RFID in 2011 and Beyond. Chris Schaefer Senior Director, Global Market Development Motorola Solutions

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2 RFID in 2011 and Beyond Chris Schaefer Senior Director, Global Market Development Motorola Solutions

3 AGENDA Motorola Solutions and RFID Evolution of RFID Business Value Adoption and Applications Market trends

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5 B2B SOLUTIONS PORTFOLIO CUSTOMER FOCUSED VERTICALS GOVERNMENT MANUFACTURING & FIELD MOBILITY TRANSPORTATION & LOGISTICS RETAIL & HOSPITALITY ENERGY & UTILITIES EDUCATION & HEALTHCARE SOLUTIONS DRIVEN PRODUCT + APPS + SERVICES TECHNOLOGY LEADERS GOVERNMENT ENTERPRISE NEXT GENERATION PRIVATE ASTRO PCR TETRA BB ic&c iden MCD ADC RFID WLAN CEC WiBB

6 SCALE & GLOBAL PRESENCE PRIMARY R&D IN 6 COUNTRIES MANUFACTURING IN 4 COUNTRIES 23,000 EMPLOYEES IN 65 COUNTRIES SALES IN OVER 100 COUNTRIES MEXICO UNITED STATES POLAND GERMANY ISRAEL INDIA CHINA MALAYSIA OFFICES + SERVICE CENTERS THROUGHOUT LATIN AMERICA PRIMARY R&D CENTERS MANUFACTURING

7 MOTOROLA RFID 2010 Passive UHF RFID Handheld Reader Vendor Matrix Global Marketshare leader in UHF RFID Readers Most Recognized RFID Brand - RFID Journal (2011) Broadest UHF RFID Product Portfolio Rated #1 RFID product for retail - RIS (Retail Information Systems) magazine (2010) Hold over 300 RFID Patents 1,000 + RFID customers across the globe #1 RFID Vendor To Turn To - AMR Research (2010) Ranked #1 in 2010 Passive UHF RFID Handheld Reader Vendor Matrix ABI Research (2010) Ranked #1 UHF RFID Readers by VDC Research (2010) Product Line Strategy award Frost & Sullivan (2011)

8 BROADEST READER PORTFOLIO FROM THE MANUFACTURING FLOOR TO THE RETAIL STORE Industrial Warehousing & Distribution Supply Chain Manufacturing Energy FX9500 XR450 MC9090-G/Z RFID RD5000 Business Retail Inventory Management Asset Management File tracking Healthcare FX7400 MC3190-Z DS9808-R NA LA only

9 AGENDA Motorola Solutions and RFID Evolution of RFID Business Value Adoption and Applications Market trends

10 DATA CAPTURE EVOLUTION Barcode adoption lifecycle +/- 30 years RFID adoption Only 10 years in First Microchip First wireless data system First handheld laser scanner Six Sigma Quality process invented World Wide Web First wireless switch EPC Global VICs/AAFA RFID Committee Apparel RFID Retail and Supplier Adoption First patented barcode First handheld calculator First Grocery UPC Scan of Wrigley Gum EAS Standardizatio n First commercial spread spectrum WLAN First twodimensional barcode scanner Auto ID Inc Gen2 Standard Approved Wal Mart begins to use RFID RFID Initiative

11 HISTORY DOES REPEAT VisiCalc Personal Computer Internet VCR Bar Codes Bar Codes vs manual RFID vs Bar Codes Sales Increase 10-12% 4% to 21% (1) Operating Costs 1% to 2% decrease 2% to 5% decrease (2) Counting Efficiency Significant Improvement over Manual Key Input > 70 X Improvement over Bar Codes (1) Motorola Customer & Partner Deployments (2) 2009, RFID Journal, The ROI of RFID in the Supply Chain

12 RFID HYPE CYCLE How has it evolved? My view

13 RFID THEN AND NOW Technology drives interest Product focus Investments Mandate Driven ROI uncertain Lack of standards Lack of application SW Fixed Reader = only product Pilots Business needs drive interest Solution focus Investments Value Driven Clear and proven ROI Gen 2 Standards Growth in application SW RFID goes mobile Full deployments

14 AGENDA Motorola Solutions and RFID Evolution of RFID Business Value Adoption and Applications Market trends

15 WHY RFID? THE SIGNS ARE EVERYWHERE ONLY75% $120B 8% 40% POS INVENTORY ACCURACY COST OF OUT OF STOCKS ITEMS OUT OF STOCK OUT OF STOCKS IN STORE 13% $35B 70M 1 IN 10 PROBLEMS WITH ORDERS GLOBAL WASTE MIS- HANDLED BAGGAGE WRONG MEDICATION

16 EVERY ASSET EVERY ASSOCIATE EVERY PERSON EVERY PATIENT VISIBLE

17 COMPELLING ROI 7X 99.5% 14% MORE EFFICIENT COUNTING INVENTORY ACCURACY UP FROM 70% INCREASE IN SALES

18 WHERE TO START Where RFID adds the most value High Number of Items High Intrinsic value High Velocity High Selectivity Multitude of Sizes, Styles, Colors Anything that is important not to lose Evidence, files, people, data tapes Fast Moving Seasonal Short Opportunity Window Closed Loop Reusable Traceable Tag Process No Trading Complexity Easier to implement than open loop Totes Carts Trolleys Bins Able to re-use the tag and lower usage cost Potential recalls Chain of custody Food/Cold Chain Pharmaceuticals Is there an exisiting tag process? How easy is the item to tag? Who will apply the tag?

19 RFID VALUE PROPOSITION RFID IS AN EASIER WAY TO COUNT AND TRACK RFID IMPROVES EFFICIENCY RFID IMPROVES PRODUCTIVITY REDUCES LABOR COSTS RFID INCREASES ACCURACY RFID INCREASES SALES

20 UNFULFILLED PURCHASES

21 ABANDONMENT IMPACT Once dissatisfied holiday shoppers abandoned a shopping experience, nearly six in 10 (57%) do not go back to the same retailer

22 RESULT LOST SALES Holiday shoppers left an average of $95 unspent per incident due to limited merchandise/out of stocks and limited employee assistance 3 in 10 left without buying more than $100 in items they wanted.

23 INABILITY TO COUNT INVENTORY EXACERBATES THE ISSUE WITHOUT RFID TRADITIONAL YEARLY PHYSICAL COUNTS physical count physical count WITH RFID INVENTORY AS OFTEN AS YOU LIKE PAGE 23

24 RFID IN RETAIL OF ALL THE BENEFITS OF RFID IN RETAIL... AUTOMATED REPLENISHMENT INCREASED INVENTORY ACCURACY LOWER SAFETY STOCK LOSS PREVENTION REDUCED OUT OF STOCKS STREAMLINED RECEIVING/PROCESSING MORE EFFICIENT, FREQUENT & ACCURATE CYCLE COUNTS REDUCTION IN INVENTORY LABOR THE END GOAL IS SALES INCREASE

25 RFID IN RETAIL Performance Metrics Proven Business Benefits Moto & Partner Implementations Reduction in OOS by 60% to 80% Better Inventory Accuracy Between 98% & 99.9% Reduction in Cycle Count Time by 75% to 92% Reduced Inventory Carrying Costs by 30% to 59% Reduced Receiving Time by up to 91% Improved Conversion Rate by up to 92% Increased Units & $/Transaction 19%, 6% Increased Sales From 4% to 21% Data from Motorola and Partner Implementations

26 RFID FOR ASSET MANAGEMENT THE PREDOMINANT ENTERPRISE BUSINESS ISSUE TODAY IS THE LACK OF ASSET VISIBILITY AND RESULTING MISMANAGEMENT CHALLENGE: KNOWING WHAT YOU VE GOT AND FINDING WHAT YOU NEED WHEN YOU NEED IT

27 RFID CAN BE USED TO TRACK Any asset that drives business value Retail Inventory Baggage Real Estate Files Recycling Bins Evidence Evacuees and their belongings Trucks Orders and shipments Work in process Food Oil Drilling Equipment Gas meters Voting equipment IT assets - data tapes, blade servers Returnable totes Pallets Students Weapons Increased Visibility = Improved Efficiency & Productivity

28 RFID FOR ASSET MANAGEMENT Performance Metrics Proven Business Benefits Moto & Partner Implementations Improvement in inventory accuracy by 30% to 60% Better Inventory Accuracy Between 95% & 99.9% Reduction in Physical Count Time by 50% to 90% Reduced Inventory Carrying Costs by 10% to 35% Reduced Counting Man Hours 20% to 45% Reduction in Inventory On Hand 5% to 20% Reduction in Expedite Fees 5% to 18% Reduction in Operating Costs From 1% to 5% Data collected from various Motorola installs and pilots

29 AGENDA Motorola Solutions and RFID Evolution of RFID Business Value Adoption and Applications Market trends

30 WALMART ANNOUNCEMENT 2010 July 23, 2010 Wall Street Journal announces Wal- Mart s plan to roll out item level RFID on jeans and men s basics in all 3,750 U.S. stores This ability to wave the wand and have a sense of all the products that are on the floor or in the backroom in seconds is something that we feel can really transform our business. Raul Vazquez, CEO Wal-Mart.com

31 Retailer has quietly rolled out RFID in three categories at all 1100 of its US stores.... "We are leveraging the basic premise that if you know where the merchandise is, you can get more sales. If you are able to take inventory every night, or a subset of inventory every night, there is a pretty high payback." Dan Smith, CIO

32 ITEM LEVEL RFID INITIATIVE NRF/NYC - JANUARY 11, 2011 Major retailers publicly advocated move to RFID The debate is over. RFID is here and it is time frankly we're a little bit late." Making endless decisions day after day based on corrupt data is unacceptable. RFID is a customer centric initiative. The efficiency of on-line ordering today does not support a 30-35% inaccuracy at store level. Early movers on RFID will be rewarded and late movers will be penalized. PAGE 32

33 KEY RFID APPLICATIONS KEY RFID APPLICATIONS Asset Management is still driving most activity APPLICATIONS RETAIL CPG MANUF. HEALTH TRANSP ENERGY GOVT FINANCE Item level Inventory Visibility Supply Chain Management Asset Tracking File Management IT Asset Tracking WIP / Parts Tracking People Tracking

34 BEST PRACTICES Learn from what early adopters have done they have often paved the way and done the heavy lifting Don t bite off more than you can chew one project at a time, phased implementation Pick the right tools/technologies UHF, HF, active, passive, combo? RFID is often not one size fits all Pick the right partner for your use case Application specialization? industry focus? geographic focus? skillset? Pick the right project pick the right business case think about: tagging logistics, value of the assets, expected benefits, etc. Over communicate and ensure buy in from those who will use the system or benefit from it Avoid analysis paralysis never ending pilot Avoid scope creep focus, focus, focus

35 AGENDA Motorola Solutions and RFID Evolution of RFID Business Value Adoption and Applications Market trends

36 RECENT TRENDS Growth Outside of Retail Other industries embracing RFID to streamline operations GOVT, T&L, ENERGY Assert Tracking, WIP, Inventory Management become early use cases Industry groups forming to drive adoption Performance Improvements Fourth generation tags and readers are much more sensitive for better performance High variety of tags available Increased Usability Out of Box Ease of implementation Multiple tag form factors High Memory Applications Use RFID as a data storage device Read Write and password security features

37 RECENT TRENDS Industry consolidation This is healthy Creates less risk Larger vendors - more stable, more invested New and Varied form factors Just as happened in barcode Increasing number of products Ability to address increasing number of business problems Technology Convergence RFID, Barcode, Mobile computing, Locationing Integrating across wireless networks RFID as information platform Cost / Benefit Improvements More cost effective solutions Total cost of ownership decreasing

38 EVERYBODY S END GOAL Always on = Minimal Human Intervention PAGE 38

39 MOTOROLA AND RFID Experience Long history in RFID ISO 2000certified/ mature operations Highest skilled applications engineers, engineering design, testing & support Global industry experience and support Best in class partner ecosystem Innovation Over 75 years of technology innovation Broad RF leadership Many firsts in RFID: Portal, Mobile, Handheld, Multi-protocol, Customers Installations Over 300 RFID Patents Products Most complete suite of RFID readers Industry/Application-Specific Product Line Complete solutions: RFID, Wireless, Mobile, Scanning,

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