Real-World RFID Experiences at. Mike Rose Vice President

Transcription

1 Opening slide 1

2 Opening slide 2

3 Real-World RFID Experiences at Mike Rose Vice President

4 Agenda Johnson & Johnson Overview RFID Program Examples Johnson & Johnson Consumer Cordis DePuy Closing Thoughts

5 Johnson & Johnson Health Care Systems Inc. (JJHCS) sits at the center of one of the world s largest and most respected health care companies. It s our job to help the different parts of the corporation medicines and nutritionals, consumer, medical devices and diagnostics work together to deliver comprehensive solutions for our customers.

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7 The World s Most Broadly Based Health Care Company Founded in 1886; family-owned until listed on NYSE in 1944 Sales in three business segments: consumer; medical devices and diagnostics; medicines and nutritionals Managed by franchise or groups of product categories -- a unique form of decentralized management 7

8 Strategic Principles Broadly based in human health care Decentralized management Manage for the long term Ethical principles Our Credo

9 In the beginning. Tagged Product is Re-Palletized & Shrink-Wrapped Read Point Outbound Dock Door Tagged Product is Loaded onto Trailer

10 Focus areas today Continue promotion execution pilots Increase set compliance & generate incremental sales Most effective promotions & their location within the store Conduct new item launch pilots Build scalable, sustainable, standard EPC systems & processes

11 Promotion Execution Pilot Consumer

12 EPC Promotion Observations Compliance lower than anticipated Backroom dwell time is low (~1 day) Early execution was unexpected With EPC, can proactively set replenishment levels rather than waiting for Out Of Stocks for action Ability to better calculate sell thru Real time information on the exact dates promotions are at retail

13 Result in Top Line Growth Code: Store Effective Date: Event End Date: # of RFID Stores: # of Stores with Reads to Date: SPLENDA FLAVOR BLEND PW 11/27/06 12/25/ % Early % On Time % Late % Not on Sales Floor 79.20% 2.40% 14.40% 4.00% Click Here: Early Store Click Here: On Time Click Here: Late Store Click Here: Not on SF List Store List List List Click Here: Stores where display(s) was set and taken down Action Item* Facts 99 stores set the display early 113 additional displays still at J&J DCs 5 stores not set to date with inventory in the backroom Actions Sales looks into the highest selling early stores for sold thru Move product into the highest selling stores for the remaining inventory Work with customer/ broker to have 5 stores set Results Realized incremental J&J sales for sell thru of 113 displays Increase in overall execution and decrease in missed sales opportunity

14 First Aid Kit EPC Daily Data Visibility at multiple points can lead to increased sales and reduction in cuts Comparison of When the Store Rec'd the Display vs. Store Effective Date Normal 1 2 # of Displays Mean: -7.4 Store Effective Date: 4/1 Can see when displays were received at Backroom # of Days Before or After Event Date that Display was Rec'd Mean StDev N 211 With RFID visibility, we could have prompted reorder at stores who took display down early # of Days Before or After the Store Effective Date that the Display was Set # of Displays Mean: -3.6 Store Effective Date: 4/1 With RFID visibility, we could ~75% of Displays Set Early Can see when displays went to sales floor 0 have realized early 0 execution Day Display was Set in Relation to Event Date here to prevent Out of Stocks Average Daily POS for Stores that Set and had Box Crucher reads before 4/1 ~$ 1.2 million retail sales Stores with reorders vs. no reorders Average POS Sales /15 3/27 Variable Reorder No Reorder 4/9 4/22 5/5 5/18 Date opportunity 5/31 6/13 6/26 7/9 3 # of POS Units Sold Mean StDev N Histogram of POS Units Sold by Day 4/ Day (in relation to store effective date) Began cutting due to early execution; Customer thought product supply issue 18

15 Stent Inventory Management

16 Inventory Management Challenges Hospitals and suppliers are facing several challenges managing hospital inventories resulting in major write offs due to product expiration, potential missed cases due to stock outs and missed revenue due to inefficiencies Hospital challenges 1) Charge capture related to medical devices used with procedures Not all products used during procedures are finally captured for reimbursement 2) High inventories of medical supplies High carrying costs and limited shelf space Supplier challenges 1) Customer product expiration due to overstock Customers and sales organization typically play safe defining inventory positions 2) Potential of missed cases due to incorrect mix Focus on scrap reduction can result in missed cases 3) High product expiration Hospital in efficiencies can create stock outs Suppliers typically carry the risk of product expiration 3) Poor/no visibility of consigned and hospital inventory 4) Limited resources, focus and knowledge on inventory management 5) Limited data available regarding usage, inventory and expiration

17 Radio Frequency Identification (RFID), how it works Tagging products with RFID labels before they are being shipped to the hospital in combination provides full visibility and transparency of the in transit and hospital inventory. The data is facilitated though a web based tool between the vendor and hospital Web Browser 3 Products registered in database Users see realtime inventory and usage information via standard web browsers. Inventory and usage updates every 12 minutes Data available to manufacturers and hospitals 1 Manufacturer 2 Product is tagged prior to shipment to hospitals. 1-2 day delivery Hospital Tagged product is placed in the RFID cabinet, removed as needed and scanned to patient after used.

18 Smart Cabinets Example St. Elizabeth Hospital Utica, NY Most hospitals are requesting RFID solutions allowing them to manage inventory from all vendors. HF Passive RFID MHz Frequency is a worldwide ISO Standard EPCglobal HF Standard anticipated Low cost disposable tags

19 Inventory optimization through collaboration Tools to set optimal PAR levels and provides strong adherence to PAR with minimal inventory efforts. The web based portal provides easy and real time information for hospital and Cordis (e.g., materials management, sales reps and support functions) CIM / LINK: PAR levels, inventory, expiration Transparency Cordis Cordis Sales rep: usage, PAR levels, inventory, expiration Missed cases Low PAR levels High Expiration Materials Manager: PAR levels, inventory, expiration, replenishment Hospital Hospital Collaboration Cath lab director: inventory, usage, market shares, trends

20 RFID Program Next Steps RFID label: Passive, High Frequency (HF), Mhz EPCglobal and ISO standard Currently no health care standard Frequency can be changed based on future health care standard Use external RFID vendor vs. Cordis solution Supplier independent solution Create expertise what to do with the data Products RFID tagged in Distribution Center before shipping to hospital Initiate RFID pilot for CYPHER products in US, Europe and Asia/Pacific

21 Express Care Orthopedic Implants

22 Express Care Background Express Care Orthopedic Implant Kits Knee and hip replacements High metal content kits per day, consisting of implant components, 1-3 totes per kit Reserved by Reps / Distributors, shipped overnight Zero to few components used per Kit Returned to Memphis for replenishment Rep/Territory only billed for components used

23 Express Care Kits

24 Express Care Business Needs High labor factor to process returned kits Barcode scan every component to find missing components Flow hampered due to variability of scanning (kits range in size) Backlogs awaiting replenishment frequently occur and create hot lists for meeting the daily needs

25 Express Care Objectives Develop cost-effective RFID enabled kitting process that works with metallic implants Reduce processing time per kit Eliminate variability of inbound scanning process. Develop RFID platform that can be leveraged in other countries

26 Express Care UHF Gen2 RFID Solution UHF Gen2 tags and readers Tunnel configuration High read rate reliability

27 Express Care Results Pilot results are down to ~30 sec per kit for scan (including load, scan, print) vs. ~5 to >10 min 100% read rate at 40 fpm Scanning variability is eliminated Flow is now possible Touch time significantly reduced.can realign resources when at scale Entering phase of scaling up to full production Leverage results in other locations Planning started for other locations (UK, Canada, others)

28 Leverage Results RFID Specification can be fully leveraged for Kits Ultra- High Frequency (UHF) band 902 MHz to 928 MHz $ $0.30 per tag w/ overlabel Process control software reusability depends on process design Integrations to other systems depends on specific usage ERP Platform Future Process Control Software RFID Reader & Tags

29 Closing Thoughts While still an emerging technology, RFID continues to demonstrate great promise to deliver strong business results Health care has unique challenges that impacts adoption, e.g., sterilization EPCglobal standards will become increasingly important to enable RFID adoption in health care Conformance to EPCglobal Standards is an important success criteria Important to influence solution providers to adopt EPCglobal Standards through active partnering and vendor management practices

30 Thank You