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3rd December 2005

3rd December 2005. @Copyrights Reserved 2005 - RFID Team : INFS 640 . Wal*Mart Case Study: RFID

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3rd December 2005

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    1. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640

    2. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Wal*Mart Case Study: RFID & Supply Chain Management

    3. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Agenda Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    4. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Introduction What is RFID ? Why RFID over Bar-Code ? RFID Working and Infrastructure

    5. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 What is RFID? Electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-of-sight, using an electromagnetic challenge/response exchange.

    6. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID 40 years old technology Why being Used NOW? right time to use the technology Benefits OUTWEIGH the Deployment Costs

    7. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Why RFID over Barcode ? Ability to read without line-of-sight Serialized numbering scheme enables more powerful Understanding Diagnosing Controlling of Supply Chain Serial numbers provides individual entity tracking and much more detailed behavior of SCM than UPC or EAN used in Bar codes No duplicate reading of the same tag – a possibility in Bar codes More powerful sensor-network and monitoring-system than bar-code systems.

    8. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID Components

    9. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Working of RFID Reader generate signals that are dual purpose: provide power for a tag, and create an interrogation signal. Tag captures the energy from Reader and executes commands sent by the Reader Tag sends back a signal containing a unique digital ID (96-bit serial number) that can be looked up in a database available to the reader to determine its identity, perhaps expressed as a name, manufacturer, SKU (stock keeping unit) number, and cost. Tags are generally passive because they require no batteries or maintenance.

    10. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID Infrastructure Existing software systems UNABLE to handle serial numbers Solution – RFID Middleware RFID Middleware : Layer between RFID readers and the application software Consists of : Lower level device and data management Higher Interpretation level

    11. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID Infrastructure (contd.) Lower level devices such as motion sensors, programmable logic arrays and human interfaces fetch data and provides to Data management layer Data management layer provides some functionality of filtering data due to intermittent appearances and disappearances After the data management layer yields data, the Interpretation layer extracts inference from such data and forwards it to the applications that deploy RFID

    12. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    13. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Introduction to Supply Chain Management Supply Chain Management Coordination of a network of facilities and distribution options Includes procurement, processing and distribution Five core processes Planning Sourcing Making Delivering Returning Integration of these processes to maximize benefits

    14. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Introduction to Supply Chain Management (contd.) Three levels of supply chain management Strategic – linked to corporate strategy Tactical Operational – involve day to day activities

    15. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Introduction to Supply Chain Management (contd.) Overall Goal Optimize supply chains Provide more accurate and time sensitive information Maximize sales and profits

    16. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Introduction to Supply Chain Management (contd.) RFID and Supply Chain Provide real time information Better readings of customers and markets Ability to provide right products at the right times Deloitte & Touché benchmark initiative Only 7% of companies managing supply chain effectively These 7% are 73% more profitable than other companies

    17. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    18. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Wal-Mart Introduction and Business Processes

    19. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Operations Wal Mart Stores Largest segment accounting to about 67.3% of 2005 fiscal sales Super centers Discount stores Neighborhood Markets SAM’s Club Consists of membership warehouse clubs accounting to 13% of 2005 fiscal sales Wal-Mart International Accounted to 19.7% of 2005 sales

    20. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Business Model of Wal*Mart Market Strategy of Wal*Mart Everyday Low prices (EDLP) Employs both “Clicks & Bricks” and “Bricks & Mortar” strategy Organizational Development Specialty Division Retail Division Competitive Advantage Price match guarantee Market opportunity B2B Single firm network B2C E-Tailer Business Model

    21. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Supply Chain Management at Wal*Mart Procurement and Distribution Logistics Management Inventory Management

    22. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Procurement and Distribution Procurement Procurement involves getting goods from different manufacturers Involves reducing the purchasing costs as far as possible Goods procured directly from the manufacturers, bypassing all intermediaries

    23. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Procurement and Distribution Distribution Distribution centre is divided in different groups depending on the quantity of goods received Goods to be used internally in US arrive in pallets & imported goods arrive in re-usable boxes. Employees have access to the inventory levels of all the products Employee makes two scans- For identifying the pallet For identifying the location from where the stock had to be picked up Bar codes & RFID used to label different products, shelves & bins The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. computers enable packaging department to get accurate information such as storage, packaging & shipping, Saves time in unnecessary paperwork. Enables supervisors to monitor their employees closely

    24. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Logistics Management Involves managing transportation & delivery of products More than 7000 company owned trucks services Distribution centers This enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves twice a week “Private Fleet Driver handbook” – tracking drivers activities “Cross Docking” – from Manufacturer to Customer Cross Docking enabled “demand chain” “Demand chain” - Customers ‘pull’ the products instead of retailers having to “push” them

    25. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Inventory Management Wal*Mart set up its own satellite system in 1983 Reducing unproductive inventory as far as possible Use of Bar-code & RFID technologies for easy packing and counting of the inventories, efficient picking and receiving & proper inventory control of the products “Massively Parallel Processor “ - enables easy tracking movement of goods & stock levels across all distribution centers and stores Use of “Magic Wand” to keep track of inventory in stores Use of sophisticated algorithm and technology infrastructure to forecast the quantities of each item to be delivered, based on inventories in the store and customer needs Centralized inventory database

    26. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    27. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID in Wal*Mart Initiated the plan to implement RFID in its supply chain in June 2003 Subsequently, reinforced the RFID standards and specifications in November 2003

    28. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID in Wal*Mart Specification of RFID Components TAGS EPC Why RFID? EFFICIENCY WAL*MART SUPPLIERS

    29. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Specification of RFID Components EPC Type of Chip TAG Distribution Centers to accept RFID tagged products

    30. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Specification of RFID Components EPC 96 bit unique number to identify an item in the supply chain. Global Trade Identification Number. EPC data format on the chip is Class 1 Version 2 communication protocol. Class 0: Factory programmable protocol Class1: Provides the capability to write serial numbers on the chip

    31. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Specification of RFID Components TAGS Operates in the UHF spectrum 868 MHz to 956 MHz Carries the 96-bit serial number Is field programmable Allows suppliers to write serial numbers to the tags while being applied to the products

    32. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 WHY RFID? OBJECTIVE: To increase the efficiency of its supply chain. It will Enhance Transparency of supply chain Help in minimizing cost and labor Strengthen inventory control

    33. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Efficiency Wal*Mart aims to reduce the practice of manually placing the order Has achieved 10% reduction in the case Implementation of RFID tags in Wal*Mart’s inventory has helped boost sales by keeping shelves better stocked Usage of RFID has reduced out-of-stock merchandise by 16% at the stores that have implemented RFID tags for more than a year.

    34. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID COST Cost Benefit Analysis Initial Research indicated cost of RFID tag was above $1. At present, TAG costs about 30 cents Cost will drop to less than 5 cents, if deployed on a large scale Analysts suggest that the tag should be approx. 1 cent for small ticket items

    35. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Wal*Mart Suppliers 130 major suppliers ship merchandise to Wal*Mart distribution centers with about 5.4 million tags By 2006, Wal*Mart aims to mandate RFID implementation for all its suppliers

    36. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Wal*Mart Suppliers Major Suppliers: Gillette Hewlett-Packard Johnson & Johnson Kimberly Clark Kraft Foods Nestle Proctor and Gamble

    37. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Wal*Mart Suppliers Kimberly-Clark Manufacturer of paper goods products Eg: Kleenex, Huggies Tagged Scott paper Towels shipment with RFID tags First supplier to use RFID – April 2004

    38. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    39. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Successful Implementation of RFID Harvard Research suggests a seven step model for successful implementation of RFID.

    40. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Seven Step Model Understand our visibility requirements Query other end users about recommendations for trials Move into the action phase in a real-world setting in a pilot/trial mode Evaluate technical performance Consider the economic benefits Understand the impact Decide whether or not to move forward with a larger scale implementation

    41. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Major Companies implementing RFID technology Volkswagen Gillette Tesco supermarket tries out smart tagging Sun Microsystems sets up RFID test centre in Scotland I.B.M. Expands Efforts to Promote Radio Tags to Track Goods Texas Instruments

    42. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    43. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Limitations of RFID Why the implementation of a 40 year old technology is taking so long? As pointed out earlier, benefits are gradually outweighing the deployment costs Limitations and challenges: Barriers to Quick Deployment

    44. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Limitations and Challenges of RFID (contd.) Global standards Variety of RFID standards and technologies Technology problems Read-range distances not sufficient to allow for consumer surveillance Defective and poorly performing RFID tags Damaged RFID tags Data management Lack of development of right information management tools Cost Tags, Tag Readers, Databases

    45. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Limitations and Challenges of RFID (contd.) Industry Standards Privacy advocates are insisting the companies to state their intended use of the technology due to lack of industry standards Privacy and civil liberties RFID tags can be embedded into/onto objects and documents without the knowledge of the individual Complex programming Potential job losses

    46. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 RFID Practices that Should be Prohibited Merchants must not force their customers into accepting RFID tags in the products they buy. RFID must not be used to track individuals absent informed and written consent of the data subject – directly or indirectly.

    47. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Up Next…… Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID

    48. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Future of RFID

    49. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Future of RFID For Retailers ?? The technology will bring a revolution. It will be widely used in retail and consumer goods, automotive, healthcare, military, postal department and other scientific uses. For Customers?? If the consumers think the technology is too complex, confusing or threat to their privacy… Will the technology survive?

    50. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Key Factors for RFID Setting up more standards in the industry Bringing down the cost of RFID Level of understanding and experience

    51. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Demonstration Of Wal*Mart SCM

    52. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 Movie Time

    53. 3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640 THANK YOU

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