Speed to Market

1. Speed to Market RFID at Liz Claiborne Solving an Internal Distribution Issue Brian O’Donnell 7/22/04

2. Driving RFID • Compliance • Return on Investment • Solve an internal requirement / issue

3. Compliance • Compliance mandates are driving the majority of all RFID implementations • To meet this challenge, corporations are utilizing RFID in the last steps in the distribution process. • Potential save/return for the originating corporation is limited. • Many are not reaping any benefit in the implementation

4. ROI • Cost of chips still in the $.30 - $.45 range • To be financially attractive • Cost per tag / unit must be in the $.015 - $.02 • Need ability to drive down cost of usage • Reuse tags • Increase the quantity per tag • Additional cost must also be factored in

5. Additional Costs • Reader - $1,000 - $10,000 • Software • Middleware • Modifications to current platform to accommodate data • Conversion Cost • Attaching tag to item • Associating a tag with a number • Integration Costs • Modifying current systems to handle large amounts of data • Ongoing Maintenance

6. Reuse tags • Tags can be applied to reusable items • Pallets • Totes • Trolleys

7. Solve Current Material Handling Problem • Identify an area within the supply chain that would benefit from the technology • Traditional methods are not meeting requirements • Barcodes • Automation • Manual operation

8. BARCODE Read one barcode at a time Requires line of site Information fairly limited – do not track sku’s uniquely Can’t update information on a label RFID Read multiple ID’s simultaneous 1000’s per second Does not require line of site Store more information Ability to write/update information on a tag RFID vs. Barcodes

9. Problems with RFID • Tags are still very expensive • Chip based tags: $.30 - $.45 • Standardization of EPC not final • Privacy Concerns • Paybacks are still risky

10. Solving an Internal Issue

11. Conventional GOH Trolleys • Trolleys are utilized to transport garment on hanger goods through out the distribution center • Diverting is controlled by a switch manually set on a trolley • Divert mechanisms are preset for

12. Conventional Trolley System

13. Problems with Conventional Trolleys • Pins are constantly breaking • Ongoing maintenance • Bent trolley cause misdiverts • Divert mechanism are constantly out of alignment • Destinations are limited • 50 distinct location • Multi pin trolleys are expensive

14. Solve Issue with Barcodes? • Cost of implementation is high • Scanner at each divert point • Barcodes consistently are damaged • Misreads are high • Requires additional interfaces with WMS

15. Issue solved with RFID • Utilized SmartTrak. • SmartTrak is an RFID based routing system using Read-Write tags embedded in the trolley. • First Distribution center in the US to utilize RFID to route trolleys • Each trolley knows its destination, and at each switching point, tells the switch to open or not.

16. Programming the Trolley • Targeting the trolley. • Hand Held version. • The operator sets the destination with a portable programming unit by simply keying the desired location and pressing the enter button on the programmer while pointing the unit at the trolley. • Touch Screen version. • The operator presses the destination on a display and each trolley is programmed for the selected destination. • The trolley is now programmed with the desired location. The trolley now may be inducted onto the overhead garment conveyor randomly.

17. Diverting • Diverting. When the trolley comes into the range of the antenna, the destination is read from the programmable computer chip. • If the Destination code contained in the chip matches the destination code for the antenna, the switch is opened for the trolley.

18. Liz Claiborne - Cincinnati

19. Located in West Chester, OH 900,000 Sq. Ft. Opened August 2002 Product Mix - Accessories and Apparel Design Capacity - 32.5 mm Units GOH Storage Capacity – 1.5mm Units Technology Deployed Cross Belt Sortation GOH Sortation High Speed Carton Sortation SmartTrak Cincinnati Facility

20. Smarttrac System

21. The Tag • Read/Write incased in glass. • Operates on the 134.2 kHZ Frequency • Dimensions ~ ¼ ” x 1 ¾”. • Range +/- 3” when used in a trolley. • Live cycle >100,000 writes. • Cost about $3.50 each. Tag, not to scale. Tag embedded in trolley.

22. 3 Level Mezzanine Transfer Station Receiving Write Station Write Station/Divert Point Empty Trolley Write Station Divert Points

23. Advantages • No moving mechanical parts to jamb or break in the reader. • Durable transponder is embedded in the trolley. • Distributed switching application highly robust as encoders and tracking PLCs are not required.

24. Advantages con’t • Virtually unlimited number of destinations possible • The system works with a lighter duty, less expensive trolley than those required with conventional pin readers • Less expensive and more reliable than a barcode based application

25. Conclusion • RFID as a technology by itself will not be the end all solution. • Companies must redefine their operation and make smart decisions of where this technology is applicable.