Maximizing AIDC Technologies for Future Business Success

1. Mapping the Future and Taking Advantage of AIDC TechnologiesApril 27, 2009Chris HookVP Business Development, RF Controls

2. Agenda • Technology Dynamics • The Solution Mix • Applications, Opportunities • Change Enabling Technologies • Seeking Business Value • Planning Your Future…

3. Monitor Technology December 2008 RFID Journal Magazine:

4. Monitor Technology • From Reik Read at industry analysts RW Baird, referring to beam-steerable phased-array antenna systems: “We view the ability to scan specific zones as a key attribute that can help locate missing items, provide real-time out of stock information, improve pick processes and can aid in inventory transfers, all in real-time.” • RW Baird’s reports make interesting reading as they examine enablers and impediments to market adoption

5. Process Solution Ingredients These are the essential ingredients in any applied solution

6. Process Solution Ingredients We witness increasing reliance on technology over time

7. A Plethora of Applications Nature of the Business Environment WIP Management – Location and Tracking Personnel Security – Location and Tracking Manufacturing Parts Location and Tracking Capital Assets (e.g. IBCs) Capital Assets Distribution and Warehousing Electronic Proof of Delivery (EPoD) Returnable Containers Put Away Locations Pick, Pack & Ship Inbound Receiving Capital Assets Libraries and Video Rentals Stock Room Inventory Visibility Promotions Monitoring Retail Store or “Office” Item Identification Replenishment Records Management Store Loss Prevention  Read Range  Unit Tag Cost Battery Assisted Passive RFID Passive RFID Active RFID and Local Area RTLS

8. Back office 67%, customer facing 33%. What could be changed using AIDC to shift this balance to increase efficiency, improve customer service and increase sales? RDC orderingOne to three times per week, the store manager must prepare an order for the RDC. Daily reporting The store manager spends an hour at a minimum and sometimes up to four hours per day filling out daily paperwork. Weekly reporting Each week, the manager must prepare weekly documentation and take it to the area manager. RDC receiving Manager must unlock the back door, count product, and review and sign invoices. Biggest Time Consumers Safety training Every other month the manager must participate in computer based safety training courses. DSD merchandising Vendors representing bread, beer, Frito-Lay, cigarettes, and soft drinks come by regularly throughout the week to order and check on their product. Employees Employees continually seek guidance from the store manager on tasks and issues. The manager must also guide employees through on the job training. Large Time Consumers Maintenance Maintenance comes to the store at least weekly to repair equipment such as when a customer drives off with a pump hose. Average Time Consumers Loss prevention The store manager receives guidance from loss prevention regarding cash control, accidents, etc.  If an event occurs, an incident report must be filed, and an investigation may take place. Central monitoring personnel(security monitoring of the store). Managers may periodically get a call from this monitoring center. Payroll Payroll personnel call once or twice per week with payroll issues Excise tax officials Excise tax officials come by periodically to inspect cigarettes and ice production. Hiring The manager must contact references and gather data to fill out online paperwork for each new employee. DSD receivingVendors representing bread, beer, Frito-Lay, and soft drinks come by regularly throughout the week to deliver their products. Merchandising requestThe manager is asked to change signage and displays. Also, price changes require items to be inventoried and added to the daily paperwork. This can be a daily occurrence. Beer and cigarette license officials Beer and cigarette license officials come by the store once per year. Tank surveyors Tanks are checked once or twice a year by a tank surveyor. Area/Zone manager Managers come by several times a week to check on store operations HR Managers get a call from HR regarding an employee once a week on average. Customer service The store manager helps with the cash register during peak times and answers customer requests and complaints. Health inspection officials Stores are inspected quarterly by health inspectors. Fuel trucks Managers must review and sign invoices. Accounting Managers speak with accounting personnel up to 10 times per week with accounting issues. Monthly audit teams An external vendor audits retail items once per month. Hazardous materials officials Stores are inspected by hazardous materials officials once per year. Help desk Help desk personnel are contacted between 10 and 15 times per week. Monthly audits An external vendor audits retail items once per month

9. Supply Chain Store Promotions Workforce Management Stocking and Inventory Management Customer Service Financial Reports Store Layout Check-Out Back Office Solving many process deficiencies will require the application of multiple “synchronized technologies”

10. UHF RFID Market Status • There is good understanding of the potential for passive and battery assisted passive (BAP) UHF RFID systems to transform business processes • Operational changes have been required to derive maximum value for all collaborating parties • EPCglobal has been pivotal in driving the adoption of user-driven standards • Interoperability and data sharing has been well proven • There has been important, innovative strides in tag design and manufacturing, leading to lower cost, higher performance products • But care is needed to ensure that maximum value can be derived from technology advances

11. Tag Developments • Latest generation Higgs-3 (Alien) and Monza3 (Impinj) chips show significant operating range improvement • But with increased range comes more extraneous or spurious reads, leading to ambiguity of tags’ locations and hence increased likelihood of process errors resulting from “dirty data” • A systemic, collaborative approach is needed among technologists to achieve maximum value from innovation • What might “-4” tags offer? Enhanced functionality, but potentially unforeseen challenges…

12. BESPA: #1 of “Mark’s Top 10” Antennas which scan selectively and collaboratively, and can give accurate 3D locations of tags

13. BESPA Antennas: A New Wave

14. Inventory Management “The future is a wired shop floor complemented by sensing technology, a platform for ubiquitous machine-to-machine computing in which human resources are dedicated to customer service, allowing sensors, readers, middleware and enterprise software to reconcile inventory in real time.” From “Chaos in the Retail Cosmos”, VDC This is a great illustration of my argument concerning the dynamic people-process-technology mix that must be applied to problem solving

15. Inventory Management • A perspective on how to approach inventory management transformation using AIDC: • Experimental design • Staged deployments • Distributed real-time interrogation capability • Integrated planning • Executive sponsorship • Maximize the use of existing data capture infrastructure • Adherence to global standards From “Chaos in the Retail Cosmos”, VDC

16. Inventory: Count and Locate Image courtesy of Vue Technology Light up the store or stock room to achieve automated, real-time inventory monitoring; tagged goods may be positioned arbitrarily

17. A Vision of an Intelligent Food Chain (IFC):A multi-sensory data capture and control network, incorporating Internet and wireless technologies, designed to improve operational efficiency, improve information velocity, enable remote resolution without human intervention, and to achieve benchmark product consistency and predictability of quality and freshness of produce, delivering fresh produce to customers “on their terms”. Mark’s #2: Cold Chain Sensors

18. IFC Applications Packing Station DischargePort Farms Vessels Stores Port/Yard Cold Storage DC/Ripening Visibility and Velocity Improve reefer monitoring and control Improve vessel monitoring and control I N T E R N A L Improve truck/container monitoring and control Improve yard management Improve yard management Enhance container security Improve asset management Improve customer service Improve control over in-transit ripening Improve customer supply chain compliance E X T E R N A L Optimize in-store promotions Enhance food safety and security

19. IFC - Benefits • Dramatic improvement in sustainability of operations • Enhanced monitoring & control of temperature throughout entire supply chain • Ability to relate key agricultural quality data from the farm, by lot • Enhanced control and monitoring of fruit respiration rates – end-to-end • Enhanced ability to respond to customized/regional needs • Improved fruit stability through continuous temperature and respiration control • Linkage to shelf-life extension technologies • Automated forward and backward traceability for food safety compliance • Improved transportation fleet management For Optimal Management of Every Load Higher consumer satisfaction by creating a new standard of excellence for fresh produce management

20. Business Process Improvement Shipping and Receiving Efficiency Load Validation Accuracy Proof of Delivery Automation On-Shelf Availability Distribution Centers Transportation Providers Suppliers Manufacturer Retailer DCs Consumers Inventory Accuracy and Product Aging Visibility Retailer Inventory Accuracy Product Safety and Status Alerts We observe multiple opportunities for process changes, leading to consistent best practices for shipping and receiving

21. Not an area for RFID applications Warehouse Approved Purchase Order Receive from Vendor Approved Requisitions Requisition Receive Create Purchase Order Create Requisitions (from various planning processes) Approve Request Test Transfer Return to Vendor Site Under Construction Receive Scrap/ Retire Warehouse Issue Install Staging Area Transfer Transfer Place In Service Operational Site In Transit Transfer Operational Site Field Technicians Remove Available to Provision Customer Order Business Process Improvement High touch business operations with high value assets, that could benefit from AIDC

22. Observations • RFID is just one facet of “wireless and sensor” technologies that facilitate increasing sophistication in automated sense and respond systems, which are being applied to transform business operations today • Bar codes are standardized and globally deployed, which is beneficial • Myopic attention to “license plate”, passive RFID tag prices will persist, especially in retail businesses

23. Observations • Enhanced tag functionality is already being utilized (e.g. temperature logging) • What new opportunities – and challenges – will next generation “-4” UHF passive tags bring? • New technologies must take account of deployed infrastructure as a springboard for adoption • RFID and other sense and respond systems are enablers for profound business process change, through which maximum value will be realized

24. Recommendations • Pay close attention to technology advances • Maintain a prioritized, rolling list of process deficiencies that it would be beneficial to improve • Quantify the potential value from change • Keep a “wish list” of prospective new opportunities which could enhance revenue • Define your success criteria; be both rational and reasonable

25. Recommendations • Remember the process-people-technology mix to maximize your return on AIDC investments • Strive for a common UI which abstracts the nature of the AIDC technologies; this will yield a device agnostic approach and aid phased migration over time • Ensure cross-functional visibility and support • Think collaboratively rather than competitively

26. and Collaborate Connect The Biggest Lesson Learned? • Now, but not in the early days of bar codes… • Internet technologies • Layered standards • Interoperability • Numerous vendors • Practically ubiquitous, wireless, portable computers

27. A Vision of Change “There have been many changes. We wanted to focus more on technology, and we simplified our business processes. Decision making in our supply chain, for example, got a lot faster. That has added agility to our organization. And our organization has become much more open.” Jong-Yong Yun, CEO of Samsung Electronics, reported in Business 2.0 as he discussed the keys to Samsung’s success in becoming a consumer electronics powerhouse on par with Sony.

28. A Closing Thought… • “The best way to predict the future is to continue to invent it.” • David Glass, Walmart

29. Q & A Chris Hook VP Business Development RF Controls, LLC 1141 S. 7th Street St. Louis, MO 63104-3623 USA Website: http://www.rfctrls.com e-mail: chook@rfcontrols-stl.com Cell phone. +1 847 274-6943