The document discusses the challenges and advancements in supply chain management, particularly emphasizing the role of technology like RFID in enhancing efficiency, visibility, and sustainability. It outlines current supply chain dynamics, the impact of globalization, and various technological applications that can improve operational efficiency and reduce costs. The presentation aims to prepare stakeholders for future developments and the importance of strategic investment in technology to optimize supply chain processes.

1. Driving Value to the Next Generation Supply Chain through Technology - What Next? for GS1 Malaysia Supply Chain Conference 2008 12 th August 2008 presented by Richard Sebastian Research Analyst, Auto ID Group - RFID, APAC

2. Who We Are Frost & Sullivan is a global growth consulting company that partners with clients to support the development of innovative growth strategies. For more than 40 years , we have leveraged our comprehensive market expertise to serve an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community. We offer industry research and market strategies, provide growth consulting and corporate training, and support clients to help grow their businesses.

4. Agenda Business and Supply Chain Dynamics Today Supply Chain Technology Involvement in the Region Enabling Silent Commerce in the Supply Chain Silent Commerce in Retail Supply Chain Outlook

5. Business Environment Today Business Dynamics Lower Cost Branding Competitive Fast Moving Market Higher Quality of Service Volatile Rising Profitability Demands Sourcing & Retaining Human Capital Demanding Policies & Regulations

6. Competitive Trends in Global Supply Chain Global Challenges How is Your Company’s Supply Chain Coping? Supply Chain Today Price Deflation Raw Material Cost Globalization Integrity & Security Visibility Quality of Service Environmental Regulations

7. Supply Chain Initiatives (Examples) Direction Lean 6 Sigma Collaboration Brief Info Create flow and eliminate waste (lean) + improve process capability and remove variation (6 Sigma) Mostly manufacturing (lean) + all business processes (6 Sigma) Strong enabler towards improving efficiency and driving cost down for operations To reach a common consensus to achieve overall goals in an increasingly distributed environment All stakeholders in the supply chain Enabler towards achieving greater visibility, time to market products, higher security and integrity, new product development and lower costs Using energy efficiently and reducing environmental waste to ensure greener environment al protection and sustainability All stakeholders in the supply chain Enabler towards achieving environmental protection and sustainability, and complying with stricter environmental regulations Green Supply Chain

8. Supply Chain Initiatives (Examples) Direction Integrity & Security Brief Info To ensure the authenticity, quality and efficient delivery of products as it passes through the entire supply chain All stakeholders in the supply chain Enabler towards data integrity with partners, and reducing risk of diversion or counterfeiting of goods with better visibility Low Cost Sourcing Outsourcing vs. Insourcing – managing relationships, external risk management, redefining core competencies All stakeholders in the supply chain Reducing overhead costs but ensuring QoS is always high

9. Agenda Business and Supply Chain Dynamics Today Supply Chain Technology Involvement in the Region Enabling Silent Commerce in the Supply Chain Silent Commerce in Retail Supply Chain Outlook

10. Supply Chain Performance 1970 2010 RFID 10 year milestone Evolution of Technologies in Supply Chain Material Resources Planning Enterprise Resources Planning Advance Planning and Scheduling Bar coding System GPS Manual tracking Fax Vendor Management System Fleet Management System Warehouse Management System

11. Logistics Technologies Currently Being Used by End-Users (Overall ASEAN 4) Note: ASEAN 4 consists of 4 countries which are Malaysia, Singapore, Indonesia and Thailand Warehouse Management and Bar Coding System is the widely used technology in facilitating logistics process More than half of the end-users are yet to adopt the Transportation Planning / Fleet Management System Close to 80% of end-users are not using RFID technology, mainly due to the high initial costs for setting up the system ERP software and GPS / Vehicle Tracking System are being used by about 35 - 40 % of the end-users

12. Future Technology Investment Plans of End-Users (Next 12 Months, Overall ASEAN 4) ** Percentages compute based on the responses from end users who currently were not adopting such technology Bar Coding System is the most sought after technology Adoption of RFID / Smart Labeling System expected to increase at faster pace in near future GPS / Vehicle Tracking Systems are beginning to gain acceptance among the end-users

13. ERP, MRP & APS System Fleet/Warehouse MS Barcode, RFID & GPS Advanced Logistic Technologies Increase supply chain efficiency Logistics Costs Reengineer supply chain Consultation from LSPs Engage new LSPs Initiatives to reduce logistic costs Used of advance technologies Average Logistics Cost Currently incurred in ASEAN 4 countries: 14.4% 14.4% Advanced Technologies + Initiatives = Lower Operational Costs ** LSP refers to Logistics Service Providers

14. Agenda Business and Supply Chain Dynamics Today Supply Chain Technology Involvement in the Region Enabling Silent Commerce in the Supply Chain Silent Commerce in Retail Supply Chain Outlook

15. Just two and a half square centimeters will decisively alter the future of supply chain management (EPCglobal)

16. RFID Technical Benefits RFID No line of sight Long read range Multiple reads Rewritable Large memory storage Automated Sensor capable Barcode Line of sight Short read range Singe reads 1 time write Limited memory Human labor needed Non-sensor capable

17. RFID Business Benefits Increased efficiency Reduced cost Increased productivity Increased resource utilization Increased flexibility and efffectiveness Avoiding or reducing delays and latency Timely project execution and delivery Improved delivery system Improved safety Efficient reverse logistics Real-time, dynamic track and trace Complete and real-time visibility Complete and real-time accuracy Improved quality of life Greener environment Streamlined logistics network Reduced (elimination) of manual handling, processes and activities Reduced inventory holding, storage and handling cost Benefits Capabilities

18. Value of Real Time Information What is the value of WSJ dated 1 month ago ? What is the value of WSJ dated yesterday ? What is the value of WSJ dated today ? What is the value of WSJ dated tomorrow ?

19. Supply Chain Behavior Today – The ‘Bull-Whip Effect’ Source: Auto-ID Labs @ MIT Variability can be up to 10X or more between manufacturer and retailer! “ Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies excessive inventory investment, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedules.” (Hau Lee et al.)

20. The Bull-Whip Effect with RFID Source: Auto-ID Labs @ MIT Variability difference in the supply chain is significantly less with better visibility

21. Agenda Business and Supply Chain Dynamics Today Supply Chain Technology Involvement in the Region Enabling Silent Commerce in the Supply Chain Silent Commerce in Retail Supply Chain Outlook

22. Manufacturer Transportation Store Operations Retail Example: Retail Supply Chain – Core Segments Supplier RFID has potential to Optimize and Streamline Entire Operations … Warehouse & Distribution + Involves several segments along the supply chain before product reaches the consumer Susceptible to various internal and external challenges that could jeopardize a proficient operational paradigm

23. Manufacturer Transportation Store Operations Design Partner Component Supplier Raw Material Supplier Contract Manufacturer Retail Customer Large Retail Customer Store Operations Transportation Manufacturer Manufacturer Warehouse & Distribution Transportation Store Operations Small Cross Supply Network Activities Retail Supply Network – Reality Complex SCM due to multi-faceted relationships So, what is RFID’s role here? Warehouse & Distribution Warehouse & Distribution + + + Large Retail Customer Right Product Right Place Right Time Right Customer Right Condition +

24. RFID Applications – Cross Functional Activities Security & Collaboration The unique ID of the EPC in the RFID tag ensures authenticity of products moving along the supply chain is not compromised. Shrinkage can be detected immediately based on pro- active alerts leveraging on business intelligence in the RFID system. The EPCIS network enables stakeholders to securely share private data of tagged goods. Supply/Demand Planning & Replenishment Forecasting Real time visibility enables supply side to have accurate information on what is actually available for more precise replenishment of products. The demand side able to monitor entire movement of goods such as sales, damage, theft making projection of demand more accurate.

25. RFID Applications – Manufacturers and Suppliers Procurement & Materials Storage Manufacturers are able to better manage the raw materials received from the suppliers thus improving operational efficiency with RFID. Case or pallet level tagging of raw materials from supplier can ensure required materials are received on time, and at the same time ensure storing and retrieving it at the plant is done rapidly. Production Tracking of goods as it flows through the manufacturing floor can aid in pin-pointing and resolving bottlenecks. As goods in work-in-progress inventory becomes finished goods, RFID applications can automatically trigger downstream transportation. Real time connectivity can ensure planners and schedulers can respond instantaneously to demand conditions from the consumer end thus reducing the need for safety stocks.

26. RFID Applications – Warehouse and Distribution Receiving & Check-In Inventory is automatically updated for tagged pallets and cases as it reaches the distribution center. All tagged goods received will be cross-checked with the purchase order to ensure any potential discrepancies is swiftly identified. Labor intensive manual based quantity checks can be eventually eliminated. Exception Product Location Goods which are potentially harmful or require special care can be detected immediately when scanning the pallets or cases. Information can be relayed to the personnel in charge to take specific precautions when handling such goods. This will ensure quality of product and consumer safety is never undermined.

27. RFID Applications – Transportation Electronic Seal Specially designed seals embedded with RFID to be used to lock containers. The e-seal will cease to operate once it has been tampered with. This will effectively make any form of tampering, theft or sabotage on the goods inside the container known early on. Security checks at customs checkpoints can also be decreased with swifter processing. Cold Chain Sensor RFID tags will enable constant temperature monitoring of goods being transported. High temperature variability can be detected immediately and necessary actions can be taken to protect this perishable goods.

28. RFID Applications – Store Operations and Retail Receiving Pallet and case level tagging will be able to update the inventory system accurately during the receiving process. Data can also be relayed to other parties in the supply chain on exact status of the batches received. Overall store labor productivity can be improved besides increasing inventory accuracy. Point of Sale Products tagged with RFID can enable a swifter checkout as total bill is automatically calculated at POS as no line of sight is required. The use of RFID at item level can heighten the overall customer satisfaction level.

29. Agenda Business and Supply Chain Dynamics Today Supply Chain Technology Involvement in the Region Enabling Silent Commerce in the Supply Chain Silent Commerce in Retail Supply Chain Outlook

30. RFID in the Supply Chain Today – Asia Pacific Refers to the present state in July 2008 4-7% 8-15% 10-18% 20-25% 25-30%

31. Conclusion Managing the supply chain will continue to become more challenging … Technology to play an even more significant role in the supply chain of the future Stakeholders will need to identify all forces before implementing the relevant strategies Thorough understanding of technology needed to fully capitalize and transform it into meaningful business strategies Top-down management approach needed to transform supply chain IT into a ‘Business Technology’ All parties (technology providers + SCM stakeholders) need to be prepared for a long term commitment at enterprise level initiatives to ensure final goal is achieved

32. Extra References – Potential Applications by Segment Production Tracking Procurement & Material Storage Supplier & Manufacturer Cross Functional Activities Asset Tracking Safety Stock Inventory Security & Collaboration Batch Item Tracking Supply / Demand Planning Loss Prevention Exception Product Location Shipping Put-away & Replenishment Order Selection Receiving & Check-in Warehouse & Distribution Cold Chain Routing & Demurrage Electronic Seal Contract Compliance Yard Management Transportation Automated Payment Self Manage Kiosk Point of Sale Security Exception Handling Receiving Store Operations & Retail

33. Thank You