Business Consulting Services. RFID The Next Evolution Where Do We Go From Here. M.D. (Mike) Lagasse RFID Competency Leader. deeper

Transcription

1 RFID The Next Evolution Where Do We Go From Here M.D. (Mike) Lagasse RFID Competency Leader deeper

2 RFID The Next Evolution Where Do We Go From Here Introduction to RFID It will probably become more ubiquitous than bar codes, in decades to come - - simply because it is the difference between being blind and being able to see. Kevin Ashton, Executive Director, Auto-ID Centre RFID: The Journey So Far RFID: The Road Ahead - Healthcare - Item Level for CPG-Retail - Industrial Applications

3 What is Radio Frequency Identification (RFID)? RFID technology is a means of identifying a unique object or a person using a radio frequency transmission RFID tags can be programmed to receive, store and transmit information such as serial numbers, place of assembly or personal information such as healthcare records. Strategic and economic benefits of RFID include: - Increase data security and integrity - Provide more accurate information about the location of goods and people - Automate and speed processes - Tighten controls through manufacturing or distribution supply chain, including reduction and shrinkage - Improve productivity - Expedite transaction processing no line of sight required - Improve product visibility see products, perhaps in realtime - Enable triggered activities replenishment, mfg. operations, alarms, etc. - Identify discrete items (and link to information) track & trace, authentication, promotions RFID Gate at METRO Innovation Centre RFID tags on the D of a dime RFID is not a stand alone solution or service offering, but rather a key enabler to current and envisioned initiatives within the value chain

4 Evolution Towards The EPC Vision 1 Internal EPC Network 2 Trading Partner to Trading Partner EPC Network 3 Industry wide EPC Network EPC 3 Information Service (PML/ONS) EPC Information Query on an EPC Tag EPC Information EPC Information EPC Information Manufacturer EPC Information EDI Transactions Distributor, 3PL, Contract Manufacturer EPC Information EDI Transactions Retailer/ Customer RFID provides an open environment that facilitates collaboration among many business partners in the product value chain

5 RFID The Next Evolution Where Do We Go From Here Introduction to RFID RFID: The Journey So Far Our expectation is to have our top 100 suppliers utilizing RFID at the case and pallet level of products by January Linda Dillman, CIO, Wal-Mart RFID: The Road Ahead - Healthcare - Item Level for CPG-Retail - Industrial Applications

6 Collaboration and operational excellence is high on the agenda across manufacturers, logistic providers, and retailers Business Priorities Expect shorter delivery times to support virtual / real-time inventory management Pay-on-scan implicates better visibility to in-transit inventory Collaborate across the value chain Drive operational excellence Build consumer loyalty Transform the consumer shopping experience Drive Revenue Improve on shelf availability Improve promotional execution Reduce shrink throughout the value chain Reduce product obsolescence Reduce Costs Reduce system-wide inventory Reduce cost-to-serve

7 Several initiatives underway that are driving broader RFID adoption Strong Suggestions June 11, Wal-Mart CIO mandates that top 100 suppliers put RFID tags on all pallets and cases by January 1, All suppliers by January 1, 2006 September 15, 2003 US Department of Defense mandates their top suppliers should label goods with RFID tags by January 2005 November 6, 2003 Tesco announces it will have RFID infrastructure in all UK stores (approx. 1000) by end of Selected suppliers (by size at category) will be required to RFID tag pallets and cases by September All suppliers must use RFID by the end of January 13, METRO Group will roll out RFID across four of its six divisions in November This initiative signifies a production environment that involves more than 35% of METRO s stores, compared to Wal-Mart s 5%. February 20, 2004 Target (4th US retailer) announces mandate for top 100 suppliers to begin using RFID by late spring, 2005, with all suppliers using by March 5, 2004 Albertson's (Large US Grocer) announces mandate for top 100 suppliers to begin using RFID on case and pallet level shipments by April, 2005 Wal-Mart s mandate to use barcode technology helped drive adoption of the barcode from ~15,000 suppliers in 1984 to ~75,000 suppliers by 1987 we can expect the same impact in RFID

8 RFID The Next Evolution Where Do We Go From Here Introduction to RFID RFID: The Journey So Far RFID: The Road Ahead Yes, we re pushing. We re not apologizing for that. The reason we are pushing is [RFID] is the future and it s here. There is always someone knocking at our doors, trying to take away our customers. We have to do this. Tom Coughlin, Vice Chairman, Wal-Mart - Healthcare - Item Level for CPG-Retail - Industrial Applications

9 IBM s Point of View RFID will be a powerful enabling technology that, when coupled with process change, will transform supply chain operations Companies should take an incremental approach to adopting the technology - standards & technology capabilities will evolve over time Componentized solutions, that are designed for scale and future growth, should be considered The transition to an RFID-enabled supply chain will take some time Compliance alone will not deliver value. RFID should be viewed in the context of a broader strategy The industry will focus on supply chain, work in process manufacturing and security and access control applications in the near term, but eventually RFID will be used to significantly enhance the consumer experience

10 RFID expected mass-market adoption Early adopters from the Retail/CPG industry will realize value for RFID in Case and pallet (not individual item) tagging the focus for the next several years. - For example, early pilots in Apparel indicate a 3% to 7% increase in sales between RFIDequipped stores and control stores because of visibility of inventory at the store level. - A 1% increase in apparel sales has a sufficient ROI, especially when coupled with decreasing costs from existing loss prevention, reduced store labour for physical inventories and eliminating return merchandise fraud of 2% to 4% of sales. RFID Technology will be economically viable in late Earliest - Item-level tagging for low-margin, low-cost goods will not be justified at current tag prices until late 2006, unless tag prices fall faster than anticipated. - High-value, high-margin goods, like apparel, music and video, consumer durables, and consumer electronics, will be immediately cost justified even at $.30 to $.40 per tag. - Readers are expected to drop quickly in price to under $3000 in 2005 and to $1000 by 2006, allowing store-level installations for all types of merchandise. Source: AMR Research

11 Forrester predicts, that 45 billion items in the CPG and Retail Supply Chain will be tagged by 2009 and that the figure could be much higher based on a number of key accelerators Potential Accelerators 50 Item Tagging Tags reach $.01 on the heels of case level tagging Objects Tagged (Billions) Item-level tagging becomes common for higher value goods Safety regulations drive RFID adoption for perishable goods Data standards driven by RFID pilot successes Tags reach $.05 as 1 Billionth tag is produced Re-usable assets (pallets, totes) tagged Global players pushing for adoption Source: Forrester

12 Getting to Item-Level tagging will require a whole new way of thinking Substrate Antenna Integrated Circuit Power Indicator Sensor Source: Precisia The onus for tag application will ultimately be pushed back up the supply chain to the packaging manufacturers where RFID as well as other enabling technologies can be applied at the source

13 RFID The Next Evolution Where Do We Go From Here Introduction to RFID RFID: The Journey So Far RFID: The Road Ahead - Healthcare RFID tagging of products by manufacturers, wholesalers, and retailers appears to be the most promising approach to reliable product tracking and tracing RFID technology will make the copying of medications either extremely difficult or unprofitable Combating Counterfeit Drugs, US FDA Report - Item Level for CPG-Retail - Industrial Applications

14 Using RFID In Healthcare Will Save Lives And Reduce Costs The most important driver in Healthcare is improving patient care, cost is a secondary concern. However many RFID implementation have the potential to improve patient care while reducing costs. - Drug Tracking match individuals to their prescribed medications by computerized scanners, has the potential to cut in half the 7,000 hospital deaths attributed to medication error every year. Washington Post Article, February Identification and Tracking of Patients Eliminate wrong-site, wrong-patient, and wrong-patient procedure surgery from 2004 JCAHO National Patient Safety Goals - Equipment Tracking [Hospitals] cannot find 15-20% of the devices they own Arthur Gasch, Medical Strategy Planning - Tracking of all people to prevent spread of disease track the doctors and nurses who are moving though the hospital to see who they came in contact with Bruce Jacquemard, EVP and GM for Global Field Operations, Savi - Optimize patient throughput - Specimen Management Reductions in errors save lives and prevent discomfort. Increased productivity means staff can spend more time with patients. RFID improves the Healthcare System

15 Patient Tracking Using RFID Technology Passive Patient ID Bands Precision Dynamics Corp. Zebra Corporation RFID enabled Active Patient ID Bands Aero-Scout EXI (infant tracking) X-Mark Hugs Implantable RFID device Veri-Chip Mexican Attorney General Macedo de la Concha says he and 160 of his deputies had the rice-grain-size chips implanted under their skin. Only people with the chips can go past scanners at a new federal building.

16 RFID The Next Evolution Where Do We Go From Here Introduction to RFID RFID: The Journey So Far RFID: The Road Ahead - Healthcare - Item Level for CPG-Retail "We see RFID as one of the crucial technologies for the future of retailing. With our largescale introduction of RFID, we will for the first time cover the entire process chain with this technology," Zygmunt Mierdorf, Member of the Management Board and CIO of the METRO Group. - Industrial Applications

17 IBM played a leading role in Metro s Future Store Initiative Metro developed the future store to test several innovative technologies. RFID provided the foundation for many of those technologies. Metro now plans to rollout RFID across 4 of it s 6 division in November 2004, covering 35% of all stores.

18 As the level of tagging evolved from case to item, benefits increased substantially for both the manufacturer and retailer Estimated Benefit Business Case Example Retailer Benefit Case Level without Retail Adoption: Primary benefits to manufacturer are based upon improved productivity, accuracy, and reduced claims Benefit ($) Manufacturer Case Level with Retail Adoption: Primary benefits for both manufacturer and retailer are based upon improved productivity and accuracy with some OOS benefits Inner pack Level with Retail Adoption: OOS benefits and store labor benefits increase Case Level w/o retail adoption Case Level w/ retail adoption Innerpack Level w/ retail adoption Item Level w/ retail adoption Item Level with Retail Adoption: Primary benefit are OOS for the manufacturer and OOS and reduced store labor for the retailer

19 The future of RFID technology is only limited by imagination The initial application of RFID will be behind the scenes as companies use the technology to improve productivity and take costs out of the manufacturing process and supply chain. The full benefits will not be realized until companies use the technology to transform the consumer experience. - RFID payment systems - Verification of authenticity - Self checkout systems with item level tagging - Mass customization of the shopping experience - Simplify and Improve Recycling

20 Some of these technologies are in use today other may be here sooner than you think Esso Speedpass IBM Retail Demonstration RFID Tagged Merchandise at Prada Store New York RFID Tagged Gillette Products and Smart Shelf at Metro s Future Store

21 Item level tagging has the potential to transform the consumer experience RFID Enabled Smart Machines - Ovens - Washers - Refrigerator

22 RFID The Next Evolution Where Do We Go From Here Introduction to RFID RFID: The Journey So Far RFID: The Road Ahead - Healthcare - Item Level for CPG-Retail - Industrial Applications We saw ways it could improve operations and reduce costs Phil Snider, Petroleum Engineer and Senior Technology Consultant, Marathon Oil Corp.

23 RFID is becoming a technology enabler for advanced vehicle architecture, linking development to e-production and supply chain In the next 3 to 5 years, 90% of automotive innovative development will be onboard electronics. We see 4 phases: - Surge in Electronic Innovations - Network & Integration of Electronics - Network of Vehicle to Environment - In Vehicle Embedded Mobile Computing The e-vehicle will offer new business opportunities for many different players in a very complex environment

24 RFID Project Roadmap Step 2 RFID Solution Evaluation and Selection Step 1 RFID Project Definition Workshop Develop Business Case Step 3 RFID Feasibility Study Step 4 Step 5 Step 6 Solution Pilot Definition Rollout Planning & Workshop Planning Execution Managed Operations And Application Managed Services Project Definition activities Alt A Pre/post pilot activities Core pilot activities RFID Technology and Product Testing Optional activities

25 Questions? Thank You deeper