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RFID – Lessons Learned July 22, 2004 Russ Brown. Agenda vRFID Basics vRFID Vision vRFID Upside vRFID Concerns vRFID Lessons Learned vRFID Future State.

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Presentation on theme: "RFID – Lessons Learned July 22, 2004 Russ Brown. Agenda vRFID Basics vRFID Vision vRFID Upside vRFID Concerns vRFID Lessons Learned vRFID Future State."— Presentation transcript:

1 RFID – Lessons Learned July 22, 2004 Russ Brown

2 Agenda vRFID Basics vRFID Vision vRFID Upside vRFID Concerns vRFID Lessons Learned vRFID Future State vThe Real Value vClose

3 RFID Basics RFID – Radio Frequency Identification RFID has three components: –An antenna or coil –A transceiver (with decoder) or reader (interrogator) –A transponder (RF tag) electronically programmed with/carrying unique information

4 RFID Basics RFID is communication through reflected power. The basic concept behind RFID was defined in It began being used in the 1960’s. The technology to implement it is just now becoming more cost-effective – with cost being relative. RFID has broadcast or output restrictions defined by the FCC in the US and other governing bodies worldwide.

5 RFID Basic Principle Basic principle of inductive passive RFID systems

6 RFID Basics Principle Applied Basic principle of microwave RFID systems

7 RFID Reader RFID Data RFID Reader RFID tag placed on items, cases and pallets at manufacturer / supplier Merchandise is ‘read’ as its shipped by supplier and received at the DC Merchandise is ‘read’ as its shipped by DC and received at the retail outlet Merchandise is ‘read’ as it leaves the retailer’s backroom and enters the sales floor Streamlined customer checkout RFID Vision

8 RFID Upside Improve in-facility accuracy/accountability within the supply chain Improve management of in-facility inventory and demand planning –Reduce safety stock inventory requirements –Improve inventory “shrink” problems –Improve visibility of assets as they move through the supply chain

9 RFID Upside Reduce labor-intensive activities such as physical inventory while improving accuracy of results –Tags can be read without contact and/or line of sight –RFID readers can differentiate and read multiple items simultaneously –RFID tags can be updated with new information as items pass through the supply chain Most companies using RFID are seeing a reduction in inventory costs but this occurs in buffer/on-hand reduction when your inventory processes are strong

10 RFID Concerns Cost to implement (initial capital investment) –Actual cost of a label with a tag and an antenna is not coming down as rapidly as anticipated – continues to range form $.20 to $.70 – you can anticipate that this cost will go up once the standards for the Class I Version 2 have been approved and moved to production –Some applications are currently cost prohibitive –Potential costs increase with the distance from the tag Potential of RFID tags being duplicated

11 RFID Concerns “ Eavesdropping” or interception of private data –Efforts are underway to protect privacy by securing information –Main issue is that data is being transmitted over the air Privacy standards have not been finalized by standards committees and governmental agencies –Consumer level privacy is a major concern – do companies disable these as purchasers complete the transaction (this is usually at the purchased item level) –Do not want other retailers to be able to read RFID tags on clothing as consumers enter or exit stores

12 RFID Concerns What does the consumer think about this?

13 RFID Concerns Chip/Cost Paradox

14 Lessons Learned Start small – follow a pilot process, learn the technology and become comfortable with it Accept the fact that you are re-engineering an important piece of your supply chain and that it is going to add cost to your process – hence you need to look for cost to eliminate. The manufacturing process continues basically as is

15 Lessons Learned The printing of the case content label that is currently being scanned will generate the barcode label just as today and the printer will also populate the RFID tag with the necessary data Cases will be received by customers or by our DC’s via barcode scanning and/or by RFID reading equipment.

16 Lessons Learned RFID chips are fragile: –Be aware of static during handling that can “fry” the chip –There is a “no man zone” when using manual chip writers – if you have the chip inside this zone when loading the chip with data, the energy will overload the chip and “fry”it –Partner with a label (with the chip embedded) supplier that does a level of testing prior to receipt for your use to mitigate the amount of bad tags –Accept the fact you will probably encounter bad tags during any step of your process and have a response step defined to address this when it occurs

17 Lessons Learned RFID chips are fragile (cont.): –The time to encode and verify might surprise you – keep statistics on this process and know what is occurring –You will encounter encode failures –Test the case/pallet scan rates. We have learned that a forklift can go too fast and it can also go too slow Include a verify process as your product is loaded – a last step to insure the tag was readable as it leaves your facility

18 Lessons Learned Take steps to insure who is liable when tags fail after they leave your DC and accept the fact that they will fail Know your customers timelines and expectations –Far too much is being published in various literature, etc., without providing companies with specific requirements and dates for implementation –Define customer segment requirements, including timelines – Wal-Mart being the primary concern

19 Lessons Learned Actively investigate the costs associated with implementing a test for RFID – a learn as you go technique Strongly recommend that you develop a phased approach to this new technology

20 Future State

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25 The Real Value As the data for scanned cases becomes available for your analysis, you should better understand where your product is located within your customer’s supply chain – use this data to mitigate the amount of your product within your customer’s supply chain –By helping your customer have the right product in the right place at the right time, this will lead to an improved partnership/relationship between your company and your key customers

26 The Real Value Accept the fact that re-engineering processes is an important piece of this initiative – from manufacturing to the DC to your customer

27 The Real Value To succeed you must execute, execute, execute

28 There are risks and costs to action. But they are far less than the long range risks of comfortable inaction John F Kennedy


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