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© 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice
RFIDEnabling Next Generation Supply Chain Today
9/25/2004 2
Agenda• Today’s challenges and the
supply chain management imperative
• RFID opportunities and benefits• HP’s industry solution portfolio
includes RFID• HP’s own business and RFID• HP’s experience as an early
adapter• HP’s solution offerings for RFID• HP RFID customers• Investment and participation in
the future of RFID
9/25/2004 3
Today’s challenge: clear needs for tighter supply chains• Product costs, shrinkage and waste
− Up to 20% of foods discarded due to spoilage in the supply chain− Global shrinkage (CPG $60B year) from expiry, loss, damage before delivery− Direct and indirect cost of cargo theft is $20-60B yearly− 75% of the cost of a retail product is getting it there
• Imbalance between supply and demand− Stock outs at retailers cost 6% of sales− Over 50% of trucks on roads either part fully empty or returning unwanted or expired products
• Security and counterfeiting− Product diversion, including smuggling, is large and increasing− Counterfeiting (10% of products) over $100B yearly− Terrorism – more than 50,000 containers enter US ports daily, 12,000 trucks enter US through
Mexican border alone – ONLY 1-2% are inspected• Social issues, safety and regulation requirements
− More mandates will be on the horizon (FDA, homeland security, etc.)− Monitoring tire pressure, drugs in transit, prisoners, babies, children, park visitors, “mad cow”
9/25/2004 4
Today’s challenge: precision supply chain management is becoming an imperative
• proper inventory balance• perishable goods management • tracking of regulated commodities• high waste and write-offs • counterfeiting and theft• archiving and security inefficient• decisions based on static and
inaccurate data• retailer/distributor requirements
Most of these processes still require human intervention
9/25/2004 5
Rapid embrace and evolution: RFID is in same position as mobility and wireless several years ago
9/25/2004 6
RFID Benefits• Increased visibility into the global supply chain• Reduced cost and increased velocity• Revenue protection and increased security
Retain your customers• Meet their requirements• Benefits to retain customers
Improved Supply Chain• Do things at less cost• Do things faster• Do things better• Do things at less risk
Improved Data collection• Data accuracy• Automation• Locate things real time
RFIDsees
tangible ROI
Experience from our HP’s RFID ImplementationSource: Ian RobertsonGlobal Director – Pan HP RFID Program
9/25/2004 7
Leveraging RFID opportunity points across the supply chain
Product Features
Production Distribution Shipping Retail Post Sale
• Mfg registration relaxed
• Production value
• Regionalization practical
• Config auto @ PCC
• Distribution security
• Retail security
• Counterfeit protection
• Save time in assembly
• Automate lower-level receiving and part tracking
• Automate lower-level receiving and part tracking
• Inventory control
• Proper FIFO
• Product completion improvement
• Shipping automation
Trials under way here
• Theft control
• Shipment tracking
• Counterfeit protection
• Shrinkage
• Shelf stock out
• Returns to dealer
• Link to warranty database
• Recycling
It’s not the tag, it’s what you do with the tag.”
Kevin Turner,President and CEO, Sam’s Club
HP understands RFID business requirements
9/25/2004 9
HP understands RFID business requirements• HP as a manufacturer
− 23,000 products, 110,000 suppliers, operations in 178 countries− Four major business groups $72B in revenue
• Imaging and Printing Group – consumer products− Multi-billion $ business - by itself the equivalent of Fortune 500 company− Makes over half of HP`s profits− must operate profitably with a competitive cost structure, discrete
manufacturing operations, unique supply chain characteristics − Strong market leadership position− #1 in inkjet printers, laser printers, scanners, wide-format plotters, all-in-one
devices and print servers− Very strong HP executive support for RFID capabilities
• to improve supply chain management and drive down operating costs• to comply with DoD and Walmart mandates and homeland security
HP is an experienced early adopter of RFID
9/25/2004 11
HP is an experienced early adopter of RFID – the early days• Working to achieve both complete customer compliance leadership and
contribute to greater efficiency in HP’s global supply chain• Early pilot results - container security initiative and RFID proof-of-concept
− Enhance supply chain security & efficiency while minimizing shipment delays− Positively position HP for homeland security driven initiatives− Learned early capabilities, potential uses and limitations of RFID− Assessed benefits for HP & its customers − Small scale proof of concept pilot, RFID technology shown to work in
principle− Errors, learning’s and information started to build team of RFID expertise
within HP− Positively positioned HP for internal efficiencies and wal*mart/dod
compliance driven initiatives
9/25/2004 12
HP is an experienced early adopter of RFID – current implementationsMemphis site:• Meet Wal-Mart RFID requirements by tagging pallets and cases• Operational benefits from improvements in outbound processes• Site receives material from Chester – inter site RFID opportunity• Early results: pallet logical build process reduced from minutes to secondsChester site:• Meet Wal-Mart RFID requirements by tagging pallets and cases• Improvements in transfer of pallet/case-level inventory between manufacturing
and distribution center sitesSao Paolo site:• Validate potential economic benefits• RFID throughout site processes – from inbound components thru shipping• Automated identification at key stages of the assembly production line to gain
manufacturing efficiencies
9/25/2004 13
Scope is pan HP and global
•
RFID implementation initiated in People’s Republic of China, Hong Kong, Thailand, Malaysia, USA and will start further sites in early 2004 in Mexico, Korea, Taiwan. Current sites Planned sites
HP offers tested RFID solutions today
9/25/2004 15
HP offers tested RFID solutions today• Start with a strategy to meet business needs
− Low-cost early implementation− Leveraging HP internal experience for faster compliance
and reduced risk− Exploration of RFID uses applied to opportunities for fast ROI
• Solutions based on unique industry and business needs− RFID Discovery Services− RFID Assessment Services− RFID Proof-of-Concept− RFID Pilot− RFID Training & Support− RFID Implementation− RFID Lifecycle Services
Partnerships with some of the leading RFID vendors
Tags – Alien, Matrics, Philips, TI, Rafsec
Readers – Tyco, AWID, Samsys, Alien, Matrics
Infrastructure – Microsoft, Intel
Middleware – OATS, Manhattan Associates, SAP, Shipcom …
9/25/2004 16
Here is what’s delivered - examples• RFID Discovery and Assessment Services
− RFID vision and strategy (development and plan)− Define business value− Develop reality roadmap
• RFID Proof-Of-Concept Services− Pilot− Learn real application solutions, training and support− Address specific concerns− Define & prove R&D strategy
• RFID Implementation Services− Development of infrastructure and infrastructure
options− Manage compliance concerns− End-to-end management− Integration installation− Ready to go implementation
• RFID Lifecycle services− Life-time global management of the RFID environment
Pilot Site
9/25/2004 17
Example of a phased roll-out approach
Pilot
•Proof of concept•Test -internal focus
- Tools, technology- Infrastructure- Compatibility
•Impact analysis•Scoping•Cost/benefit
analysis•Strategy for
future phases
Compliance
•Test -external focus• Integration•Ex: Wal-Mart /
DoD
Transition
•Infrastructure Integration
•Application, Biz Process
•Warehouse mgmt•Labor mgmt•Efficiency
Improvements
Scan Free
•Supply Chain Operations•Warehouses and DC•Receive, Store, Move and ship
products•Reduce / remove human
element from locating, tracking, recording and transmitting information about objects in the warehouse & DCs
Objects: Pallets, Cases or, individual item, forklifts, pallet jacks, rack locations or other equipmentsSample project scope
9/25/2004 18
Example of pilot & proof-of-concept
Proof-of-Concept
Pilot
ManufacturingInventory Inventory
Inventory
InventoryWarehouseForward Rack
to Forward Rack
1 2 3 4
5
6
78
910
1211
Elevator
Divert 1 Divert 2 Divert 3 Divert 4
WalMart OrderBundlingShrinkwrap
Shipping
9/25/2004 19
Example of pilot and compliance
Task 2.1Test nodes analysis,
Identify objects
Assessment Test plan Test execution Results and recommendations
Task 1.1Current process
model
Task 1.2Prioritization of test
nodes
Task 1.3Workshop, best
practices sharing, learnings, strategic
benefits
Task 2.2Location analysis,
tag, reader, antenna, station
Task 2.3Test plan,
architecture, middleware, compatibility
Task 3.1Tag, reader, antenna,
middleware, application config
Task 3.2Test execution
and results
Task 3.3Capture results
Task 4.1Reports, test results, architecture, models,
compatibility
Task 4.2Present report
Task 4.3Learings, RFID
adoption, roadmap, next steps
Phase exitreview date
Phase exitreview date
Kick offdate
Phase exitreview date
Projectclose date
9/25/2004 20
HP offers tested RFID solutions today –demonstration & lab environment• RFID Centers of Excellence provide companies the ability to:
− learn about RFID capabilities and characteristics− conduct proof-of-concept trials− understand RFID requirements of current infrastructure− learn and explore latest innovations and research from HP labs − build RFID roadmap that best fits their business
• Visit our centers that will be based in− Palo Alto, California− Geneva, Switzerland− Bristol, United Kingdom− Tokyo, Japan− Other selected sites in the US
9/25/2004 21
Solutions at workHasbro• Worldwide leader in children’s and family leisure
time entertainment products and services, major supplier to Wal-Mart
• Objective:−Compliance to Wal-Mart mandate −SAP integration capabilities− Realizing business benefits from RFID Supply Chain
Integration • Partner−ShipCom
9/25/2004 22
“HP is enabling Hasbro to implement RFID technology in a
cost-effective and low-risk manner to meet our own customer
requirements and, at the same time, make supply chain
improvements. HP’s expertise in this area is invaluable as we
explore new possibilities around RFID.”
Steve Marcolini, Vice President of IT, Business Integration,
Hasbro, Inc.
9/25/2004 23
Solutions at workConros• Ontario based manufacturer of fire logs and
candles, supplier to Wal-Mart• Objective:−Compliance to Wal-Mart− Production order validation, visibility into plant-plant
product transfer and delivery confirmation, streamlining operations with one of Conros’ largest customers.
• Partners −ShipCom, Matrics for tags & readers
9/25/2004 24
“By being one the first suppliers to integrate RFID technology with our
business processes in compliance with the Wal-Mart mandate, Conros will
gain a competitive advantage as well as demonstrate our commitment to
lower overall supply chain costs and improved service levels. We are proud of our relationship with HP, leading the
way in the deployment of RFID.”
Navin Chandaria, Chief Executive Officer,
Conros
9/25/2004 25
Solutions at workHewlett Packard Company• Global based leading manufacturer of consumer and
commercial devices, supplier to Wal-Mart and DoD• Objective
− Compliance to Wal*Mart and DoD requirements− More than 30 sites to be deployed by the end of the year− Today 13 sites launched− 2 sites in the US tagging at pallet and case level
• Partners− Alien, Matrics, Philips, Rafsec, Tyco, AWID, Microsoft, Intel, OATS,
Manhatten Associates
9/25/2004 26
“RFID has huge potential to automate the supply chain, significantly reducing manual intervention and eliminating inefficiencies from the process.”
Carly Fiorina, CEO, Hewlett-Packard
“Technology to the Rescue”InformationWeek Feb 2004
HP is investing and participating in the future of RFID
9/25/2004 28
HP is investing in the future of RFID• Sentient environment team is researching :
− New technology secure end-to-end networks for locating, tracking and monitoring objects and their interactions
− Adaptive network technology less vulnerable to failure and malicious attacks, while maintaining integrity and privacy of sensor data
− Lower cost of deployment and maintenance than current products
• EPC network compatible technologies for applications− Reducing product shrinkage from loss or theft− Detecting counterfeit goods
• Nano-technology and next-generation sensing technologies• Innovative business processes within data management• RFID / sensor based enterprise security
9/25/2004 29
HP is participating in the future of RFID• HP joined EPC Global in early 2004
− Dick Lampman, HP’s SVP of HP Labs, has joined the EPC Global Board representing HP
• HP has joined and will contribute to the various working / action groups within EPC Global
• All tagged goods leaving HP that are destined for reading by another entity will use the EPC Global EPC Class standards
• We will also willingly share our experiences to date with other EPC Global members
• We are promoting the use of these standards to our customers where appropriate
9/25/2004 30
HP is uniquely qualified to deliver technology and solutions in RFID
Smart Labels USA Conference Displays Record Attendance, Technology and Market
Breakthroughs
What was most noticeable at the Conference was that the gorillas have arrived. Industry behemoths like General
Motors, DHL (Deutsche Post), Marks & Spencer, and the US DOD were in attendance, and are now placing orders.
Other giants, in the strong position of being both end-users and sellers, such as International Paper, Intel, and Hewlett
Packard were also present.IDTechEx
Boston, MA, March 18, 2004
•HP understands RFID business requirements• $20 billion dollar consumer goods business in imaging and
printing• HP’s compliance leadership + critical and necessary supply
chain efficiencis•HP is an experienced early adopter of RFID
• pilot, proof-of-concept, current and planned implementations pan HP and global
•HP offers tested RFID solutions today• HP’s own experience and shared best practices• Right partnerships, knowledge, skills, service experience and
resource centers•HP is investing and participating in the future of RFID
• EPCglobal and HP labs
Q&A