The Business Benefits of RFID

Transcription

1 The Business Benefits of RFID Where companies will find the return on investment Mark Roberti Founder and Editor RFID Journal RFID Journal LIVE! 2005 Chicago, April 10,

2 Overview What this session covers Understanding how to deploy RFID The benefits stack The bottom up business case Potential benefits Major applications Conclusions Where to get more information

3 RFID is infrastructure No one application will deliver a return on investment RFID is infrastructure It s an enabling technology Once installed and networked, readers can be used for many different applications This is similar to the Internet

4 The Benefits Stack How do you deploy infrastructure in a way that delivers an ROI? Deploy within a benefits stack: Reduce out of stocks Reduce excess inventory Reduce manufacturing inefficiencies Reduce losses due to excessive theft or counterfeiting Reduce losses due to obsolete or unsaleable goods

5 The Bottom Up Business Case Start with your biggest macro-level problem and attack the small issues that contribute to it. Excess Inventory: Administrative errors Cargo transfer errors Poor inventory visibility Receiving errors Put away errors Internal theft

6 Potential Benefits Savings for retailers include: Labor reductions of 5% to 40% in distribution centers Safety-stock reductions made possible by reducing delivery lead-times by one to four days of supply Improvement in the accuracy of demand forecasts by 10% to 20% Sales increase of 1% to 2% from fewer out of stocks Better use of working capital

7 Potential Benefits Savings for logistics providers include: Better asset utilization Fewer lost assets due to better tracking Labor savings resulting from automating processes Increased efficiency due to fewer routing errors Increased safety and security through identification of package contents without visual inspection

8 Potential Benefits Savings for manufacturers include: 60% to 93% reduction in labor costs associated with receiving and checking goods into a DC 90% reduction in labor costs associated with verifying an order s accuracy before shipping Up to 36% reduction in the cost of labor in selecting cases for shipping

9 Potential Benefits Manufacturers savings (cont.): 5% to 30% reduction in inventory Reduction in stocks of unsaleable and obsolete goods and chargeback Reduction in out of stock situations, increasing sales up to 1%

10 Major Applications: Asset Tracking Air Canada was losing $2 million worth of food carts per year The results of deploying an active RFID system: 2% reduction in the total inventory 5% reduction in maintenance 20% to 50% in trucking charges 80% reduction in shrinkage 100% reduction in costs for auditing yearly inventory counts ROI within 18 months

11 Major Applications: Shipping and Receiving P&G facility in Spain installed a system that cost under $100,000 By putting tags in the floor and readers on forklifts, P&G was able to: Increase throughput Improve order accuracy Reduce the number of forklift drivers by one per shift Achieve ROI within one year

12 Major Applications: Track Work in Process Boeing deployed a system to track parts internally. The result: Labor needed to scan bar codes was reduced Parts became visible Delays in getting parts to the assembly line were reduced

13 Conclusions RFID is for real All large and midsize companies will be affected Think infrastructure, not apps Go after small inefficiencies that contribute to a larger problem Look for various applications that together deliver an ROI

14 Where to Get Good Information RFID Journal ( 150,000 unique visitors per month RFID Alliance Lab ( Performance testing Durability testing Auto ID Labs ( SIGs on packaging, network architecture anti-counterfeiting EPCglobal ( Business action groups

15 Contact Information Thank you Mark Roberti Founder & Editor RFID Journal