Ppt version1090

3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640

Wal*Mart Case Study:
RFID & Supply Chain Management

TEAM MEMBERS

•Angrish, Sangita
•Chivukula, Venkata S.
•DeWitt, Brendon
•Patel, Raxesh
•Shamsi, Shazeb
•Yellapragada, Ramachandra


Agenda
 Introduction to RFID
 Introduction to Supply Chain Management
(SCM)
 Introduction to Wal*Mart and its Business
Processes
 RFID in Wal*Mart
 Current RFID Usage
 Limitations and Challenges of RFID
 Future of RFID

Introduction
 What is RFID ?
 Why RFID over Bar-Code ?
 RFID Working and Infrastructure


What is RFID?
Electronic tagging technology that allows an
object, place, or person to be automatically
identified at a distance without a direct line-of-
sight, using an electromagnetic
challenge/response exchange.


RFID
• 40 years old technology
• Why being Used NOW?
• right time to use the technology
• Benefits OUTWEIGH the Deployment Costs


Why RFID over Barcode ?
 Ability to read without line-of-sight
 Serialized numbering scheme enables more powerful
 Understanding
 Diagnosing
 Controlling of Supply Chain
 Serial numbers provides individual entity tracking and
much more detailed behavior of SCM than UPC or EAN
used in Bar codes
 No duplicate reading of the same tag – a possibility in
Bar codes
 More powerful sensor-network and monitoring-system
than bar-code systems.


RFID Components

RFID

Reader TAG

Antenna Silicon Chip Substrate


Working of RFID
 Reader generate signals that are dual purpose: provide
power for a tag, and create an interrogation signal.
 Tag captures the energy from Reader and executes
commands sent by the Reader
 Tag sends back a signal containing a unique digital ID
(96-bit serial number) that can be looked up in a
database available to the reader to determine its identity,
perhaps expressed as a name, manufacturer, SKU
(stock keeping unit) number, and cost.
 Tags are generally passive because they require no
batteries or maintenance.


RFID Infrastructure
 Existing software systems
UNABLE to handle serial numbers
Solution – RFID Middleware
 RFID Middleware : Layer between RFID readers and
the application software
Consists of :
1. Lower level device and data management
2. Higher Interpretation level

Context generation and
Interpretation

Device Data
Management Management


RFID Infrastructure (contd.)
 Lower level devices such as motion sensors,
programmable logic arrays and human
interfaces fetch data and provides to Data
management layer
 Data management layer provides some
functionality of filtering data due to intermittent
appearances and disappearances
 After the data management layer yields data, the
Interpretation layer extracts inference from such
data and forwards it to the applications that
deploy RFID


Up Next……
 Introduction to RFID
 Introduction to Supply Chain Management
(SCM)
 Introduction to Wal*Mart and its Business
Processes
 Future of RFID

Introduction to Supply Chain
Management
 Supply Chain Management
1. Coordination of a network of facilities and distribution options
2. Includes procurement, processing and distribution
 Five core processes
1. Planning
2. Sourcing
3. Making
4. Delivering
5. Returning
 Integration of these processes to maximize
benefits


Management (contd.)
 Three levels of supply chain management
1. Strategic – linked to corporate strategy
2. Tactical
3. Operational – involve day to day activities


Management (contd.)

Overall Goal
 Optimize supply chains
 Provide more accurate and time sensitive
information
 Maximize sales and profits


Management (contd.)
 RFID and Supply Chain
 Provide real time information
 Better readings of customers and markets
 Ability to provide right products at the right times

 Deloitte & Touché benchmark initiative
 Only 7% of companies managing supply chain
effectively
 These 7% are 73% more profitable than other
companies

Up Next……
 Introduction to Supply Chain Management
(SCM)
 Introduction to Wal*Mart and its Business
Processes
 Future of RFID

Wal-Mart Introduction and
Business Processes


Operations
 Wal Mart Stores
1. Largest segment accounting to about 67.3% of 2005 fiscal
sales
2. Super centers
3. Discount stores
4. Neighborhood Markets

 SAM’s Club
1. Consists of membership warehouse clubs accounting to 13%
of 2005 fiscal sales

 Wal-Mart International
1. Accounted to 19.7% of 2005 sales


Business Model of Wal*Mart
 Market Strategy of Wal*Mart
1. Everyday Low prices (EDLP)
2. Employs both “Clicks & Bricks” and “Bricks & Mortar” strategy

 Organizational Development
1. Specialty Division
2. Retail Division

 Competitive Advantage
1. Price match guarantee

 Market opportunity
1. B2B Single firm network
2. B2C E-Tailer Business Model

Supply Chain Management at
Wal*Mart
 Procurement and Distribution
 Logistics Management
 Inventory Management


Procurement and Distribution
Procurement
 Procurement involves getting goods from
different manufacturers
 Involves reducing the purchasing costs as far
as possible
 Goods procured directly from the
manufacturers, bypassing all intermediaries


Procurement and Distribution
Distribution
 Distribution centre is divided in different groups depending on the
quantity of goods received
 Goods to be used internally in US arrive in pallets & imported goods
arrive in re-usable boxes.
 Employees have access to the inventory levels of all the products
 Employee makes two scans-
1. For identifying the pallet
2. For identifying the location from where the stock had to be picked
up
 Bar codes & RFID used to label different products, shelves & bins
 The hand held computers guide employee to the location of the specific
product.
 The quantity of the product required from the center is entered in
the hand held computer, which updates the information on the main
central server.
 computers enable packaging department to get accurate
information such as storage, packaging & shipping,
 Saves time in unnecessary paperwork.
3rd December 2005
 Enables supervisorsReserved 2005 - RFID Team : INFS 640 closely
@Copyrights
to monitor their employees

Logistics Management
 Involves managing transportation & delivery of products
 More than 7000 company owned trucks services
Distribution centers
 This enables shipping of goods from distribution centers
to the stores within 2 days and replenish the store
shelves twice a week
 “Private Fleet Driver handbook” – tracking drivers
activities
 “Cross Docking” – from Manufacturer to Customer
 Cross Docking enabled “demand chain”
 “Demand chain” - Customers ‘pull’ the products instead
of retailers having to “push” them

Inventory Management
 Wal*Mart set up its own satellite system in 1983
 Reducing unproductive inventory as far as possible
 Use of Bar-code & RFID technologies for easy packing
and counting of the inventories, efficient picking and
receiving & proper inventory control of the products
 “Massively Parallel Processor “ - enables easy tracking
movement of goods & stock levels across all distribution
centers and stores
 Use of “Magic Wand” to keep track of inventory in stores
 Use of sophisticated algorithm and technology
infrastructure to forecast the quantities of each item to be
delivered, based on inventories in the store and
customer needs
 Centralized inventory database

Up Next……
(SCM)
 Introduction to Wal*Mart and its Business
Processes
 RFID in Wal*Mart
 Future of RFID

RFID in Wal*Mart
 Initiated the plan to implement RFID in its
supply chain in June 2003
 Subsequently, reinforced the RFID
standards and specifications in November
2003


RFID in Wal*Mart
 Specification of RFID Components
 TAGS
 EPC
 Why RFID?
 EFFICIENCY
 WAL*MART SUPPLIERS


Specification of RFID Components

 EPC
 Type of Chip
 TAG
 Distribution Centers to accept RFID
tagged products



 EPC
 96 bit unique number to identify an item in the
supply chain.
 Global Trade Identification Number.

 EPC data format on the chip is Class 1
Version 2 communication protocol.
Class 0: Factory programmable protocol
Class1: Provides the capability to write serial numbers
on the chip


 TAGS
 Operates in the UHF spectrum
 868 MHz to 956 MHz
 Carries the 96-bit serial number
 Is field programmable
 Allows suppliers to write serial numbers to the tags
while being applied to the products


WHY RFID?
 OBJECTIVE: To increase the efficiency
of its supply chain.
 It will
- Enhance Transparency of supply chain
- Help in minimizing cost and labor
- Strengthen inventory control


Efficiency
 Wal*Mart aims to reduce the practice of
manually placing the order
 Has achieved 10% reduction in the case
 Implementation of RFID tags in Wal*Mart’s
inventory has helped boost sales by keeping
shelves better stocked
 Usage of RFID has reduced out-of-stock
merchandise by 16% at the stores that have
implemented RFID tags for more than a year.


RFID COST
Cost Benefit Analysis
Initial Research indicated cost of RFID tag was above
$1.

At present, TAG costs about 30 cents

Cost will drop to less than 5 cents, if deployed on a large
scale

Analysts suggest that the tag should be approx. 1 cent
for small ticket items


Wal*Mart Suppliers
 130 major suppliers ship merchandise to
Wal*Mart distribution centers with about
5.4 million tags
 By 2006, Wal*Mart aims to mandate RFID
implementation for all its suppliers


Wal*Mart Suppliers
 Major Suppliers:
 Gillette
 Hewlett-Packard
 Johnson & Johnson
 Kimberly Clark
 Kraft Foods
 Nestle
 Proctor and Gamble


Wal*Mart Suppliers
 Kimberly-Clark
 Manufacturer of paper goods products
 Eg: Kleenex, Huggies
 Tagged Scott paper Towels shipment with
RFID tags
 First supplier to use RFID – April 2004


Up Next……
(SCM)
Processes
 RFID in Wal*Mart
 Current RFID Usage
 Future of RFID

Successful Implementation of RFID
 Harvard Research suggests a seven step
model for successful implementation of
RFID.


Seven Step Model
1. Understand our visibility requirements
2. Query other end users about
recommendations for trials
3. Move into the action phase in a real-world
setting in a pilot/trial mode
4. Evaluate technical performance
5. Consider the economic benefits
6. Understand the impact
7. Decide whether or not to move forward with a
larger scale implementation

Major Companies implementing RFID
technology
 Volkswagen
 Gillette
 Tesco supermarket tries out smart tagging
 Sun Microsystems sets up RFID test centre in
Scotland
 I.B.M. Expands Efforts to Promote Radio Tags to
Track Goods
 Texas Instruments


Up Next……
(SCM)
Processes
 Current RFID Usage
 Limitations and Challenges of RFID
 Future of RFID

Limitations of RFID
 Why the implementation of a 40 year old
technology is taking so long?

 As pointed out earlier, benefits are gradually
outweighing the deployment costs

 Limitations and challenges: Barriers to Quick
Deployment


Limitations and Challenges of RFID
(contd.)
1. Global standards
 Variety of RFID standards and technologies
2. Technology problems
 Read-range distances not sufficient to allow for
consumer surveillance
 Defective and poorly performing RFID tags
 Damaged RFID tags
 Data management
 Lack of development of right information
management tools
5. Cost
 Tags, Tag Readers, Databases

Limitations and Challenges of RFID
(contd.)
1. Industry Standards
 Privacy advocates are insisting the companies to state their intended
use of the technology due to lack of industry standards

2. Privacy and civil liberties
 RFID tags can be embedded into/onto objects and documents without
the knowledge of the individual

3. Complex programming
4. Potential job losses


RFID Practices that Should be Prohibited

 Merchants must not force their customers
into accepting RFID tags in the products
they buy.
 RFID must not be used to track individuals
absent informed and written consent of the
data subject – directly or indirectly.


Up Next……
(SCM)
Processes
 Current RFID Usage
 Limitations and Challenges of RFID
 Future of RFID

Future of RFID


Future of RFID
 For Retailers ??
 The technology will bring a revolution.
 It will be widely used in retail and consumer goods,
automotive, healthcare, military, postal department
and other scientific uses.
 For Customers??
 If the consumers think the technology is too complex, confusing
or threat to their privacy…
 Will the technology survive?


Key Factors for RFID
 Setting up more standards in the industry
 Bringing down the cost of RFID
 Level of understanding and experience


Demonstration Of Wal*Mart SCM
Wal*Mart
Store

Manufacturer

Wal*mart
Warehouse


Movie Time
http://www.future-store.org/servlet/PB/- s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html


THANK YOU

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