RFID Migration Strategies:  The Key to Electronic Product Code Michael Dominy Director, Enterprise Services The Yankee Gro...
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
RFID Basics: Data and Processes 4 2 ERP/SCM Apps 3 1 1 Tags, Readers, LAN, WLAN, Software Server and Database B2Bi Retaile...
RFID Basics: Technologies <ul><li>Tags (chips) </li></ul><ul><li>Readers </li></ul><ul><li>Network  (LAN or WLAN) </li></u...
EPC RFID Spending on Technology and Services Source: The Yankee Group, 2004 0 500,000 1,000,000 1,500,000 2,000,000 2,500,...
RFID Basics:  The Opportunity <ul><li>Reduce inventories $117-$293 billion  </li></ul><ul><li>Increase sales $83-$166 bill...
RFID Basics: Key Decision Points Source: The Yankee Group, 2004
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
Implementation Strategies Source: The Yankee Group, 2004 RFID at all distribution centers with selective tagging in manufa...
Implementation Strategies  Across Verticals Survey of 309 enterprises. Source: The Yankee Group, 2004
Industry Implementation Strategies: Survey Says… Survey of 309 enterprises. Source: The Yankee Group, 2004 Conservative Co...
<ul><li>Compliance (1-3 distribution centers) </li></ul><ul><li>Conservative (4+ distribution centers) </li></ul><ul><li>C...
SAP Users Implementation Strategies: Survey Says… Source: The Yankee Group, 2004 Survey of 76 SAP Users.
Industry Implementation Strategies: Survey Says… Survey of 309 enterprises. Source: The Yankee Group, 2004 Conservative Co...
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
Costs and Risks Source: The Yankee Group, 2004 <ul><li>Slow adoption </li></ul><ul><li>Changing requirements  </li></ul><u...
Planned RFID Spending Source: The Yankee Group, 2004 Survey of 309 enterprises.
<ul><li>0  </li></ul><ul><li>>$1 million </li></ul><ul><li>$1–$3 million </li></ul><ul><li>$3+ million </li></ul>Hosted by...
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
RFID Benefits Continuum Degree of Collaboration and Linkage Between Planning and Execution  Benefit Opportunity Low High H...
Benefits Source: The Yankee Group, 2004 <ul><li>Volume discounts/ leverage with vendor </li></ul><ul><li>Identify internal...
Benefits: Gaining Value from RFID Supply Chain Partner 1 Supply Chain Partner n Transactions (EDI, XML,…) RFID Data Analyz...
Will RFID deliver ROI? <ul><li>Yes, for the extended supply chain but not my  operations </li></ul><ul><li>Yes, for the ex...
Benefits: Survey Says… Most (57%) of SAP Users See ROI in RFID Source: The Yankee Group, 2004
Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li...
Best Practices  <ul><li>Get started now! Set-up a RFID lab </li></ul><ul><li>Target problem areas </li></ul><ul><li>Begin ...
Yankee Group Recommendations <ul><li>Use RFID to establish a supply chain road map </li></ul><ul><ul><li>From “chains” to ...
Thank You! [email_address]
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RFID migration strategies: The key to Electronic Product Code

  1. 1. RFID Migration Strategies: The Key to Electronic Product Code Michael Dominy Director, Enterprise Services The Yankee Group October 21, 2004
  2. 2. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  3. 3. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  4. 4. RFID Basics: Data and Processes 4 2 ERP/SCM Apps 3 1 1 Tags, Readers, LAN, WLAN, Software Server and Database B2Bi Retailer Manufacturer Supplier Source: The Yankee Group, 2004
  5. 5. RFID Basics: Technologies <ul><li>Tags (chips) </li></ul><ul><li>Readers </li></ul><ul><li>Network (LAN or WLAN) </li></ul><ul><li>Reader and network Software </li></ul><ul><li>Integration software to database </li></ul><ul><li>Database </li></ul><ul><li>Integration software to applications </li></ul><ul><li>Data communication software/services </li></ul>PML Server ERP Applications (Inv., SCM, Planning) ONS Server Reader Network Savant SCE Applications (WMS and TMS) EPC RFID Tagged Pallet and Cases Source: EPC Global
  6. 6. EPC RFID Spending on Technology and Services Source: The Yankee Group, 2004 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2004 2005 2006 2007 2008 Cost (in Thousands of U.S. Dollars) $0.30 $0.18 $0.09 $0.05 Applicators Scanners WLAN Database Middleware Services Tags As tag costs decline and adoption increases, the RFID market will reach $4.2 billion by 2008 Cost per Tag
  7. 7. RFID Basics: The Opportunity <ul><li>Reduce inventories $117-$293 billion </li></ul><ul><li>Increase sales $83-$166 billion </li></ul><ul><li>How? </li></ul><ul><ul><li>Connecting, collaborating and synchronizing with the extended supply chain </li></ul></ul><ul><li>RFID as a key enabler for improved SCM </li></ul>Source: The Yankee Group, 2004
  8. 8. RFID Basics: Key Decision Points Source: The Yankee Group, 2004
  9. 9. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  10. 10. Implementation Strategies Source: The Yankee Group, 2004 RFID at all distribution centers with selective tagging in manufacturing Basic RFID capabilities at all (typically 4-7) distribution centers Minimal RFID at limited locations (typically 1-3) distribution centers Committed Conservative Compliance
  11. 11. Implementation Strategies Across Verticals Survey of 309 enterprises. Source: The Yankee Group, 2004
  12. 12. Industry Implementation Strategies: Survey Says… Survey of 309 enterprises. Source: The Yankee Group, 2004 Conservative Committed
  13. 13. <ul><li>Compliance (1-3 distribution centers) </li></ul><ul><li>Conservative (4+ distribution centers) </li></ul><ul><li>Committed (ALL distribution centers and some implementation in manufacturing) </li></ul><ul><li>No plans to implement RFID </li></ul>Hosted by What best describes your RFID implementation or migration strategy?
  14. 14. SAP Users Implementation Strategies: Survey Says… Source: The Yankee Group, 2004 Survey of 76 SAP Users.
  15. 15. Industry Implementation Strategies: Survey Says… Survey of 309 enterprises. Source: The Yankee Group, 2004 Conservative Committed Compliance
  16. 16. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  17. 17. Costs and Risks Source: The Yankee Group, 2004 <ul><li>Slow adoption </li></ul><ul><li>Changing requirements </li></ul><ul><li>Technology changes </li></ul><ul><li>Typical cost: >$30 million </li></ul><ul><li>Invest too broadly and quickly—“pioneer” </li></ul><ul><li>Multiple expansion projects as volume rises unevenly </li></ul><ul><li>Typical cost: $7-$10 million </li></ul><ul><li>Unable to meet increasing volume requirements (capacity) </li></ul><ul><li>Longer lead times </li></ul><ul><li>Increased logistics costs (intranetwork transfers) </li></ul><ul><li>Typical cost: $1-$2 million </li></ul>Costs and Risks Committed Conservative Compliance
  18. 18. Planned RFID Spending Source: The Yankee Group, 2004 Survey of 309 enterprises.
  19. 19. <ul><li>0 </li></ul><ul><li>>$1 million </li></ul><ul><li>$1–$3 million </li></ul><ul><li>$3+ million </li></ul>Hosted by How much do you plan to spend on RFID in 2005?
  20. 20. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  21. 21. RFID Benefits Continuum Degree of Collaboration and Linkage Between Planning and Execution Benefit Opportunity Low High High <ul><li>Reduce labor in DC operations </li></ul><ul><li>Improve yard management </li></ul><ul><li>Improve inventory management and asset management </li></ul><ul><li>Improve promotion effectiveness </li></ul><ul><li>Improve freshness/reduce obsolescence </li></ul><ul><li>Improve extended SCM </li></ul><ul><li>Improve on-shelf availability </li></ul><ul><li>Invoice matching </li></ul><ul><li>Processing efficiencies </li></ul><ul><li>In-transit visibility </li></ul><ul><li>Reduce shrink </li></ul><ul><li>Improve deduction management </li></ul>RFID Improving Internal Supply Chain Execution RFID Improving Extended Supply Chain Execution RFID Driving Collaborative Planning and Execution Source: The Yankee Group, 2004
  22. 22. Benefits Source: The Yankee Group, 2004 <ul><li>Volume discounts/ leverage with vendor </li></ul><ul><li>Identify internal savings: </li></ul><ul><li>— Logistics cost </li></ul><ul><li>— Inventory </li></ul><ul><li>— Demand planning </li></ul><ul><li>— Supply planning </li></ul><ul><li>— Revenue </li></ul><ul><li>Conserve capital </li></ul><ul><li>Defer committing to a particular technology vendor </li></ul><ul><li>Hedge against additional customer requirements </li></ul><ul><li>Small labor savings </li></ul><ul><li>Minimize capital expenditures </li></ul><ul><li>Minimize operational impact </li></ul><ul><li>Minimal (if any) operational benefits </li></ul>Benefits/Advantages Committed Conservative Compliance
  23. 23. Benefits: Gaining Value from RFID Supply Chain Partner 1 Supply Chain Partner n Transactions (EDI, XML,…) RFID Data Analyze, Model, Redesign, Execute Extended Supply Chain Flows The sooner you implement technology that enables you to understand inter-enterprise supply chain flows, the faster you can improve the flow of goods through the supply chain Source: The Yankee Group, 2004
  24. 24. Will RFID deliver ROI? <ul><li>Yes, for the extended supply chain but not my operations </li></ul><ul><li>Yes, for the extended supply chain and my operations </li></ul><ul><li>Yes, for my operations but not the extended supply chain </li></ul><ul><li>No, ROI for my operations or the extended supply chain </li></ul><ul><li>Don’t know </li></ul>Hosted by
  25. 25. Benefits: Survey Says… Most (57%) of SAP Users See ROI in RFID Source: The Yankee Group, 2004
  26. 26. Agenda <ul><li>RFID Basics </li></ul><ul><li>Implementation Strategies </li></ul><ul><li>Costs and Risks </li></ul><ul><li>Benefits </li></ul><ul><li>Best Practices </li></ul>
  27. 27. Best Practices <ul><li>Get started now! Set-up a RFID lab </li></ul><ul><li>Target problem areas </li></ul><ul><li>Begin with a manageable project </li></ul><ul><li>Look beyond “generic” benefits </li></ul><ul><li>Put ROI in perspective </li></ul><ul><li>Ask, “What if…?” </li></ul><ul><li>Develop a business and migration road map </li></ul>Source: The Yankee Group, 2004
  28. 28. Yankee Group Recommendations <ul><li>Use RFID to establish a supply chain road map </li></ul><ul><ul><li>From “chains” to “networks” </li></ul></ul><ul><li>View RFID as one element of your wireless supply chain strategy </li></ul><ul><li>Turn to the right migration manager: </li></ul><ul><ul><li>Who understands supply chain networks? </li></ul></ul><ul><ul><li>Who understands RFID and complementary wireless technologies? </li></ul></ul><ul><ul><li>WHO DO YOU TRUST? </li></ul></ul><ul><li>Use best practice selection and decision processes for selecting vendors </li></ul>Next-generation SCM marries traditional and wireless supply chains
  29. 29. Thank You! [email_address]

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