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The Business Case for RFID in the Supply Chain Sue Hutchinson Director, Product Management FCC/OET RFID Workshop 7 October 2004.

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Presentation on theme: "The Business Case for RFID in the Supply Chain Sue Hutchinson Director, Product Management FCC/OET RFID Workshop 7 October 2004."— Presentation transcript:

1 The Business Case for RFID in the Supply Chain Sue Hutchinson Director, Product Management FCC/OET RFID Workshop 7 October 2004

2 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US EPCglobal Joint venture of Uniform Code Council and EAN International –Built on 30+ years of proven, product identification standards development expertise Develop technical specifications and standards Ensure intellectual property is free and open Facilitate mass adoption across all industries Provide compliance and interoperability testing Drive education and training Provide continuing support for cutting-edge research performed by MIT Auto-ID Labs Over 400 companies worldwide are subscribers –300 companies in the US –Represent over $1Trillion commercial revenue

3 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US RFID – Why Now? Groundbreaking MIT research changes the economics of RFID hardware Mature information technologies and practices to manage the data Slowing growth in the economy Pervasive challenges in supply chain management

4 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Challenges -Commercial Supply Chain –Observability of goods and assets in motion –Integrity & security –Unmanned operation, 24x365 –Data distribution and sharing $ Labor Inventory Shrinkage OOS Errors Regulation Goods Xfer Effective Bar Code Replacement Pervasive Reader Deployment EPC-Driven Data Sharing $400 Billion AMR Research $50M cost/yr $1B rev/yr $100M cash

5 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Challenges in the Pharmaceutical Supply Chain Global pharmaceutical counterfeiting range from 2-7%, rising to 80% in some countries. 3 Out-of-stock or manufacturing problems account for the 8% of order lines that can’t be filled. 1 Returns worth $2B occur annually 2 - total monthly Rx volume that is returned by customers is 4% for Distributors and 2% for Manufacturers. 1 Overstock, 49% for Distributors and 5% for Manufacturers, and outdated product, 16% for Distributors and 43% for Manufacturers, were listed as the top reasons for returned goods. 1 Tracking regulatory compliance information on products handled is a practice currently followed by 85% of Distributors and 74% of Manufacturers. 1 Approximately 1300 recalls annually. 1 Sources: HDMA Industry Profile and Healthcare Fact book 2 - HDMA presentation at Auto-ID Healthcare Adoption Forum 3 - RECONNAISSANCE International Source: Accenture

6 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Challenges in Food Safety 76 Million cases of food borne disease 325,000 hospitalizations 5000 deaths* 91 Million tons of food disposed Transported to landfills 26% of food supply* * United States figures

7 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Example: MRE Safety Research in using RFID and micro- sensors to promote safety in MREs for field deployment (MIT Auto-ID Labs)

8 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US The Changing Landscape in RFID ParameterPastFuture Frequency 125 KHz MHz 900 MHz Read Range< 1 meter> 10 meters Read RateFew / secHundreds / sec Field RewritabilityNoneMandatory Readers/Location1Tens / Hundreds Tags/LocationTens Hundreds / Thousands Reader Cost~$2000~$200 Tag Cost~$1.00<$0.10

9 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Projected RFID Volume Source: Deloitte & Touche, stores.org, vendor analysis Units (billions) $- $0.5 $1.0 $1.5 $2.0 $2.5 Chip Revenue ($ in billion) Other Uses Supply Chain Chip Revenue

10 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US Key to RFID Adoption One worldwide standard –“Wal-Mart and other end users … are driving for one open globally accepted communication protocol, and that is Class 1, G2.” -- Tom Williams, Wal-Mart

11 INSERT GRAPHIC SQUARE HERE  2004 EPCglobal US US Competitiveness in RFID Industry Goal: Promote EPCglobal UHF Gen2 air interface protocol as the worldwide standard –DoD, Wal-mart, Target, Best Buy mandates –FDA guidance on RFID –Backed by 120+ key FMCG companies Ex: P&G, Gillette, Kimberley-Clark, International Paper –Backed by 80+ Health Care and Pharma companies Abbott Laboratories, Johnson & Johnson, etc. –Backed by key technology companies TI, IBM, Sun, CISCO, Symbol Technology, Manhattan, etc. Many smaller companies (Impinj, Reva Systems, Alien Technology, etc.) Government support: Promote RFID usage in North America –Favorable regulatory climate –Studies & analysis FTC RFID panel FCC RFID panel


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