx
8

9. By far the most common use of RFID is tracking across the supply
chain. Item level identification and tracking is the fastest growing
application
RFID Sectors
No Case Studies
Adapted from IDTechEx
9

10. Surveys seeking to capture the reasons for adopting RFID indicate
that increased supply chain transparency is acknowledged as a
major benefit
Primary Reason RFID Adoption
Percentage of responses
Adapted from ABI Research
10

11. Table Of Contents
 Introduction
 The momentum created by global trends
 The Australian environment
 Opportunities to exploit RFID as an enabling technology
11

12. The pace of Australian industry and Government involvement in
RFID is significant
 DCITA’s Starting Guide to RFID for SMEs
 Over 44 case studies across multiple industries
 World class suppliers such as G2 Microsystems and Magellan
 World’s largest supplier of livestock tagging – Allflex
 Setting standards for tracking livestock
 Preponderance of consultancies, hardware suppliers, system integrators
 Standards setting bodies - GS1 Australia
 Peak body creation - RFIDAA
12

13. Of the 44 case studies identified in Australia, 14 were in the
livestock and farming sector
IDTechEX identified case studies in Australia
Adapted from ISTechEx Number of case studies
13

14. Example Australian case studies
 National Demonstrator Project  Government
– Designed by CSIRO, overseen by GS1 Australia – Department of Corrections
and partly funded by DCITA – Defence
– Two supply chains operating an EPC Network – AFP
 National Livestock Identification System (NLIS) – Libraries
– License plating of over 10 million cattle  Retail Consumer Goods
– World’s best livestock tracking program – Coles Myer
 Mining – Moraitis tomato
– Coal  Logistics
– Nickel – Australia Post
– Copper
14

15. Booz Allen and RFIDAA’s 2006 Survey – Measuring Government’s
Understanding - also provides interesting insights into RFID
adoption in Australia.
10% 9%
5%
23%
27% 14% 14%
36%
48%
23% 48%
29% 41%
23%
RFID General Knowledge RFID Educational Materials Understanding RFID
Standards
Very High High Neutral Low Very Low
15

16. Most recognised the supply chain, retail and transport activity, but
failed to identify the RFID investment in health
Supply Chain 90%
Retail 85%
Transport 80%
Manufacturing 60%
Defence 47%
Mining 35%
Health 20%
Finance 11%
Government 10%
Trailing Following Leading
16

17. RFID investment and adoption would be driven by demonstrated
efficiencies and security enhancements
-100 0 100
Demonstrated efficiencies 10% 70%
Interoperability 30% 40%
Mandates 85% 10%
Regulations 35% 25%
Security 15% 65%
Low / very low High / very high
17

18. In relation to the perceived benefits, respondents believed that
RFID would improve the accuracy of information, deliver more
efficient processes and enhance security
0 100
Efficient processes 70%
Improved customer service 45%
Information accuracy 95%
Labour saving 55%
Reduced costs 50%
Security
70%
Perceived Benefit (High / very high)
18

19. They also identified competing program priorities and
demonstrating in-year cost benefit as the major challenges to RFID
adoption in the Government sector
-100 0 100
Competing priorities 5% 80%
Cost benefit 10% 70%
Data volume 65% 10%
Lack of executive
sponsorship 50% 35%
Lack of standards 45% 15%
Privacy 35% 20%
System integration 20% 55%
Easy Implementation Implementation Challenges
(Low / very low) (High / very high)
19

20. We concluded that the implications for Government, and probably
for Australian industry, were as follows
 RFID is a significant business investment and demands a strong business case
 RFID can provide a breakthrough solution to improve the accuracy and timeliness of
information
 Australian Government needs greater awareness to understand the implications of RFID on
the broader Australian economy
 Getting involved early on can provide competitive advantage and shape the technology
20

21. Table Of Contents
 Introduction
 The momentum created by global trends
 The Australian environment
 Opportunities to exploit RFID as an enabling technology
21

22. 2006 Larstan Business Report ‘Meeting of the Minds’ and BAH
European Study
 RFID is an enabling technology
 RFID is becoming a mainstream technology
 Focus on improving process efficiency
 ROI demonstrated in targeted applications
 Real benefit in providing visibility across extended supply chain
 Need middleware applications to provide an analytical overlay for data
 Key is not in obtaining data but in how organisations will use the data
22

23. Global pilots
 Automotive  Aerospace and Defence  Retail
– Sensor equipped processes – Boeing and Airbus - safety, – Improved on-shelf availability
security, and MRO – Reduced out-of-stocks
– Parts tracking
– Baggage tracking at Hong
 Consumer Packaged Goods Kong, Narita, QATAR and  Mining
Paris
– Gillette – Asset management
– US DoD
– International Paper – Warehouse management
 Transport – Product tracking
 Financial services
– Postal and Courier
– Tracking physical goods  Government
– Airlines and airports
– Document tracking – Tracking in cultural institutes
– Containers, pallets and totes
– Document tracking
 Manufacturing
 Health – Access control
– Product life-cycle
management – Drug authentication – Libraries
– Patient safety – US DoD and UK MOD
– Safety
– Tracking hazardous materials – Environmental sensing (1) 1 billion cars each with 100 sensors
generating data a 6.7 tbps
(2) Each new A380 jetliner will contain
10,000 RFID tags
23

24. Contact information;
Dr Clive Macmillan-Davies
Booz Allen Hamilton (Australia) Ltd
Level 7, 12 Moore Street
Canberra City ACT 2601
Tel +61 (0)2 6279 1951
Fax +61 (0)2 6279 1990
Mob +61 (0)438 670 859
24