European Convocation on RFID Mike Rose Vice President Johnson & Johnson Tom Aelbrecht Technology Manager Johnson & Johnson
Agenda Business Overview RFID/EPC Program Innovation Research Challenges
Business Overview World s s most comprehensive, and broadly based manufacturer of healthcare products $53.3B Net Trade Sales in 2006 Approximately 122,000 employees More than 200 operating companies Selling products throughout the world Major business segments Consumer Medical Devices & Diagnostics Medicines & Nutritionals
>> Medicines & Nutritionals >> Medical Devices & Diagnostics >> Consumer
Johnson & Johnson Credo Guides Our Actions The Four Tenets Customers Employees Community Shareholders
RFID/EPC Program
RFID Vision Johnson & Johnson will be a leader in the appropriate use of RFID technology to develop innovative products and business solutions that improve the quality, safety, and efficiency of healthcare delivery.
RFID/EPC Strategy Johnson & Johnson will be a leader in the appropriate use of RFID technology to develop innovative products and business solutions that improve the quality, safety, and efficiency of healthcare delivery. OBJECTIVES Healthcare Delivery Innovation Supply Chain Efficiencies Brand Protection Product Innovation RFID Leadership GOALS Improve Patient Safety Improve Supply Chain Efficiencies Reduce counterfeiting and diversion incidents Develop new RFID enabled products & services J&J recognized as as industry RFID leader
Program Highlights Consumer
In the beginning. Tagged Product is Re-Palletized & Shrink-Wrapped Read Point Outbound Dock Door Tagged Product is Loaded onto Trailer
Promotion Execution Pilot Consumer
RFID Promotion Observations Compliance lower than anticipated Backroom dwell time is low (~1 day) Early execution was unexpected With RFID, 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 Uncovering additional opportunities
First Aid Kit: RFID Daily Data Visibility at multiple points can lead to increased sales and reduction in cuts 1 2 Mean -7.386 120 StDev 7.417 4 Comparison of When the Store Rec'd the Display vs. Store Effective Date Normal # of Displays Average POS Sales 100 80 60 40 20 0-15 0 15 30 45 60 75 # of Days Before or After Event Date that Display was Rec'd 90 80 70 60 50 40 30 20 10 0 3/15 3/27 Mean: -7.4 Store Effective Date: 4/1/06 N 211 With RFID visibility, we could have prompted Can reorder see when at stores displays who took display were received down early at Backroom Variable Reorder No Reorder ~$1.2 million retail sales 4/9 4/22 5/5 opportunity Average Daily POS for Stores that Set and had Box Crucher reads before 4/1 Stores with reorders vs. no reorders 5/18 Date 5/31 6/13 6/26 7/9 # of Days Before or After the Store Effective Date that the Display was Set # of Displays 120 100 80 60 40 20 Can see when displays went to sales floor 0 have realized early 0 execution 20 40 60 80 Day Display was Set in Relation to Event Date 3 # of POS Units Sold 600 500 400 300 200 100 0 Mean 11.74 StDev 12.58 N 18698 112-18 Mean: -3.6 Store Effective Date: 4/1/06 With RFID visibility, we could here to prevent Out of Stocks ~75% of Displays Set Early Histogram of POS Units Sold by Day 4/1-12 -6 0 6 12 Day (in relation to store effective date) 18 100 Began cutting due to early execution; Customer thought product supply issue
Program Highlights Medicines & Nutritionals
Counterfeiting A Key Challenge Counterfeit drugs (according to WHO): <1% in developed world >30% in some parts of the developing world >50% from rogue internet sites In 2000 FDA opened 6 cases; In 2006 opened 53 Increasingly sophisticated methods Lack of focus on product authenticity in some countries Many potential entry points No track & trace systems
Technology Solutions Multifaceted layered approach Track and trace solutions Bar code and RFID Electronic product codes Serialization unique identifier numbers Pedigrees using a uniform code
RFID Proof of Concept Flip Off Seals with Identity Goal Evaluate incorporating 13.56MHz tags into flip-caps and safety closure seals Scope Development consortium of 8 partners Exclusive In Mold Label (IML) Technology modified to accommodate RFID tags Outcomes Technology feasible RF effects on biologicals?
Program Highlights Medical Devices & Diagnostics
Tracking Use of Instruments and Consumables
Tracking Equipment in a Hospital
RFID enabled inventory cabinet - France Business Value Better replenishment of stents Reduced out of stock, increased revenue Faster invoicing Reduce # of FTE s required to execute onsite inventory management. Stent inventory management system Now Future 21
Innovation
RFID Research Laboratory Established in 2003 Locations - Beerse, Belgium and Raritan, NJ Center of excellence across operating units Investigate leading edge technologies Evaluate impacts to business processes Leverage learning s s across decentralized units
RFID Incubator Fund Established in 2004 Stimulate RFID-enabled innovation Co-funding model Enriches RFID knowledge base Enhances community of practice
Research Challenges
Creating Value Why should a consumer care about RFID? How do we create value for the consumer? Once we have all this event data, what do we do with it? How do we create business value? How do we redesign our processes to use this information?
Technology Research Areas RFID deployment vs. infrastructure implementation Reduce tag cost and complexity. Low cost tags, Printable tags, etc. Convergence of RFID with other wireless protocols to leverage existing wireless infrastructure Reducing the complexity of RF application to liquid and metals HF vs. UHF discussion in item level tagging RF effects on biological products
Healthcare Research Areas How do we address the challenges associated with healthcare? What areas are ripe? What are not? How do we deploy a "common" infrastructure across a very diverse industry? Why should patients care about RFID? What are the incentives for various supply chain parties to deploy RFID?
Close Encouraged by promotional displays results Exciting new opportunities for RFID enabled services and products Standards are important for broad adoption Continuing research investment is critical to advancing RFID
Questions?