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2. The EPC/RFID Revolution Matt Maddox Internet Business Solutions Group 3. The 1980 Boston Marathon and the Global Supply Chain 4. What is EPC/RFID?F127.C238.DF1B.17CC ePC code Unique number 96 bits long Smart Tag Made from microchip with antenna Transmits ePC code Typical object Addition of Smart Tag makes each object unique From MIT Auto ID Center 5. What Makes it Work?

  • Globally identifies:
    • Manufacturer (EPC Manager)
    • Product (Object Class) (SKU)
    • Individual identity (serial#)

6. Science Fiction or Business Imperative? Key chain fobs to buy gas and hamburgers Tagging 80,000 casino employee uniforms, cutting replacement costs in half Automated toll collection RFID tags the size of a grain of rice implanted into pets Identification, Friend or Foe (IFF) Retail security tags 7. 8. 9. Markets and Applications Supply Chain Asset Tracking Security & Regulatory Track product & containers through supply chain (palettes, cases, individual items) Efficiently use expensive assets (tractors, medical & manufacturing equipment)Identify people, vehicles, and other items to ensure regulatory and security compliance Consumer Products Homeland Security Industrial Products Logistics/ Trans. Retail Government Healthcare Financial 10. Bullwhip Effect Today Adapted from Walmart 11. Bullwhip Effect with EPC/RFID Adapted from Walmart 12. Potential Benefits

  • DC: Automated inventory count
  • DC: Faster shipping and receiving
  • DC: Improved quality inspection
  • Store: Real-time accurate inventory
  • Store: Improved in-stock
  • Store: Reduced inventory
  • Store: Anti-shrink
  • Store: Auto checkout
  • Efficient production planning
  • Smart recalls
  • Improved inventory control/reduced inventory
  • Efficiencies

Retailers Suppliers 13. Loss Prevention

  • Shrink costs retailers $30b annually
  • Every minute, 1,500 shoplifters strike, each stealing $25 in merchandise
  • 26% of shrink occurs at POS

In 2000, Shrink was 2.26% of retail sales the average superstore lost $450K, and the average grocery store lost $200K over half of which was caused by store employees 14. Out-of-Stocks

  • Out-of-Stocks: How Big Is The Problem?
  • Supermarkets:8.2%(Coca-Cola Research Council study, 1995)
  • C-Stores:9.2%(CSNews Online report, 2002)
  • Mass Merchants:6-12%(National Housewares study, 1995)
  • Customer Loyalty
  • 71% substitute; 29% leave empty-handed
  • Product related: 50% of tobacco consumers will not substitute
  • After 2.4 out-of-stock experiences, customer will not return
  • What Does This Mean To The Store?
  • Translates into lost sales of 3%

15. RFID Market Growth

  • Near term activity is focused on proving RFID technology in a variety of environments
  • Mandated Supply Chain implementations for DOD and Walmart will drive value chain

16. The Chicken and the Egg: Tag Costs Cheaper Higher Volume 17. Declining RFID Costs Enable Widespread Adoption

  • Current tag pricing is appropriate for high value items and containers
  • Examples of high value items are batteries, clothing, pharmaceuticals, medical equipment, and trucks/trailers
  • By 2008, decreasing tag prices will enable individually tagged items
  • The volume of RFID infrastructure and traffic will escalate as more items are tagged

Global RFID Reader and Tag Market, 2002-2006 Source:IBM, June 2002 18. Whats Walmart Doing?

  • Tagging at case and pallet level
  • Regional rollout (Dallas TX) to Walmart stores and SAMs Clubs
  • Rollout to regional, grocery, and SAMs DCs
  • Future expansion: domestic and international
  • All suppliers by the end of 2006

19. What Are Walmarts Suppliers Doing?

  • Slap and ship: meet minimum compliance while learning
  • Developing internal business case

20. Going Through the EPC/RFID Change Curve SurpriseResistance Exploration Commitment Morale & Productivity Time 21. Call to Action

  • Procter & Gamble considers EPC to be a transforming technology EPC promises to generate significant new business for technology providers, especially those active in shaping the technical direction and meeting the early user[s] needs.We believe Cisco is uniquely positioned to take advantage of that [opportunity] because of the key role of technology on the edge where EPC tags and readers will reside.

Steve N. David Global CIO Procter & Gamble 22. RFID and Cisco March 03 Dec. 03 Gillette/Alien Announcement Wal-Mart Decree Cisco Begins CDO Commits RFID Network Model Begin Tech RoadmapDoD Decree RFID Readiness Rest of the World Sun RFID Business Unit Symbol RFID Lab Cisco RFID Market Model BUs EngagedAutoID ORG Models AutoID for Retail/CPG P&G Endorsement Metro Store of the Future Wal-Mart Sets RFID Timeline IBM RFID Practice/Solution SAP Solution Customer Endorsement Launch RFID Ready NetworkCustomerLab ParticipationCisco RFID Tiger Team Research and Dev. Product/ Alliance Opps Join Tesco, Carrefour, Metro Consort. Join EPC Global 23. Which Brings Us to Wireless Security

  • Transactional information
  • Sophisticated attacks
  • Edge vulnerability
  • Ubiquity of wireless access

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