Jon S. Chorley Sr. Director of Development Oracle Inventory & WMS Oracle Corporation

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2 Jon S. Chorley Sr. Director of Development Oracle Inventory & WMS Oracle Corporation

3 Oracle's Vision for RFID, EPC and the Future of Fulfillment or the Answering the 10 Fallacies of RFID

4 Fallacy 1: It s New British develop RFID to identify aircraft Los Alamos releases technology to public Experimentation on tracking cattle begins RFID used in card access systems RFID Latest step in Evolution of Auto-Id Source: RFID Inc.

5 So Why is it Hot Now? A Convergence of Developments Technology/Standards Enablement Business Process Evolution Falling RFID Tag Costs Ubiquitous Internet Connectivity XML Messaging Compliance Initiatives Wal-Mart, DoD, Metro, Tesco,, Supply Chain Collaboration Global Numbering (EPC) and Catalogs (UCCNet) VMI and Consignment Broad-Based RFID Value Proposition

6 Fallacy 2: What s the big deal? It s just another way to do barcoding Differences with barcoding No need for line-of-sight Supports simultaneous reads Increased physical robustness Increases security Must leverage these difference to create value Redesigned Business Processes Use natural material flow to generate read events Eliminate the UI from the event capture Design alternate feedback mechanisms (e.g. lightstacks) Yields significant reduction Core Value Proposition Reduce the cost of data capture

7 Fallacy 3: With RFID I can locate an object anywhere, anytime, Method GPS: Tag on object broadcasts is position RTLS: Triangulate position of tag using special tags and reader hardware. RFID: Track movements in and out of zones. Location is assumed to be last zone. Implications Low infrastructure costs. High tag costs. Med/high infrastructure cost to flood entire area with RF field. Medium cost tags. High infrastructure costs (at least one reader per zone). Low cost tags. Uses Transportation Asset Tracking Goods in Supply Chain RFID is most cost effective for event-based tracking through a limited number of portals

8 Fallacy 4: I store all the data I want on an RFID tag and read it anytime Tag cost and read time increases with data size so Current focus is on ID-only tags (96 bit) so The ID must be a standard key of a business object and Used to access the data of the object Which may be anywhere in the network so We need a central name service to find the data and A standard format for returning the data Class 1 Tags, EPC, PML/XML, ONS

9 RFID Concept Map The Internet of Things EPC ONS Object Name Service PML RFID Concept Electronic Product Code Physical Markup Language Purpose Replacement to UCC / GTIN numbering scheme for identifying objects. EPC codes (stored as the ID on the RFID tag) will be used as generic handles to any Application Object. Lookup service to resolve RFID/EPC number to the location of its associated object. Requires X-Reference capabilities (internal lookup) and LDAP-like services (external lookup). Represent and publish physical objects using standardized XML-based language. Internet Analog URL DNS HTML / XML Savant - RFID Controller RFID controller, to filter events, store and forward data, and to publish events. Application Servers Oracle Confidential: This presentation does not reflect a commitment to deliver. Product directions can be modified without explicit notice.

10 What is the Electronic Product Code? An Extension of GTIN GTIN / UCC 14-digit structured number Limited name space Item level only EPC 96-bit structured code Larger name space Unique instance level ID EPC, and similar, can be mapped to GTIN / UCC Standard adopted by both UCC and EAN via EPCGlobal Source: Auto-id Center Oracle Confidential: This presentation does not reflect a commitment to deliver. Product directions can be modified without explicit notice.

11 How will the ONS Work? 2. Local Data Lookup 3. Request Address 4. Return Address ONS Object Name Service 1. RFID Read Event Intra-Enterprise 5. Request Data 6. Return Data Inter-Enterprise

12 Fallacy 5: RFID will drown us all in a tidal wave of data Events = Objects Tracked * Event Frequency Objects Tracked controlled by: Tagging Level instance, carton, pallet level determined by value of tracking at that level Aggregation Strategy read outer tag only Event Frequency controlled by: Filtering Business events only (In-Zone, Out-Zone) and filtering at the edge Subscription Limit what you care about Some estimates: Wal-Mart - 30Tb per year of data and 5,000 eps These are well within capabilities of Oracle 10g Multiply by 100 for US Supply Chain

13 Wal-Mart Data Volume Estimate Wal-Mart takes in $300bn per year If Average price of item = $5, then there are 60bn item sales If each item sale requires 20 events to track that item in the up to POS, then there are 1,200bn events If there are 100 bytes per event, then this is 120,000Gb or 120Tb If 1Gb = $100, then this is $12m dollars per year. F you assume this will take 10 years to fully rollout, then Moores law will reduce this by at lest a factor of 10 to $1.2m per year This is peanuts to Wal-Mart.

14 Fallacy 6: It s just going to increase my cost of doing business If Slap and Ship compliance, then it s all cost Total Cost = Labor + Technology Labor Costs Technology Costs System Interaction Material Handling Travel Time Fixed Infrastructure Ongoing Operational

15 Fallacy 6: It s just going to increase my cost of doing business If Slap and Ship compliance, then it s all cost Total Cost = Labor + Technology RFID Value Prop is that Labor Savings > Technology Cost Equation improves with high labor processes (e.g. Service & Returns) Labor Costs (Down) Technology Costs (Up) Material Handling System Interaction Travel Time Fixed Infrastructure Ongoing Operational

16 Fallacy 7: With RFID everywhere, I ll loose my personal privacy Hey Mary, You can get those pants cheaper in aisle 10. Mary Jones spent below her normal in the earlier aisles. Offer her a special. Tell Marketing that Mary Jones removed me from the shelf and then decided not to buy

17 Personal Privacy and Commercial Security Cost of Adoption Point of Sale Retail Distribution Manufacturing Personal Privacy Commercial Security Broad adoption at POS is in the future Current concern is supply chain Commercial Security Must acknowledge and address public concerns to win trust Comprehensive Access Rights logic in ONS Physical kill capability of tag at POS Disassociation of information on ONS Opt-in policy for Privacy vs. Benefit trade-offs

18 Fallacy 8: Oracle hasn t invested much in RFID There are lies big lies and then there is SAP marketing

19 Oracle RFID Strategy Maximize RFID ROI through Top-to-Bottom Integration Application Server Deliver a robust, hardware agnostic RFID platform which elevates the application development interface to standard technology and the processing of true business events Data Base and Tools Leverage data base extensibility, scalability and event management capabilities to support the data and transaction volumes associated with this technology Applications Leverage the above technology to deliver functionality with realistic ROI and to create platform for future expansion

20 Oracle RFID Program Office Coordinating All Oracle RFID Activity Executive Review Board -Chuck Rozwat -Andy Mendelsohn -Thomas Kurian -Chuck Phillips -Ron Wohl -Keith Block -Kevin Fitzgerald -SergioGiacoletto -Derek Williams Product Solution Deployment Partners Architecture Steering Committee Customer Reference Marketing Business Plan Field Readiness

21 Oracle Application Server 10g RFID Events and Edge Processing Handheld Scanner / Reader (with Driver) Fixed Sensors (e.g. RFID) Filtering & Device Integration Naming / PML Operational Services Data Stream Data Minimized & Normalized Distribution Backend Applications Lightstack, Message Boards, or Notification Devices (e.g. SMS, Pager)

22 Event Architecture Stack Common support for range of events Visibility Layer: Portals, BAM & BI Alerts Portal Middleware & Applications 10g Application Server BPM Applications Event Storage & Distribution AQ 10g Database Streams Event Sources System Events Sensors RFID

23 RFID-Initiated Shipping & Receiving Built-In RFID Support in Oracle WMS RFID Middleware (Oracle AS) (3) Interface to readers, clean and filter data, then pass IDs to application (1) Load of pallets and / or cartons with RFID tags on each (2) Drive load through RFID Reader in Receiving Dock RFID Event Processor (4) Access objects associated with the ID's (e.g. LPN's on ASN) then raise correct Business Event (5) Access associated source document, e.g. the PO s s ASN Application APIs (6) Process the Business Event, e.g. Receipt of pallet or carton (8) Putaway, rescan or divert material Response & Exception Handling (7) Confirm success or failure, e.g. trigger green light or sound buzzer

24 Fallacy 9: It s too risky for my company to tackle now Oracle s Built-in support reduces risk and cost Device-independence allows for hardware and standards flexibility Technology leverages Oracle s existing, proven, scalable architecture RFID is highly aligned to Oracle s core competencies

25 Fallacy 10: RFID and EPC are just the latest passing fad Visibility Key: Time to Plateau Less than two years Case - Level CPG Tagging Port Operations Tagging Two to five years Mobile RFID Inventory RFID - Medical Equipment Tagging Pharmaceutical Tagging Centric WMS Third - Party RFID Inventory Item - Level CPG Tagging RFID - Centric Retail Operations RFID Smart Consumer Appliances Pallet Level CPG Tagging Pallet Transmission of ASN Passive RFID Controls on Factory Equipment Finished Vehicle Tagging Returnable Assets Automotive OEM Parts Tagging Military Field Equipment and Supply Tagging Five to 10 years More than 10 years Obsolete before Plateau Active RFID Controls on Factory Equipment Bar - Code - Centric WMS, Manufacturing and Retail RFID - Enabled Dynamic Logistics Networks As of September 2003 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Maturity

26 Adaptive Supply Chain Execution Ability to adjust reduces need for buffers Replan Adjust Variable Demand Profitable Total Demand Demand Range Range Stable Demand Variable Demand Months Planning Horizon Hours Source: Gartner Research

27 RFID, Planning and the Adaptive Supply Chain Profit is optimized by matching supply to demand Actual vs. Planned Error depends on: 1. Quality, granularity & timeliness of information 2. Your ability to react to change If RFID gives you (1), then you must also improve (2) On-demand sources of supply Flexible supplier relationships Internal distribution flexibility Flexible manufacturing facilities Rapid product development processes

28 The Supply Chain Stock Market? Complete transparency to current state Highly liquid supply and demand Transactions mediated by intelligent agents in real-time Continuous optimization

29 Q U E S T I O N S A N S W E R S

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