World Retail Congress Looking to the future of RFID Helmut Merkel, Prof. Dr. KarstadtQuelle AG
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1 Value Chain 2016* Value for Customers *) refers to GCI s Vision of Value Chain 2016 Global Standard One (GS1) World Retail Congress Looking to the future of RFID Helmut Merkel, Prof. Dr. KarstadtQuelle AG helmut.merkel@karstadtquelle.com
2 Topics 1 Who is GS1? 2 The markstowns of the Value Chain The Reality 2006/7 4 Summary 2
3 1 Who is GS1? GS1: History and numbers A fully integrated global non-profit organization 30 years of experience 104 local GS1 organizations Over a million companies doing business across 145 countries Over 20 represented sectors (Retail, healthcare, transport, defense ) GS1 is the most widely used supply chain standards system in the world. 3
4 1 Who is GS1? Structure of national GS1 s Shareholders Supervisory Board Organizations/Politics Steering and Working Groups Users - Manufacturers - Retailers - Service providers (logistic sector) - IT service providers 4
5 1 Who is GS1? A true global presence Countries with a GS1 Member Organisation Countries served on a direct basis from GS1 Global Office (Brussels) 104 Member Organizations. 145 Countries served. Local services, global reach. 5
6 1 Who is GS1? GS1 Vision and Mission Mission To lead the design and implementation of global standards to improve the supply chain Roles Develop global, open, multi-sectorial standards, Train and educate on the standards, Promote and help to implement standards, thus facilitating best business solutions. (Under revision) 6
7 1 Who is GS1? Strategic Plan : Objectives Drive adoption of EPCglobal Standards that contribute to consumer and user benefits Develop user-driven EPC technology standards that support multiple industries globally Enable business transformation through standardized information exchange using EPCglobal standards Ensure that an effective environment and organization is in place to successfully support EPCglobal standards and technology implementation globally 7
8 1 Who is GS1? GS1 Products The Global Language of Business OVERALL BENEFITS: Improving efficiency & visibility in supply and demand chains Global standards for automatic identification Global standards for electronic business Messaging Global Standards for data Synchronisation Global Standards for RFID-based Identification RAPID AND ACCURATE ITEM, ASSET OR LOCATION IDENTIFICATION RAPID, EFFICIENT & ACCURATE BUSINESS DATA EXCHANGE STANDARDISED, RELIABLE DATA FOR EFFECTIVE BUSINESS TRANSACTIONS MORE ACCURATE, IMMEDIATE AND COST EFFICIENT VISIBLITY OF INFORMATION 8
9 2 The markstowns of CGI s Value Chain 2016 The Vision 2.1 All, to improve Customer Value? 2.2 The seven markstowns of CGI s Vision 2.3 Outlook 9
10 2.1 All, to improve Customer Value? GCI Global Commerce Initiative GCI presented in 2006 a remarkable Vision on the future Value Chain. The first time Sustainability and Cultural Behaviour are essential elments of the Vsion. GS1 Germany shares this Vision and shows, what it means and where we are. THE FUTURE VALUE CHAIN Source: GCI
11 2.2 The seven markstowns (1) Shopper dialogue The industry has an opportunity to better serve shoppers by creating a two-way dialogue with them, helping them make more informed decisions, and linking the store and the home with emerging in-house and consumer technology. Source: GCI
12 2.2 The seven markstowns (1) Shopper dialogue CGI proposes a new Dimension of two way communication: - all objects* around, are able to self-active communicate with third parties (retailers, banks, insurers, service providers etc.), - the technology can be used to identify** all devices or objects in the real world, - the real world has to be equipped with active/passive tags and readers *) Objects: refrigerator, milk-box, PDA, living animal, car, book in a bookstore shelf etc., all objects carry an EPC (electronic product code). **) Through EPC everybody can identify the product (documentation) on a hosted and secured IT-Server 12
13 2.2 The seven markstowns (1) Shopper dialogue What is the Value for the Customer? - Customers do like, to be served immediately and precisely with what they want. If they get what they want in their convenient way, they develop loyalty and are willing to pay a competitive price. - but, do Customers like to personalize their behaviour? Loyalty card programs, addresses, credit cards Mobile phone - Customers are used already to use e-channels and Customer Care Centers by telephone. Are they going to accept this proposal easily? Do they build up trust? 13
14 2.2 The seven markstowns (2) Information sharing Companies must be prepared to share standards-based information along the supply chain free of charge. A resulting collaborative information platform could become the basis for further supply chain solutions, like demand-driven ordering and collaborative promotion planning. Source: GCI
15 2.2 The seven markstowns (2) Information sharing CGI is describing a communication architecture* for supply chains with tremendous future potential - existing information hubs: master data platforms, such as SINFOS, payment regulation platforms, logistics information hubs of seefreight and airfreight carriers, - more information hubs to come: product documentation (where does the product come from ), vendor auditing reports/certification, product testing *Information hubs support to overcome the domino achitecture of current supply chains 15
16 2.2 The seven markstowns (2) Information sharing What is the Value for the Customer? - Customers do like to be served fast, they like changing presentations, changing colours, changing styles etc., - Information hubs make sure, all members along a supply chain have access to all relevant information (tracking & tracing), but: they do not like to pay for this! but: Do customers want, their individual information is shared? 16
17 2.2 The seven markstowns (3) Synchronised production The industry must use the improved dialogue with the household and the technological connection with the customer to help the industry make more informed decisions, share plans and better synchronise production with actual demand. Source: GCI
18 2.2 The seven markstowns CGI is describing another consequence of the new Information Hub communication architecture - Delivery, Qualitiy Assurance, Payment, Manufacturing, Packaging etc. can be synchronised all along the supply chain, - All participants of a supply chain know in advance, what their requested contribution will be, - The concept support decentralized management of the supply chain efficiently, there are limits to synchronize global supply chains still today! 18
19 2.2 The seven markstowns What is the Value for the Customer? - Customers do have a significant price advantage, due to significant cost and slack reductions in Retail, Manufacturing and the service industry, - Competition between supply chains will drive these concepts during the next couple of years, 19
20 2.2 The seven markstowns (4) Integrated logistics/home fulfilment As the industry is confronted with less available energy and fuel, more city regulations, increases in working capital and a sharp rise in home shopping, it will move from retailer brandcentric logistics to geographic-centric logistics. Strategies will include consolidated distribution, dynamic route planning, and more effective transport sharing and backhauling. Source: GCI
21 2.2 The seven markstowns CGI is picking up a subject, which was discussed in the New Economy already - KEP (Pick up) Services, last Mile Distribution will be discussed again, - the ratio of home delivery relative to personal pick up will grow, - Distribution becomes more efficient due to GPS! What is the Value for the Customer? - More convenience! 21
22 2.2 The seven markstowns (5) Sustainability Sustainability aims to achieve a higher quality of life for everyone. Economic development, social development and environmental protection are mutually reinforcing components. The three key objectives are: eradicating poverty, protecting natural resources and creating sustainable production and consumption. Corporate Social Responsibility An approach, to balance economic intersests with environmental and social needs all along the Supply Chain European Union Goverments NGO s CSR Shareholders Employees all along the Supply Chain Consumers and Public Opinion 22
23 2.2 The seven markstowns (5) Sustainability CGI is adressing this issue right in time! Customers and the public opinion are becoming very sensitive to this issue - Retailer and Manufacturer became very active about this issues for many years already. European FTA (Foreign Trade Association) and its engagement in BSCI were launching auditing and certification programs for their suppliers, - Accidents like Spectrum in Bangladesh were raising the questions for the final responsibility in the supply chain, - not all Governments woke up, yet! What is the Value for the Customer? - Satisfied expectation but, customers are consuming mobile advantages without to much knowledge about the environmental and social conditions in the global sourcing countries 23
24 2.2 The seven markstowns (6) Company cultural and behavioural changes Building the new value chain vision starts with information sharing within and between enterprises. Other critical cultural and behavioural changes will include organisational development, improved trust, and new measures and rewards to support the better alignment of strategic and tactical thinking. Source: GCI
25 2.2 The seven markstowns (6) Company cultural and behavioural changes CGI is proposing, the world is changing faster, because all the interelated companies do have a steeper learning curve - Retailers learn from manufacturers and their experience with other retailers, and the other way around, - Consumers adopt experiences from other consumers faster because of the changing communication behaviour, - Do we all behave the same? What is the Value for the Customer? - Customers learn faster about changes and adopt their advantages, - Swarm Theory becomes valid for social behaviour 25
26 2.3 Outlook (1) The technical standards (2) (EPC-) Membership trends (3) Potential Areas of Improvement 26
27 2.3 Outlook (1) The technical standards Within a supply chain all parties have to communicate along the same rules. GS1 has approved the Standards Supply Side Interfacing Demand Side 27
28 2.3 Outlook (1) The technical standards Reader Gen 2*) Tag allows Reader and Tag to communicate 28 Tag Data Standards Ratified by EPCglobal Board (Jun-2004) *)Ratified by EPCglobal Board (Dec-2004) and ISO (Jun-2005) Has driven significant RFID hardware price drop ($0.45 to $0.10 and lower)
29 2.3 Outlook (1) The technical standard EPCIS allows Companies to exchange EPC read Data Company B Reader Gen 2 allows Reader and Tag to communicate Tag Company A Tag Data Standards EPICS*) *)Approval anticipated Q1 07 First solutions expected by Q
30 2.3 Outlook (1) The technical standard The EPC can be read as an IP address, with immediate access to the entire product documentation (Example below) Source: Jeff Richards, Verisign 30
31 2.3 (2) Outlook Membership trends full EPC Memberships Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec End Users 31 Solution Providers Total
32 2.3 (2) Outlook Membership trends M&E: Media & Electronics 32
33 2.3 Outlook (3) Potential Areas of Improvement What Worked What Didn t Work (so well) Rapid expansion of membership and re organization (100 work groups, individuals) Expansion to new industries Standards implemented Effective management of public policy issues and securing Government support Frequencies and technical regulations (ETSI) Exponential expansion in piloting Few major implementations yet China - no frequency yet Many positive business cases but few are prepared publish results Tech. issues - liquids and metals Broad marketing and communications initiatives Current resources used to maximum capacity Proprietary solutions 33
34 3. The Reality 2006/7 (1) The projects (2) Membership trends (3) Potential Areas of Improvement 34
35 3. The Reality 2006/7 (1) The projects Basis 1 Basis 2 Basis 3 Option 1 Option 2 Supply Side Electronic Master Data Management Identification Systems EPCglobal Electronic Orders, Invoicing and Dispatch Advice Use of SSCC 128- Transport Label incl. Dispatch Advice Picking/ Cross Docking Inventory Management/ Inventory and Sales reporting Basis 4 Basis 5 Option 3 Option 6 Interfacing POS Data Management Advice of Receipt Joint Forecasting CPFR Collaborative Planning Forecasting + Replenishment Basis 6 Option 4 Option 5 Demand Side Day-to-Day CM Efficient Assortment Efficient Product Introduction Category Management Efficient Promotion 35
36 3. The Reality 2006/7 (1) The projects: EANCOM Messages Results of our implementation monitor Usage of EANCOM messages in % of transaction 100% 90% 80% 70% 24% 49% 24% 60% 50% 40% 26% 18% 17% 15% bis 25% 26-50% 51-75% > 75% 30% 21% 20% 10% 22% 26% 34% 0% Orders (ORDERS) 5% Despatch Advice (DESADV) Invoice (INVOIC) 36
37 3. The Reality 2006/7 (1) The projects: Supply Side The potential has not been utilised, yet. Supply Side 68% 87% 85% 79% 73% 57% 57% 68% 62% 47% FMCG industry Retail trade Master Data Pool EDI ORDERS Dispatch Advice Invoicing 37
38 3. The Reality 2006/7 (1) The projects: Interfacing 57% The potential has not been utilised, yet. 46% 47% Interfacing 37% 36% 34% 25% 25% 18% 17% FMCG industry Retail trade CPFR Vendor Managed Inventory Cross Docking Efficient Unit Loads Traceability of products 38
39 3. The Reality 2006/7 (1) The projects: Demand Side 55%54% The potential has not been utilised, yet. Demand Side 48% 43% 38% 43% 45% 46% 31% 32% 23% 20% FMCG industry Retail trade CRM Customer loyalty programs Category Management On shelf availability POS Data Space Management Management 39
40 4. Summary (1) GS1 Germany shares the Vision of GCI s 2016 Value Chain, (2) The Information Hub communication architecture arrived, (3) Sustainability becomes a public subject, (4) EPC will become the most important interface in all Industries (5) The Reality 2006/2007 shows lot of room for improvement 40
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