RFID and the potential channel opportunities
The World’s Top Brands Use T3Ci – The Leaders in RFID Analytics and Applications <ul><li>30+ customers – Including 5 of to...
HP Today $19B IT infrastructure business: servers, storage & software $16B services business; consulting, support & outsou...
HP RFID Geographic Scope May 28, 2010 Commercial sites Retail sites 33 sites now RFID capable
Areas of Focus… <ul><li>Simpler registration </li></ul><ul><li>Product Regionalization practical </li></ul><ul><li>Config ...
Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the s...
Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the s...
Proof of Delivery reconciliation    The size of the problem <ul><li>POD claims are increasing in quantity & cost to HP </l...
Proof of Delivery reconciliation    How RFID helps <ul><li>Visibility into Retailer network (DC & Store) </li></ul><ul><li...
Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the s...
The next frontier of Retail collabortion   Store operational performance               <ul><li>No/Limited visibility...
Convergence of technologies is enabling this shift <ul><li>Detailed daily store/SKU data visibility </li></ul><ul><ul><li>...
Context setting  Enablers of the next frontier.. Value Enablers    Improving Promo compliance RFID (front / back vis) S...
Promotion Effectiveness <ul><li>Promo Compliance is the #1 RFID application because… </li></ul><ul><li>Timely arrival to t...
Results from our pilot  (inkjet printer) <ul><li>HP Compliance appears to be much better than avg </li></ul><ul><li>The pe...
Learnings from other OEM’s <ul><li>OEM Intervention Pilots are showing real value  </li></ul><ul><ul><li>~30% improvement ...
© 2005  T3Ci All rights reserved May 28, 2010 © 2005-2006 T3Ci All rights reserved HP’s plan going forward Utilize reports...
Shelf Out of Stock <ul><li>Largest opportunity to improve is in the ‘last 100 yds’    getting it to the shelf </li></ul>S...
Out of stock example   inkjet cartridge © 2006  T3Ci All rights reserved <ul><li>Lack of front / back visibility </li></ul...
Out of stock example   inkjet printer © 2006  T3Ci All rights reserved Retail Link PI T3PI <ul><li>Infrequent cycle counti...
Magnitude of the Phantom Inventory problem <ul><li>Store Perpetual Inventory (PI) is more often  in accurate than accurate...
Learnings from the T3Ci user group <ul><li>OEM Intervention Pilots are showing real value </li></ul><ul><ul><li>~50+% redu...
HP’s plan going forward   Utilize reports <ul><li>Shift the conversation from HP perf to collaboration on all drivers </li...
Conclusions <ul><li>There are business applications in FMCG for RFID that can provide real value to OEM’s </li></ul><ul><l...
Conclusions <ul><li>Retailers setting up a RFID program need to consider the collaborative business process with suppliers...
Questions
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Maximizing the Return From RFID - Making the Most of Mandates

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Maximizing the Return From RFID - Making the Most of Mandates

  1. 1. RFID and the potential channel opportunities
  2. 2. The World’s Top Brands Use T3Ci – The Leaders in RFID Analytics and Applications <ul><li>30+ customers – Including 5 of top 7 CPG Companies </li></ul><ul><ul><li>Leaders in CPG, Food and Bev, Consumer Health, Toys, Electronics </li></ul></ul><ul><li>Leading edge work at customers </li></ul><ul><ul><li>Promotions, Out of Stock, Collaborative Business Processes </li></ul></ul><ul><li>Awards/Recognition – AMR, CGT, Managing Automation.. </li></ul><ul><li>T3Ci is the de facto standard in RFID analytics (AMR Survey) </li></ul><ul><li>T3Ci has Grown 200% Per Year Since Inception and Holds >75% Market Share in Companies Over $5B </li></ul>June 2007 © 2007 T3Ci All rights reserved
  3. 3. HP Today $19B IT infrastructure business: servers, storage & software $16B services business; consulting, support & outsourcing $29B access devices business #1 personal computers #1 in mobile computing #1 in pocket pc #1 in PDA manufacturing $27B imaging and printing business #1 in inkjet printers #1 in laser printers #1 in wide-format plotters #1 in all-in-one devices #1 in print servers #1 in UNIX® servers #1 in fault-tolerant servers #1 in Windows®-based IA-32 servers #1 in Linux®-based servers #1 in enterprise storage <ul><ul><li>#1 mission-critical infrastructure services </li></ul></ul><ul><ul><li>#1 services for open IT environments </li></ul></ul><ul><ul><li>#1 enterprise-ready Microsoft integration & support services </li></ul></ul>
  4. 4. HP RFID Geographic Scope May 28, 2010 Commercial sites Retail sites 33 sites now RFID capable
  5. 5. Areas of Focus… <ul><li>Simpler registration </li></ul><ul><li>Product Regionalization practical </li></ul><ul><li>Config auto @ PCC </li></ul><ul><li>Automatic Reflash </li></ul><ul><li>Distribution security </li></ul><ul><li>Retail security </li></ul><ul><li>Counterfeit protection </li></ul><ul><li>Save time in assembly </li></ul><ul><li>Automate lower-level receiving and part tracking </li></ul><ul><li>Shipping automation </li></ul><ul><li>Inventory control </li></ul><ul><li>Automate lower-level receiving/ part tracking </li></ul><ul><li>Proper FIFO </li></ul><ul><li>Product completion improvement </li></ul><ul><li>Product recalls </li></ul><ul><li>Shipment tracking </li></ul><ul><li>Theft control </li></ul><ul><li>Counterfeit protection </li></ul><ul><li>Out of Stock </li></ul><ul><li>Promo Management </li></ul><ul><li>Claims reconciliation </li></ul><ul><li>Shrinkage </li></ul><ul><li>Auto check-out </li></ul><ul><li>Real-time pricing </li></ul><ul><li>Returns Processing </li></ul><ul><li>Correlating return to warranty terms </li></ul><ul><li>Recycling </li></ul>Product Features Production Distribution Shipping Retail Post Sale
  6. 6. Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the store Factory DC DC Store Products Payments Near term project: - OOS reporting - Promo reporting Long term opportunities: - Reduce OOS - Improve Promo compliance - Improve Promo design - Improve store stocking - Improve store forecasting - Improve product rolls Retailer
  7. 7. Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the store Factory DC DC Store Products Payments Near term project: - OOS reporting - Promo reporting Long term opportunities: - Reduce OOS - Improve Promo compliance - Improve Promo design - Improve store stocking - Improve store forecasting - Improve product rolls Retailer
  8. 8. Proof of Delivery reconciliation The size of the problem <ul><li>POD claims are increasing in quantity & cost to HP </li></ul><ul><li>Process is time consuming & expensive </li></ul><ul><li>Case is difficult to prove </li></ul>*Data is only of reason codes that RFID could help (i.e. documentation issues, etc.). POD* driven Credit Requests (volume) for IPG NA 2005 2006 Total Requests Requests Paid + 56% + 24%
  9. 9. Proof of Delivery reconciliation How RFID helps <ul><li>Visibility into Retailer network (DC & Store) </li></ul><ul><li>How it will work.. </li></ul><ul><ul><li>HP sends SN# information in the ASN with each shipment </li></ul></ul><ul><ul><li>When a claim is made </li></ul></ul><ul><ul><ul><li>The HP Claims will utilize a T3Ci analysis portal to search for EPC’s (linked to SN#’s) from that shipment </li></ul></ul></ul><ul><ul><ul><li>The analysis portal will create a read report which we will then include in our response </li></ul></ul></ul><ul><li>Working thru process internally & with retailer to turn this on in coming months… </li></ul>
  10. 10. Focus areas with channel <ul><li>1. Closing the loop on the delivery & payment </li></ul>2. Improving performance in the store Factory DC DC Store Products Payments Near term project: - OOS reporting - Promo reporting Long term opportunities: - Reduce OOS - Improve Promo compliance - Improve Promo design - Improve store stocking - Improve store forecasting - Improve product rolls Retailer
  11. 11. The next frontier of Retail collabortion Store operational performance       <ul><li>No/Limited visibility across the partners </li></ul><ul><li>High volatility & poor availability </li></ul><ul><li>High Inventory </li></ul><ul><li>Strong collaboration at regional level: - SDM for run rate volume via CPFR - Deal / Promo management </li></ul><ul><li>Consistent, good availability </li></ul><ul><li>Improved inventory turns </li></ul><ul><li>Strong collaboration into the stores to manage on-shelf availability </li></ul><ul><li>Refinement of promos / deals based on improved visibility & access </li></ul><ul><li>Great availability </li></ul><ul><li>World class inventory mgmt </li></ul>Buy/Sell relationship Regional Collaboration Store collaboration 1985 1998 2007 2015
  12. 12. Convergence of technologies is enabling this shift <ul><li>Detailed daily store/SKU data visibility </li></ul><ul><ul><li>Inventory levels & movements </li></ul></ul><ul><ul><li>Sell thru & pricing </li></ul></ul><ul><ul><li>Promo details </li></ul></ul><ul><li>RFID for in-store locational visibility </li></ul><ul><li>Sophisticated & dedicated analysis tools </li></ul><ul><li>Store level Insights to take action on </li></ul><ul><li>Promo compliance & performance* </li></ul><ul><li>Out of Stock* </li></ul><ul><li>Promo design </li></ul><ul><li>Store stocking </li></ul><ul><li>Store forecasting </li></ul><ul><li>Product rolls </li></ul>Near term focus Backroom RFID Read locations Sales Floor
  13. 13. Context setting Enablers of the next frontier.. Value Enablers    Improving Promo compliance RFID (front / back vis) Store Ops data (Inv, Sell thru +) Customized Analysis Tools Reducing Shelf Out of Stocks    Improving Promo design    Improving store stocking _   Improving store forecasting _   Improve product rolls _   Key enabler  Incremental value  Not needed for value _
  14. 14. Promotion Effectiveness <ul><li>Promo Compliance is the #1 RFID application because… </li></ul><ul><li>Timely arrival to the sales floor is key to maximizing lift but.. </li></ul><ul><li>Avg store performance to the start date is not great  ~50% </li></ul><ul><li>Front/back visibility from RFID enables OEM’s to: </li></ul><ul><ul><li>Take action on stores that aren’t moving it out </li></ul></ul><ul><ul><li>Understand the ‘perfect’ lift vs. avg performance </li></ul></ul><ul><ul><li>Determine how to better position promos at retailer </li></ul></ul>
  15. 15. Results from our pilot (inkjet printer) <ul><li>HP Compliance appears to be much better than avg </li></ul><ul><li>The performance delta between good performing stores & poor ones is material </li></ul>© 2005 T3Ci All rights reserved © 2005 T3Ci All rights reserved <ul><li>For the 45 stores executing correctly </li></ul><ul><ul><li>140% lift (1.7  4.2 units / wk) </li></ul></ul><ul><ul><li>48% sell thru of the promo qty </li></ul></ul><ul><li>For 25 stores with late to floor displays </li></ul><ul><ul><li>38% Lift (1.8  2.5 units / wk) </li></ul></ul><ul><ul><li>21% sell thru of the promo qty </li></ul></ul>
  16. 16. Learnings from other OEM’s <ul><li>OEM Intervention Pilots are showing real value </li></ul><ul><ul><li>~30% improvement in compliance </li></ul></ul><ul><li>OEM Merchandiser initiated action is a major constraint </li></ul><ul><ul><li>Only companies that are seeing value from interventions are those which visit a store at a minimum of once / week </li></ul></ul><ul><li>This intervention model needs to be changed to a remote alert approach to provide value beyond top CPG players.. </li></ul>
  17. 17. © 2005 T3Ci All rights reserved May 28, 2010 © 2005-2006 T3Ci All rights reserved HP’s plan going forward Utilize reports <ul><li>Support management of promo to the floor (where feasible) </li></ul><ul><li>Collaborate with Retailer on Promo performance drivers / issues </li></ul><ul><li>Gain much better understanding on Promo lift drivers </li></ul>
  18. 18. Shelf Out of Stock <ul><li>Largest opportunity to improve is in the ‘last 100 yds’  getting it to the shelf </li></ul>Study details : Products / stores: 400 stores and 42 HP products time period: ~200 days HP Out of Stock levels 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Ink Cons HW % store / product days lost Legend Shelf OOS 5.5% 4.2% Phantom Inv. 1.3% 3.1% Replen Settings 1.2% 0.6% Delayed Delivery Blocked Replen Shelf & Phantom 2.6% 1.9% Shelf OOS Phantom Inventory
  19. 19. Out of stock example inkjet cartridge © 2006 T3Ci All rights reserved <ul><li>Lack of front / back visibility </li></ul><ul><li>“ Dressing of shelves” </li></ul><ul><li>Mechanical planning system </li></ul>Sustained ‘hidden’ Out of Stock
  20. 20. Out of stock example inkjet printer © 2006 T3Ci All rights reserved Retail Link PI T3PI <ul><li>Infrequent cycle counting </li></ul><ul><li>Dis-incentive to adjust inventory </li></ul><ul><li>Mechanical planning system </li></ul><ul><li>Phantom inventory </li></ul><ul><ul><li>If high enough can block replenishment </li></ul></ul>Phantom Inventory Store finally adjusts On Hand by -1 to correct problem
  21. 21. Magnitude of the Phantom Inventory problem <ul><li>Store Perpetual Inventory (PI) is more often in accurate than accurate </li></ul><ul><li>Only takes a small PI error to impact auto-replenishment for our products </li></ul><ul><li>Analysis indicates that ~30% of our store/product combos have errors large enough to cause problems </li></ul>© 2006 T3Ci All rights reserved Study: 370 stores / 10 products Date: April 1 st , 2006 Hidden inventory Phantom inventory 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2 1.5 1 0.5 0 0.5 1 1.5 2 2.5 3 PI Error (WOS) % of stores Hidden inventory Phantom inventory Esimate from Data Analysis Pilot ( Printers & Scanners) Actuals from a formal cycle count (Desktop PC)
  22. 22. Learnings from the T3Ci user group <ul><li>OEM Intervention Pilots are showing real value </li></ul><ul><ul><li>~50+% reduction in phantom inventory </li></ul></ul><ul><ul><li>~20% reduction in backroom inventory issues </li></ul></ul><ul><li>A large portion of these problems can be deduced via sophisticated ‘event mgmt’-esque data analytics </li></ul><ul><ul><li>Several players are extending the use of these techniques beyond the enabled network </li></ul></ul>
  23. 23. HP’s plan going forward Utilize reports <ul><li>Shift the conversation from HP perf to collaboration on all drivers </li></ul><ul><li>Get commitment from Retailer to take action on the data themselves or enable us to effect via remote alerts </li></ul>© 2005 T3Ci All rights reserved
  24. 24. Conclusions <ul><li>There are business applications in FMCG for RFID that can provide real value to OEM’s </li></ul><ul><li>The big opportunity this work has turned up is the potential to extend the OEM / retailer collaboration to the store level </li></ul><ul><ul><li>See big opportunities long term to be more sophisticated in our interactions </li></ul></ul><ul><li>Getting there requires: </li></ul><ul><ul><li>Daily store level data visibility being shared </li></ul></ul><ul><ul><li>Collaborative business processes to be worked out to drive action </li></ul></ul><ul><li>This future state is getting defined now by the early adopters, so get in soon if you want to impact it.. </li></ul>
  25. 25. Conclusions <ul><li>Retailers setting up a RFID program need to consider the collaborative business process with suppliers – what role each party will play </li></ul><ul><li>RFID data is just one signal needed in data sharing – retailers also should provide daily POS, inventory, orders, etc – RFID data does not stand alone </li></ul><ul><li>RFID does not have to be an all or nothing proposition – it should be considered for a category/dept where it has high value uses – and that area can be instrumented by itself. </li></ul>
  26. 26. Questions

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