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Corey WoodwardJakrapan Somsakraksanti

Nattapat SuadsongYogi Kapur

April 11th 2007

EMERGING TECHNOLOGIESEMERGING TECHNOLOGIES(Group 4)

VIDEO: IBM Commercialhttp://www.youtube.com/watch?v=-ZYY85IyDNM, viewed April 5th 2007

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RFID (Radio Frequency Identification)RFID (Radio Frequency Identification)--Innovative…

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RFID (Radio Frequency Identification)RFID (Radio Frequency Identification)…or Invasive?

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Topics that will be covered

Radio Frequency Identification (RFID)Why general managers should careAn introduction and brief historyThe Wal-Mart EffectReal-world applicationsSecurity/controversies/mythsLessons learned

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Why should general managers care?

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Why should general managers care?

Inventory management: Fast, accurate inventory audits

Increased efficiency: Faster processing, shipping, and receiving

Better tracking: Links manufacturer floor to retailer floor

Business Benefits from Radio Frequency Identification (RFID), Symbol Technologies Inc., September 2004, http://www.symbol.com/assets/files/RFIDBenefits.pdf , viewed April 4, 2007.

Enhanced supply chain management

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Results of enhanced supply chain management

Increased revenue: Faster receiving, processing, and replenishment of inventory mean

fewer “out of stock” situations and more sales opportunity.

Reduced operating expenses: Lower inventory levels lead to less waste and lower handling costs

and labor requirements.

Business Benefits from Radio Frequency Identification (RFID), Symbol Technologies Inc., September 2004, http://www.symbol.com/assets/files/RFIDBenefits.pdf , viewed April 4, 2007.

Why should general managers care?

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What is RFID?A brief history and introduction

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Radio Frequency Identification (RFID) is a technology for automatically identifying objects through a system of tags, readers, and radio waves.

Lin, P., & Brown, K. (2006).  Radio Frequency Identification and How to Capitalize on It.  The CPA Journal, 76 (7), 34-37.  

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Active tags have their own power source to broadcast information back to the reader. Passive tags use the power gathered from the electromagnetic waves sent from the reader.

PASSIVE TAGS (Frequency)

Read Range

Pros (+) Cons (-)

Low (30Khz-300KhZ) +/- 1 ft Less power, scanning high-water objects

Less range, slower

High (3Mhz-30Mhz) +/- 3 ft Faster than L.F., scanning metallic objects

Uses more power than L.F.

Ultra-High Frequency

(300Mhz-3Ghz)

+/- 20 ft Fastest passive tag More power needed, requires a clear path between tag and reader

ACTIVE TAGS <300 ft Longest range, provides most data

Costs more

Active vs. Passive tags

RFID FAQs.  Viewed February 21, 2007, from http://www.rfidjournal.com/faq

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Something like RFID

World War 2:

British IFF (Identify Friend or Foe) system uses transponders on planes to distinguish enemies from allies on radar.

1960’s:

Electronic Article Surveillance equipment is used by retailers to curtail shoplifters. 1 bit chips in tags are placed on merchandise. First widely adopted commercial use of technology resembling RFID.

The History of RFID Technology.  Viewed February 21, 2007, from http://www.rfidjournal.com/article/articleview/1338/1/129/

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Birth of modern RFID1970s:

Los Alamos National Laboratory develops an RFID system to track nuclear materials. Vehicles entering nuclear facilities contain transponders carrying information regarding vehicle’s contents and origin as well as driver’s ID.

1980s:

RFID used at electronic toll payment stations on the world’s highway, bridges, and tunnels.

Use of RFID develops in various industries. In Europe, animal tracking is popular.

The History of RFID Technology.  Viewed February 21, 2007, from http://www.rfidjournal.com/article/articleview/1338/1/129/

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Widespread Use and Standardization of RFID

1991: Engineers develop a UHF RFID system.

1999: Auto-ID Center is established at MIT as a non-profit collaboration between professors and private companies. Professors develop the Electronic Product Code (EPC) putting serial numbers on tags which is the basis for an RFID networking structure capable of tracking items through the supply chain over the internet.

2003: EPCGlobal is established to further commercialize EPC technology. The EPC system has become the worldwide standard for RFID tracking along supply chains.

The History of RFID Technology.  Viewed February 21, 2007, from http://www.rfidjournal.com/article/articleview/1338/1/129/

Landt, Dr. Jeremy (2001).  Shrouds of Time: The History of RFID.  Viewed February 21, 2007, from http://www.aimglobal.org/technologies/rfid/resources/shrouds_of_time.pdf

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Widespread Use and Standardization of RFID

1991: Engineers develop a UHF RFID system.

1999: Auto-ID Center is established at MIT as a non-profit collaboration between professors and private companies. Professors develop the Electronic Product Code (EPC) putting serial numbers on tags which is the basis for an RFID networking structure capable of tracking items through the supply chain over the internet.

2003: EPCGlobal is established to further commercialize EPC technology. The EPC system has become the worldwide standard for RFID tracking along supply chains.

The History of RFID Technology.  Viewed February 21, 2007, from http://www.rfidjournal.com/article/articleview/1338/1/129/

Landt, Dr. Jeremy (2001).  Shrouds of Time: The History of RFID.  Viewed February 21, 2007, from http://www.aimglobal.org/technologies/rfid/resources/shrouds_of_time.pdf

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Encoding RFIDs

Alien(R) Technology Opens Gen2 RFID Tag Writing Breakthrough to RFID Reader Industry (3/26/2007)http://www.stockhouse.com/news/news.asp?newsid=5010635&tick=RFID viewed April 15, 2007

The Write Stuff: Understanding the Value of RFID Read/Write Functionality (2003)http://epsfiles.intermec.com/eps_files/eps_wp/RFIDread_write_wp_web.pdf viewed April 15, 2007

Companies (RFID users) use encoders to write information on to RFID tags

Read only tags: can only be written once

Read/write tags: can be encoded, erased, and then re-encoded

Encoding compliant w/ EPC protocols

Gen2 RFID tags take 240 milliseconds to encode

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Dollars (in millions) spent worldwide on RFID

0

500

1000

1500

2000

2500

3000

2004 2005 2006 2010

Spending is projected to surpass $3 billion in 2010.

Gartner: Worldwide RFID Spending to Surpass $3b in 2010. (2005, December 14)Viewed February 21, 2007, from http://www.rfidinternational.com/news.php?action=full_news&NewsID=106

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RFID costs continue to drop

Average cost of an RFID tag in 2000 was $1. Today, tags can cost as little as 5 cents (for purchases over 100 million).

Niemeyer, A., Pak, M., & Ramaswamy, S. (2003) Smart Tags for Your Supply Chain. McKinsey Quarterly, 2003 Issue 4, 6-9. Smartcode News &Analysis. (2006, May 1) Viewed April 7, 2007, from http://www.smartcodecorp.com/newsroom/01-05-06.asp

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RFID WaveThe Wal-Mart Effect

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World’s largest retailer $344.992 billion sales revenue in Jan. 2006 Leader in supply-chain management (SCM) Proponent of RFID technology for use in SCM

http://en.wikipedia.org/wiki/Wal-Mart , viewed April 4, 2007.Thomas Friedman, The World is Flat (Pages 161-162) viewed April 4, 2007.

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Before Wal-Mart was part of the RFID equation: RFID technology deemed not practical for SCM Lack of standardization Hit-or-miss adoption Lack of motivation due to high implementation costs High costs of RFID tags

David Williams (Jul 2004) The Strategic Implications of Wal-Mart's RFID Mandate. Retrieved February 23, 2007http://www.directionsmag.com/article.php?article_id=629&trv=1/

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Wal-Mart’s announcement on June 11, 2003Wal-Mart’s announcement on June 11, 2003Top 100 suppliers to use crate/pallet RFID by Jan. 2005Top 100 suppliers to use crate/pallet RFID by Jan. 2005Top 200 mandated for Jan. 2006Top 200 mandated for Jan. 2006

Mark Roberti, eWeek RFID – Wal-Mart’s Network Effect, Sep 15 2003 , viewed April 5th 2007Linda Dillman , viewed April 5th 2007 Rollin Ford , viewed April 5th, 2007BW Online - Talking RFID with Wal-Mart's CIO , viewed April 5th, 2007

“Our goal is to be live with the top 129 suppliers by Jan. ’05in the Dallas market.” Linda Dillman, CIO of Wal-Mart in June 2003

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Benefits following Wal-Mart’s mandate Cost of implementation (for suppliers) less than predicted Ripple effect (supplier’s supplier) driving down costs Standardization increasing adoption (EPCGlobal, Gen 2, ISO) Live (real world) production feedback for researchers 26% reduction in out-of-stocks after RFID deployment Other players jumping in, including DOD, Target, Best Buy

David Williams (Jul 2004) The Strategic Implications of Wal-Mart's RFID Mandate. Retrieved February 23, 2007http://www.directionsmag.com/article.php?article_id=629&trv=1/

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Bill Hardgrave

“Much of the credit to the progress is attributable to RFID‘end-users’ who, through extensive testing in the field, provided invaluable feedback to the RFID technology providersfor ways to improve the technology.”

Founder and Director RFID Research Center – University Of Arkansas

The ACNeilsen global RFID newsBill Hardgrave: Talks with ACNeilsen on today's RFID practices and innovations

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Benefits following Wal-Mart’s mandate Cost of implementation (for suppliers) less than predicted Ripple effect (supplier’s supplier) driving down costs Standardization increasing adoption (EPCGlobal, Gen 2, ISO) Live (real world) production feedback for researchers 26% reduction in out-of-stocks after RFID deployment Other players jumping in, including DOD, Target, Best Buy

David Williams (Jul 2004) The Strategic Implications of Wal-Mart's RFID Mandate. Retrieved February 23, 2007http://www.directionsmag.com/article.php?article_id=629&trv=1/

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Consumer awareness of RFID technology now stands at 42.4%, up from 28.2% Two out of every five adults claim to have heard of a new technology called RFID. Coincidental with flat awareness is the lack of media coverage since April 2005.

“Many of the early gains coincided with news reports about RFID deployment in pharmaceutical and retail settings, most notably Wal-Mart.”Linda Stegeman, President of Artafact Research, and co-sponsor of the study along with BIGresearch

SurveySurveyHave you heard of a new technology called RFID?Have you heard of a new technology called RFID?

“RFID appears to have returned to being more of a business story than a consumer story, but that could change quickly.” Phil Rist, BIGresearch

PRESS RELEASE RFID Buzz Research (In collaboration by BIGResearch and Artafact Research) http://www.marketwire.com/mw/release_html_b1?release_id=101380, viewed April 5th 2007

28.20%

35.50%40.75%

43.60% 42.40%

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%

Sep-04 Dec-04 Mar-05 Jun-05 Sep-05

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What does Wal-Mart know?What does Wal-Mart know?Ability to know where item is in supply chain could save retailers billions of dollars per year.

Savings Estimate

$6.7 Billion: Reduced labor costs (by 15 percent) $600 Million: Reduced out-of-stocks (using smart shelves to monitor on-shelf

availability) $575 Million: Reduced employee theft, administrative error and vendor fraud (by

tracking and scanning products automatically) $300 Million: Improved tracking of the more than 1 billion pallets and cases $180 Million: Reduced Inventory (due to improved visibility. less holding costs)

Total pre-tax estimated savings: $8.35 Billion$8.35 Billion (Higher than the total revenue of more than half the companies on the Fortune 500)

Mark Roberti, eWeek Sep 2003 The bottomline for Wal-Mart’s RFID researchhttp://www.cioinsight.com/print_article/0,3668,a=61672,00.asp

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Campbell’s Conversion to RFID

The Wal-Mart EffectThe Wal-Mart EffectAn Example

Mark Roberti (Feb 2007)Wal-Mart, Suppliers  Affirm RFID Benefits. Retrieved February 23, 2007https://www.rfidjournal.com/article/articleview/3059/1/1/http://www.rfidjournal.com/article/view/3068/

“We're not Gillette; we sell low-value products that aren't out of stock a lot. We're not going to get any value out of this.”- Campbell’s Executive in 2005

“We're already seeing value. It's hard to dispute the value of this technology.”Campbell’s Soup CIO Doreen Wright Feb 2007

Wal-Mart is sending data from RFID-enabled stores back to Campbell’s tagging pallets, cases, and promotional displays within 30 minutes of a tag being read. This data has enabled Campbell’s to execute promotions and boost sales.

Initial hesitation, even resistance to Wal-Mart’s mandate

Pilot tests on promotional cases yield good results

Now an active proponent of RFID

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RFIDRFIDReal-world applicationsReal-world applications

(focus on healthcare industry)(focus on healthcare industry)

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From $90 million in 2006

to $2 billion in 2016

Global market for RFID in healthcare 2006-2016 by value

IDTechEx : Rapid adoption of RFID in healthcare http://www.idtechex.com/printelecreview/en/articles/00000470.asp, viewed April 6, 2007.

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Drug anti-counterfeiting

The largest use of RFID in healthcare will be on drug labels.

This will enable drug companies to prevent fake products.

Ex.: pharmaceutical bottles 600 tags per minute

Embedding tags in containers : Modern Materials Handling, Dec2006, Vol. 61 Issue 13, p20-20, 1/3p; (AN 23532476) http://www.umsl.edu:3417/ehost/pdf?vid=1&hid=117&sid=c45d1992-48bc-482f-a321-71448ed872b3%40sessionmgr106

Newspaper Source : Sun helps fight drug counterfeiting with RFID technology; New RFID solution enables pharmaceutical

companies to track and verify drug packages and helps prevent diverting and counterfeiting of products,  M2PressWIRE, Nov 15, 2005

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Error prevention

To ensure that doctors perform the right surgery on the right person

Wrongful surgeries kill thousands of patient a year

Innovative uses of RFID tagshttp://www.primidi.com/2004/11/20.html, viewed April 6, 2007.

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RFID in Singapore

In June 2003, RFID was used to fight

SARS (Severe Acute Respiratory Syndrome)

RFID Journal : Singapore fights SARS with RFIDhttp://www.rfidjournal.com/article/view/446, viewed April 6, 2007.

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2 hospitals in Singapore tested

RFID system to track the movement

of staff, visitors, and patients They spent $100,000 on RFID pilot

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Whenever a person enters or exits the hospital, this movement will be recorded automatically

Anyone who wants to enter the areas must provide their name and contact information

Then they will receive a RFID card that has a small battery inside.

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The tag operates at 433 mhz

A receiver is installed in the ceiling

Found no SARS case, so they’ve never

tracked back the contacts

RFID Journal : Singapore fights SARS with RFIDhttp://www.rfidjournal.com/article/articleview/520/1/1/, viewed April 6, 2007.

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Benefit

No interruption with any operation in the hospital

No interference with any equipment in the hospital

Doesn’t require staff to perform extra duties

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Benefit (Con’t)

Track a person in real-time (RTLS) = Real Time Locating Systems

Check and track who had contact with a patient when and where

RFID can track unlimited number of people, but no more than 100 RFID cards at a time

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Drawback

There were some blind spots

Receiver can’t find the signal. It needs to find the perfect frequency.

if too sensitive = overlap in the signalif not sensitive enough = can’t find the signal

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RFIDRFIDReal-world applicationsReal-world applications

(various industries)(various industries)

VIDEO: Spotlight on RFID Technology. http://www.aimglobal.org/Services/RFIDSpotlight.asp,viewed April 5 th 2007

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Animal Identification Library System

Personnel & AssetTracking

Supply ChainManagement

Airport Security

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Type of RFID Usage

Low frequency RFID tags animal identification, beer keg tracking, automobile key and lock, anti-theft systems, pets’ location.

High frequency RFID tags book tracking, pallet tracking, building access control, airline baggage tracking, and apparel item tracking, identification badges replacing earlier magnetic strip cards.

UHF RFID tags pallet and container tracking, truck and trailer tracking in shipping on the highway systems.

Active RFID tags used in long range access control for vehicles.

Current Usage

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RFIDRFIDSecurity/controversies/mythsSecurity/controversies/myths

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Security controls for implementing an RFID application

Contract with contractors and trading partners

Password managementVirus control

Securing RFID Applications: Issues, Methods, and Controls. By: So, Stuart C. K.; Liu, John J.. Information Systems Security, Sep/Oct2006, Vol. 15 Issue 4, p43-50, 8p; (AN 22287939)

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Controversy

FOR AGAINST

People who believe in the benefits RFID technology can bring to the society.

People who see privacy as more important than the benefits RFID technology can bring to the society

RFID books example:

Supporter/Anti-Supporterhttp://web.ecs.baylor.edu/faculty/newberry/myweb/Ethics/Web%20Pages/Shih%20test/rfid_controversy.htm, viewed April 5th

eWeek, 3/22/2004, Vol. 21 Issue 12, p64-64, 1p; (AN 12612875) No RFID for library books., viewed April 5th 2007

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Common RFID Myths Thieves can drive around the block and read

RFID tags inside your home.

Reality: 10-foot range; affected by water/metal

RFID tags store sensitive personal information.

Reality: Limited storage; 14 digit UPC code

Bill Hardgrave and Robert Miller (March 2006), The Myths and Realities of RFIDRetrieved February 23, 2007, from RFID Research Center White Papershttp://itri.uark.edu/RFID/whitepapers.asp

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Common RFID Myths RFID is replacing the barcode.

Reality: Not anytime soon; cost/reliability factors

RFID can be used to continuously track people/objects wherever they go.

Reality: Can operate only in read zones.

Bill Hardgrave and Robert Miller (March 2006), The Myths and Realities of RFIDRetrieved February 23, 2007, from RFID Research Center White Papershttp://itri.uark.edu/RFID/whitepapers.asp

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Lessons Learned

A great deal of potential for supply chain and other industries

Unrealistic expectation and negative perception – both harmful

Technology still maturingCosts of technology are coming downNeed good business models to derive

maximum benefit

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RFID costs continue to drop

Average cost of an RFID tag in 2000 was $1. Today, tags can cost as little as 5 cents (for purchases over 100 million).

Niemeyer, A., Pak, M., & Ramaswamy, S. (2003) Smart Tags for Your Supply Chain. McKinsey Quarterly, 2003 Issue 4, 6-9. Smartcode News &Analysis. (2006, May 1) Viewed April 7, 2007, from http://www.smartcodecorp.com/newsroom/01-05-06.asp

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Lessons Learned

A great deal of potential for supply chain and other industries

Unrealistic expectation and negative perception – both harmful

Technology still maturingCosts of technology are coming downNeed good business models to derive

maximum benefit

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Lessons LearnedSurvey: Primary Challenge to effective RFID

implementation

RFID Survey : 669 Respondents Comparativewww.larsten.net/RFID_results/RFID_comparative.pdf

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Lessons LearnedSurvey Results

RFID Survey : 669 Respondents Comparativewww.larsten.net/RFID_results/RFID_comparative.pdf

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QUESTIONS?