2. Wal*Mart Case Study:
RFID & Supply Chain Management
TEAM MEMBERS
•Angrish, Sangita
•Chivukula, Venkata S.
•DeWitt, Brendon
•Patel, Raxesh
•Shamsi, Shazeb
•Yellapragada, Ramachandra
3rd 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 RFID
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
4. Introduction
What is RFID ?
Why RFID over Bar-Code ?
RFID Working and Infrastructure
3rd 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 Costs
3rd 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 Substrate
3rd 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 Management
3rd 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 RFID
3rd 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 RFID
3rd 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
benefits
3rd 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 activities
3rd 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 profits
3rd 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
companies
3rd 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 RFID
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
18. Wal-Mart Introduction and
Business Processes
3rd 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 sales
3rd 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 Model
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
21. Supply Chain Management at
Wal*Mart
Procurement and Distribution
Logistics Management
Inventory Management
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
22. Procurement and Distribution
Procurement
Procurement involves getting goods from
different manufacturers
Involves reducing the purchasing costs as far
as possible
Goods procured directly from the
manufacturers, bypassing all intermediaries
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
23. Procurement and Distribution
Distribution
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” them
3rd 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 database
3rd 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 RFID
3rd 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
2003
3rd 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 SUPPLIERS
3rd 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 products
3rd 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 chip
3rd 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 products
3rd 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 control
3rd 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 COST
Cost 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 items
3rd 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 suppliers
3rd 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 Gamble
3rd 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 2004
3rd 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 RFID
3rd 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 Model
1. Understand our visibility requirements
2. Query other end users about
recommendations for trials
3. Move into the action phase in a real-world
setting in a pilot/trial mode
4. Evaluate technical performance
5. Consider the economic benefits
6. Understand the impact
7. Decide whether or not to move forward with a
larger scale implementation
3rd 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 Instruments
3rd 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 RFID
3rd 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
Deployment
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
44. Limitations and Challenges of RFID
(contd.)
1. Global standards
Variety of RFID standards and technologies
2. 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 tools
5. Cost
Tags, Tag Readers, Databases
3rd 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 standards
2. Privacy and civil liberties
RFID tags can be embedded into/onto objects and documents without
the knowledge of the individual
3. Complex programming
4. Potential job losses
3rd 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 RFID
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
48. Future of RFID
3rd 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 experience
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
51. Demonstration Of Wal*Mart SCM
Wal*Mart
Store
Manufacturer
Wal*mart
Warehouse
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640