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Realities of RFID in the Retail Supply Chain

Speaker:

Alan MellingSenior Director, Business Development

Symbol Technologies

Sponsored by Symbol Technologies

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The Realities of RFID In Retail

The Realities of RFID In Retail

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Why Now?

StandardsThe Standards Path is Set – EPC & Gen 2

PerformanceLatest UHF technology read ranges (20 feet) and high read rates needed for supply chain applicationsWill Only Improve

AdoptionBroad Global adoption by Supply Chain, Pharmaceutical, Transportation and DOD and others ROI Validated

CostTechnology and scale have made the prices of tags and Infrastructure more attractive

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The Promise of RFID

RFID-based systems report store inventory in real time to drive restocking

Real-time inventory visibility drives lower inventory and associated carrying costs

$600MM

$180MM

Financial OpportunityOut of Stock – Product Visibility

Inventory Visibility

Eliminating need to have people scan barcodes on pallets, cases, and items

Stolen / counterfeit merchandise is identified … not accepted. Knowing where products are at all times makes internal theft at warehouses more difficult

$6.7BB

$575MMSource: CIO Insight, September 15, 2003

Shrink

Scanning - Automation

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Where Will The ROI Come From?

Scanning/AutomationDecreased Labor

Inventory VisibilityDecreased Inventory

ShrinkInventory Shrinkage

(% of Sales)

Out Of StockIncreased Shelf Visibility

Regional DCManufacturing Plant Retail

Reduced Operating Costs Increased Customer SatisfactionProduct On Shelfthe bottom line

7.5% (1); 5% - 40% (2)

1. A.T. Kearney, 'RFID/EPC: Managing the Transition', 20032. Accenture “Auto-ID on Demand, 2003 3. 2003 National Retail Security Survey 4. Ernst & Young's Study of Retail Loss Prevention, 2003

1% - 2% (2)

Increased Sales

10% to 30% (2)

1.65%(3); 1.7% (4)

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Who’s Doing What In RFID?

Marks & Spencer Reduced amount of time to read stacks of trays by more than 80%

Major suppliers delivering RFID tags on all product cases and pallets by Jan. 2, 2006. All cases and pallets May 2007.

Reduced Labor Costs in DC’s by 11%

Reduced the number of forklift operators at a manufacturing plant in Spain

Precision location of paper rolls allows for fewer lifts, optimal loading, etc.

“Less than 85% accuracy is not uncommon; but for its in-store RFID trial, Gap's inventory accuracy levels hit 99.9%”

Labor savings, improved visibility of WIP

Tagging every 100-tablet bottle of OxyContin tablets to be shipped to Wal-Mart and drug wholesaler HD Smith.

10 percent labor savings at its Sterling Heights, Mich., manufacturing plant as a result of RFID. Pharm. Manufacturing

1st Implementation of Item Level Tagging

…High-Value Item Tracking

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State of Supply-Chain RFIDStandards

Gen 2 Path Set; Adoption Timeline MisunderstoodEurope and Asia lag behindRegulatory changes needed to support EPC in Europe Japan conducting tests to open a UHF band this yearChina standards and regulations expected finalization “Near Future”

SoftwareMiddleware – “The ROI Enabler”TMS, WMS, DMS, MES

HardwareBarcode & RFID Coexistence (& Co-Management) Consolidation – Further Needed

– First Example: Symbol & Matrics

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The Promise Vs. RealityMacro

Business Process Examined & Dynamic Evaluation“Slap-and-ship” compliance vs. long-term business casesCosts Still HighStandards in fluxLack of end-user knowledge

MicroInterference

– Other Radio (900 MHz) and Non-Radio Environment

Challenges to read 100% of cases on palletOne frequency and tag design does not fit allLiquids & Metals

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U.S. RFID for the Retail Supply Chain, Long View Source: IDC, 2004

2002 2008 2020

Pallet & Case Level Boom

Pallet & Case Level Peak

Item-level Begins

Item-level Takes Off

EAS Transitions to UHF

2002

Global Manufacturers Source Tag

2008 2020

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Phase 3: Item Level ROI BeginsPhase 2:

Case Level ROI BeginsPhase 1:

Pallet Level ROI Begins

When Will I Get It?When The Silo’s of the current inbound RFID implementations……Progressively Interpret (Not Just Send & Receive)…& Experience The Coming Gen X PhasesCase Tagging: More Beneficial Than Pallet TaggingItem Tagging: More Beneficial Than Case

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pallet & Case Level Boom

Pallet & Case Level PeakItem-level Ramps Up

Item-level Boom

Regional DCManufacturing Plant

Raw Materials Supply

OverseasSourceTagging

RetailDistribution/3PL

US Retail RFID Spending (IDC)

The ROI in RFIDMaking It Essential

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Solution SetTags

Look For: Orientation Insensitive, Read-Only, Read-Write (Many), 2nd Page Memory

Antennas

Fixed ReadersLook For Multi-Protocol, Gen 2 Upgradeable

HandheldsLook for MP, G2 UpgradeabilityIntegrated

Vertical Application Solutions

Portal Solutions

Conveyor Solutions

Forklift Readers

Symbol RFID Tag Tracker

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Why Symbol?

ExperienceEPC Gen 1 Innovation & LeadershipEPC Gen 2 Innovation & CommitmentVertical Market Leader Real Application Experience

Proven TechnologyProven Leader In High-performance, Handheld & Fixed, EPC Readers Broadest Range Of Application-specific EPC Tags.

– Fast Read Rates– Best-in-class Read Ranges

First To Market In Packaged,

Customers choose Symbol because of our innovation, leadership & experience…

& Ability To Make RFID Work

Vertical And Application-specific Solutions

A System-Based Approach To RFID….….Within An Enterprise Mobility Framework

We Make RFID Work

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Store of The Future

Smart Retail

RFID tags in attractive, reusable enclosures attached to garments

Tuned hardware to specific needs of each location.

Smart Dressing RoomPD8500 touch pad displays

An RFID tag attached to a dress is read by readers in the dressing room

Data is instantly transmitted via high speed 802.11 wireless LAN

Data is instantly received by MC50, in the hands of the sales clerk

A video of a runway model wearing the same dress is shown on the Tablet PC

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Adjustments & Fixes: Store of the FutureAdjusting expectations:

Reading through gel pads Reading through Corian

RFID Tags:Larger tags get longer read rangesAesthetically pleasing tag enclosures --- affected performanceTag enclosures modified to create separation from gel pads

Software: filtering/smoothing of tag reads

AdjustingRefining and tuning readers and antennas Adjusting power levels, frequency hopping, etc.Changing antenna locations/angles, etc.Tuning hardware to specific needs of each location.Reading through harsh materials: one inch thick gel cushions

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Summary

Inventory & Product Visibility is not Getting it Done with “as is“ business process improvement efforts

Industry-wide implementation of ePC, combined with the re-engineering of end-to-end business processes:

Major step towards solving for the out of stock gap

Achieve a good portion of the step-up in shelf availability……before item level tagging

Tagging of case and pallets linked with real-time, front-end POS data provides significant process efficiencies.

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Thank You For YourTime And Attention!

Questions