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May 2007 Canadian Grocery Industry RFID Pilot RFID Value Assessment Results Prepared by IBM Canada Ltd. for Canadian Council of Grocery Distributors (CCGD) Food and Consumer Products of Canada (FCPC) EPCglobal Canada
Transcript

May 2007

Canadian Grocery Industry RFID Pilot

RFID Value Assessment Results

Prepared by IBM Canada Ltd. for

Canadian Council of Grocery Distributors (CCGD)

Food and Consumer Products of Canada (FCPC)

EPCglobal Canada

RFID Value Assessment Results Page 2

Contents

Executive Summary 3

Pilot Overview 8 Background 8 Objectives, Execution, and Deliverables 10 Technology 11

Analysis Methodology 12

Pilot Results 14 Results Overview 14

Technology Key Messages 14

Business Case Drivers 18 Benefi ts Overview 18

Investments 26

Deployment Strategy 30 Deployment Overview 30

Next Steps 34

RFID Value Assessment Results Page 3

Highlights

“The Canadian grocery industry RFID pilot

was done for the right reasons, the right

way and provides members with the right

information to understand the conditions

that will be required for successful implement

of RFID throughout the grocery supply chain.

The commitment of the industry to take

a collaborative approach to understand

RFID’s potential and the impact and benefi ts

to both suppliers and retailers is unique to

the Canadian market and defines our industry

approach to changes that require critical

mass adoption to maximize benefi ts.”

- David Wilkes, Senior Vice President,

Trade and Business Development,

Canadian Council of Grocery Distributors

“The Canadian RFID Centre and the RFID

Industry pilot are excellent examples of the

industry working collaboratively to ensure

due diligence on emerging issues that

can significantly affect the supply chain.

In the case of RFID, building knowledge

and examining the business case collectively

provides stakeholders with an objective

perspective that can be used to make

decisions.”

- Elaine Smith,

Senior Vice President, Industry Affairs

Food and Consumer Products of Canada

Executive Summary

Preparing for the future of RFID

The Canadian RFID Grocery Industry Pilot was born out of the collaborative

partnership between the key players associated with the Canadian RFID Centre

(CRC): industry, associations and technology providers. Four grocery product

manufacturers, one retailer, three industry associations and three RFID solution

providers participated in the Pilot, which was conducted under the premise that

RFID and EPC adoption should be approached as an industry-wide initiative.

With a focus on the business case validation of food traceability, distribution centre

efficiencies, environmental monitoring and reduction of out-of-stocks at the retail

level, the Pilot took place between May 2006 and January 2007. To analyze the Pilot

results, our detailed methodology covered:

• analysis of the product fl ow dynamics;

• benefi ts identifi cation and quantifi cation;

• investments assessment; and

• business case development for each manufacturer and retailer involved.

This White Paper examines the results of the Grocery Industry RFID Pilot and

suggests recommendations for industry adoption. As RFID gains traction in the

Canadian market, the question of RFID adoption in Canada’s grocery industry

is not a matter of “if”, but rather, “when.” Early – and informed – adoption is key

to successful implementation.

RFID Value Assessment Results Page 4

Results Overview

Even though the Pilot had a unique, collaborative industry-wide approach,

it confi rmed some fi ndings identified in other previous studies. When considering

RFID, it is important to delve deeply into an organization.

Read rates improved significantly over the course of the Pilot, rising an average

of 18% overall. By using “inference of read rates” companies can achieve benefi ts

in various categories, including traceability, promotions management, condition

monitoring, out of stock and improved labour efficiencies. In addition, new and

upgraded technology can contribute to improved read rates and thus improved

results. Effectiveness can be maximized by integrating the RFID solution data

into existing applications for improved decision-making.

From a retailer perspective, RFID provides a positive return given critical mass

of tagged cases and pallets is achieved through the distribution and store network.

On the manufacturer’s side, the results were mixed. Payback for this pilot study was

highly dependent on how manufacturers were currently performing in the six benefi t

areas analyzed. If manufacturers were performing very efficiently in certain areas,

or they had difficulty quantifying their existing environment, potential improvement

opportunities were harder to identify and track. It should also be noted that payback

was very sensitive to changes in the labour required to tag cases and hardware costs.

With Slap and Ship, RFID benefits are only considered after the tagged product

leaves the manufacturer’s DC. Therefore, it does not represent the full potential

RFID can offer to a manufacturer.

Other potential benefits derived from additional information and inventory visibility

to support other business areas – such as demand forecasting, production, inventory

management and marketing – have not been quantified and included in the business

case. The business cases also exclude benefits that could be realized in other supply

chain execution areas such as transportation management, asset tracking and raw

materials and work-in-process inventory management. Such areas were not in scope

of analysis in the Pilot.

RFID Value Assessment Results Page 5

Some of the results were surprising. Given the current high level of effectiveness

in managing shipments from suppliers to retailers, only limited Proof of Delivery

benefits were quantified. These results, however, may not reflect the reality of

the industry, particularly for those companies with very fragmented distribution

networks that see the standardization of their processes as a challenge. For those

companies, RFID could provide drastic gains by automating their shipping and

receiving.

For traceability, benefits depended greatly on each pilot participants own supply

chain network and were mainly qualitative in nature. That’s because the real value

of traceability information is serving as a source of feedback to support pro-active

risk mitigation measures that will drive efficiency gains and optimize logistics,

manufacturing and quality management processes.

Using RFID Successfully

The greatest benefits discovered in the Pilot related to improving promotion

execution and reducing out of stocks. These benefits categories provided substantial

potential, but are highly dependent on the interaction among members in the

supply chain. Therefore, the benefits realization can be compromised by lack of

collaboration between retailers and manufacturers in terms of information sharing

and process execution.

Critical to any successful RFID deployment is a collaborative effort – the sharing of

information between manufacturer and retailer to realize mutual benefi ts associated

with promotion management and out-of-stocks at the retail store.

RFID Value Assessment Results Page 6

The Pilot showed that:

• “Slap and Ship” can be a workable approach, if used in a low-volume

situation where there is no benefit in investing in a larger solution. Regardless,

it was discovered that the earlier the tag was applied in the supply chain, the

better the result in terms of improved accuracy and more effi cient shipping.

• RFID can be used to avoid OOS situations. RFID delivers real-time information

about inventory levels in the supply chain, enabling employees to act upon

that information. Thus, operational variability can be reduced and product

availability at the stores can be improved.

• RFID technology is expected to offer a superior level of promotions management

due to the enhanced visibility both retailers and manufacturers gain on

inventory positions, before and during the promotions. RFID is also promising

improved traceability during a recall because managers can have full visibility

into where the products are moving from the moment they have a commis­

sioned RFID tag attached to them until they are available to consumers.

• RFID can improve the effectiveness of shipping and receiving processes.

It enables operators to proactively identify wrong picks, short shipments

and overages before loading is concluded.

Cost Considerations

The most cost-effective solution for each client was chosen, and the range of costs

is illustrated in the following table for all participants in the Pilot.

Investment Area Lower Range % of total costs

Higher Range % of total costs

Corporate Services 6 16

Application & Integration 9 20

Maintenance 1 4

Hardware 3 67

Labour 0 35

Tags 3 33

RFID Value Assessment Results Page 7

Explanation of costs:

• Corporate Services: All consulting and internal manpower required

for an RFID solution.

• Application and Integration: Application hardware, middleware and costs

to integrate RFID application into existing WMS systems.

• Maintenance: Yearly software maintenance and support.

• Hardware: RFID readers and tagging equipment

• Labour: Labour required tagging cases and pallets

• Tags: individual costs of an RFID tag

Tailoring RFID for your business needs

Given the findings of the Pilot, a compelling case exists from a retailer’s perspective

to deploy RFID. From a manufacturer’s perspective, the case is not as clear cut.

Preparation of a full business case is required to see where a particular manufacturer

stands. Depending on their specific pain points, deployment of RFID by product

or product category may be a viable option.

RFID Value Assessment Results Page 8

Highlights

The Canadian RFID Grocery Industry Pilot

was conducted under the premise that RFID

and EPC adoption should be approached as

an industry-wide initiative. This White Paper

reports the findings and conclusions

from the Pilot and suggests a series of

recommendations for industry adoption.

Pilot Overview

Background and Scope

The Canadian RFID Grocery Industry Pilot (the “Pilot”) was launched as a logical

extension to the collaborative partnership created at the Canadian RFID Centre

(CRC) between industry, associations and technology providers. This Pilot was

conducted under the premise that RFID and Electronic Product Code (EPC)

adoption should be approached as an industry-wide initiative. All the participants

identified herein have contributed significantly to this project and its fi ndings.

The purpose of this White Paper is to report the findings and conclusions from

the Pilot and to suggest a series of recommendations for industry adoption.

Four grocery product manufacturers, one retailer, three industry associations

and three RFID solution providers were involved in the pilot.

The industry participants were:

• General Mills Canada

• Loblaw Companies Limited

• Maple Leaf Foods

• Kruger Products Limited

• Unilever Canada

The industry associations were:

• Canadian Council of Grocery Distributors (CCGD)

• Food & Consumer Products of Canada (FCPC)

• EPCglobal Canada

The solution providers were:

• IBM Canada Ltd.

• Intermec Technologies Limited

• Motorola, Inc. (formally Symbol Technologies Limited)

RFID Value Assessment Results Page 9

Unless otherwise stated, the results (including findings and recommendations)

outlined in this paper are based on the scope in which the Pilot was executed.

Each of the four suppliers tagged two to three SKUs at the case and pallet level for

the Pilot. In total, 10 SKUs were tagged. The tagged SKUs were shipped to a single

retailer distribution centre and then sent to be sold at two retail stores. The selected

products spanned a wide range of categories, encompassing frozen products,

refrigerated products and dry goods. They included:

• Dry products

• Canned products

• Fresh, processed meat products

• Frozen products

• Display-ready pallets

During the life cycle of the products, they were read by fixed RFID portals at the

time of: manufacturer shipping; retail distribution centre receiving; retail distribution

centre shipping; retail store receiving; upon entry or return from the retail store

sales floor; and finally, when entered into the retail store trash compactor.

The following were specific to each location:

Supplier Warehouse: The supplier warehouse or third party logistics (3PL) entity,

which provided RFID and EPC enablement services on the supplier’s behalf, stored

goods for shipment to customers. The key technology consideration for the sup­

plier was the entry point and conversion of products with UPC SKUs into the EPC

standard, and the departure of EPC enabled goods to other locations of the supply

chain.

RFID Value Assessment Results Page 10

Distribution Centre (DC): The distribution centre was used to store goods from

multiple suppliers, and to fulfill orders of required goods for the two retail stores.

The distribution centre infrastructure allowed RFID enabled product to be tracked

as they entered and left the distribution centre. The key points of interest in the

distribution centre included receiving and shipping docks, as well as storage

(freezer, fridge, dry goods).

Retail Store: The retail domain consisted of the back end, receiving area of a retail

store where shipments were received from the retailer’s distribution centre,

the entry point to the store floor where goods were displayed for sale, and the

trash compactor where the boxes and wrappers were disposed.

Objectives, Execution and Deliverables

The primary objectives for the Canadian Food Industry RFID Pilot included:

1) Validation of the RFID business case associated with food traceability, distribution

centre efficiencies, environmental monitoring (temperature) and reduction

of out-of-stock at the retail level

2) Creation of an industry implementation approach for each supplier,

distributor and retailer

3) Validation of the findings made at the Canadian RFID Centre (CRC) in the fi eld

To accomplish these objectives, the project was organized into five distinct phases,

beginning in May 2006 and ending in January 2007.

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Project Mobilization & Solution Design

Solution Build & Site Mobilization

Solution Install & Solution Test

Pilot Launch & Pilot Run

Result Analysis & Report Development

May 1 - June 6 June 6 - July 6 July 7 - July 28 July 28 ­November 3

November 4 ­January 15

RFID Value Assessment Results Page 11

Technology The Pilot was conducted using a centralized hosted applications model; therefore, limited technology was physically deployed at each of the participating sites. This approach was used because it provided:

• Speed to deployment; • Lower costs for participants; • Easier management and support during Pilot execution; and • A scalable solution, capable of being reused in a future deployment.

RFID Value Assessment Results Page 12

Analysis Methodology

A detailed methodology was applied to analyze the Pilot results. The methodology

covered not only analysis of the product flow dynamics during the Pilot, but also

benefi ts identifi cation and quantification, investments assessment and business

case development for each manufacturer and retailer involved.

Business processes that were impacted by the rollout of an RFID solution were

investigated. The business processes were then used to define a set of benefi t

categories for analysis. In addition, several discussion points were prepared for

the respective benefits. A questionnaire was completed to summarize baseline

data for each Pilot participant.

The benefi ts were quantified at a per-case level, to take into account different

volume flows throughout each participant’s supply chain. Along with the potential

benefits calculation, real illustrations of how business can capture value provided

by RFID solutions were identified as a result of Pilot observations. Examples were

shown throughout the Pilot with the aid of information provided by an RFID

solution. These included proof of delivery (discrepancies treatment, service level

improvement, returns), traceability (old code / spoilage, order tracking, recalls),

condition monitoring, inventory visibility, out-of-stock, promotions management

and labour effi ciencies.

Market pricing from the software and hardware vendors involved were utilized

as a baseline for the investments calculations. Using information from participants,

a customized, cost-effective RFID solution was conceived for each participant.

A yearly deployment strategy was then developed to obtain the best net fi nancial

outcome for all the participants involved in the Pilot to supply one retailer.

The number of cases requiring RFID tags on a yearly basis was used for each

participant and hardware investments were extrapolated accordingly to handle

the flow of RFID tagged cases. Specific assumptions were made around the price

depreciation of RFID equipment and future trends (i.e. tag prices). Some of the

key assumptions used when calculating payback were a $0.10 tag cost depreciating

to a floor of $0.05 and hardware discounts based on large orders. Finally extensive

sensitivities were conducted on these variables to assess the level of impact.

RFID Value Assessment Results Page 13

Four Investment Models

From an investment perspective, four distinct investment models were evaluated

for each manufacturer: Slap and Ship, Hybrid, Inline Printing, and Corrugate Tagging.

Each model was considered for the manufacturers and the best viable solution was

analyzed in detail for them to provide an RFID solution to one retailer.

Slap and Ship: This model was used during the Pilot project and requires all

suppliers’ products to be manually tagged at their manufacturing sites or distribution

centres. This model provides the least required capital investment but allows

companies to provide an RFID solution to comply to any potential mandate with

significant impact to their current processes. However, because labour costs rise

as case volumes increase, it is not recommended as a long-term solution.

Hybrid: This model is a “slap and ship” model in early deployment years (when

volumes are low), and a “print and apply” automated system in the later, high-volume

years. Some additional manual labour is still required. This model proves that tagging

may be done at a 3PL or within the manufacturing/distribution network of the

suppliers. The Hybrid model provides the smallest investment for a large manufacturer

who still needs to provide an RFID and non-RFID solution to its customers.

Inline Printing: All cases are tagged by an inline printer installed on each of the

manufacturer’s product lines. This model provides the best long-term solution for

manufacturers/suppliers in terms of reducing the labour costs and ineffi ciencies.

It affords the best opportunity to capitalize on additional benefits that can be gained

upstream in internal warehousing, inventory control and logistics. The challenge

here is twofold: 1) Segregating RFID orders from non-RFID orders is diffi cult, and

2) Many manufacturers have a global supply chain and would require an international

RFID initiative to make inline printing a practical and cost-effective solution.

Corrugate Tagging: This final model considers RFID tags embedded into the case

corrugate by the corrugate suppliers. This option, like inline printing, is deemed to

be a viable long term solution. However, the viability of the corrugate tagging model

strongly depends on the technology maturing and its broader adoption by other

members of the supply chain. Corrugate suppliers should understand that products

with RFID labels can be considered a distinct line of business, and as such, might

drive substantial business opportunities.

RFID Value Assessment Results Page 14

Highlights

Integrating the RFID solution data into

existing operational and decision-making

applications will align the use of the

information with day-to-day activities.

Pilot Results

Results Overview

Results clearly showed that read rates improved significantly over the course

of the Pilot, rising an average of 18%. At the same time, it was evident that by

using “inference of read rates” companies can achieve benefits in various categories,

including traceability, promotions management, condition monitoring, out of stock

and improved labour efficiencies. New and upgraded technology can contribute to

improved read rates and the benefits realized. And finally, the effectiveness of

the solution can be maximized by integrating the RFID solution data into existing

applications for improved decision-making.

Technology Key Messages

Read rate performance promises significant business value across the supply chain

Read rates improved significantly over the course of the Pilot. The initial average

read rate for the nine piloted SKUs was 71%. However, by the end of the Pilot,

the average read rate had risen to 89%. This 18 percentage point improvement

can be attributed to modifications and adjustments to the process, equipment and

application including upgrading the firmware and middleware. In addition, proper

tag placement on the product was critical to achieving the optimal read rate.

Even more significantly, three out of the nine SKUs had 100% read rates and seven

out of the nine SKUs had read rates over 85%. The results of the Pilot show that

for many product categories and packaging types, RFID read rate performance is

adequate today to drive significant business value across the supply chain. However,

there are others for which further read rate improvements are still required before

there is a rationale for adoption.

It is important to note that this Pilot did not consider the process changes or the

business reengineering of pallet configurations; therefore, the read rates experienced

in this Pilot could have been higher had these changes been considered. This

report cannot make recommendations on pallet reconfiguration – each company

needs to evaluate the implications of making such changes to their business.

RFID Value Assessment Results Page 15

Ultimately, given ongoing technology improvements, read rates are expected to

continue to rise. Ongoing testing of new technology such as tags and readers will

further improve read rates, bringing RFID a step closer to full adoption.

Inference of read rates often sufficient to drive business benefi ts

In situations where a 100% read rate is currently not achievable, the concept

of “inferring a read” may be applicable. Read rate inference utilizes the known

number of case tags associated with a pallet. During pallet building, RFID tags

are printed and commissioned. The number of case tags along with tag EPCs

are then associated with a specific pallet tag. Those tags are applied to the cases

and pallet, and a baseline or aggregation is performed.

Therefore, at the next read point, if only 85% of the case tags are read, the other

15% are inferred or read based on the known fact they are associated with that

pallet. If at any instance in the supply chain the pallet is broken down, and baseline

or aggregation is established, case tags are then associated to the pallet tag for the

newly created pallet.

Inference of read rates will allow a company to achieve benefits – where achieving

a 100% read rate is currently not available – in various categories, including

traceability, promotions management, condition monitoring, out of stock

and improved labour effi ciencies.

Retailers will often use the concept of Trusted Supplier Agreements with their

vendors and regularly audit receipts from vendors to ensure that case quantities

associated with pallets are accurate. In this way, when there is a high degree of trust

between the retailer and its vendors in terms of ship/receive quantities, inference

of read rates is an acceptable RFID practice.

RFID Value Assessment Results Page 16

As RFID technology improves, companies must continue to assess its benefi ts

As demonstrated during the Pilot, upgrades to existing technology components,

along with the introduction of new technology, contributed to the improvement

of read rates and the overall efficiency of the technology. This allows for more

options when designing and implementing an RFID solution; they improve

the read rates of products with challenging compositions.

Companies must continue to monitor and evaluate RFID technology. Technology

assessed at the beginning of a deployment will improve within a short time frame,

and applying the most efficient technology components will allow a company

to achieve the most from its RFID strategy. For example, during the three months

of the Pilot, we observed an improvement in all aspects of the technology: readers,

firmware, software, and middleware.

Integration of RFID technology with existing decision-making tools will improve benefi ts

Integrating the RFID solution tool sets and data into existing operational and

decision-making applications will align the use of the information with day-to-day

activities.

Most sophisticated replenishment, inventory management, manufacturing

and warehouse management systems drive the planning and operational activities

– and subsequent feedback – into the financial aspect of the organization.

Point-of-sale information is typically integrated into back-offi ce solutions

periodically throughout the day.

However, the speed and quantity of data flowing from an RFID solution – dynamically

integrated with the operational and decision-making tools – can expedite the

action/reaction time significantly. Triggering management or operational alerts

to situations such as out-of-stocks, code date issues, stocking, picking or shipping

errors, will only be beneficial if that information is provided real-time to the user

who must remedy the situation. This changes the landscape of reaction and execution,

to event-driven activities that need to be performed by floor staff in the retail store,

warehouse or manufacturing environments. The key is having the information received

by the right person at the right time, giving them the opportunity to correct or

address the situation.

RFID Value Assessment Results Page 17

Information available to the manufacturer, such as inventory status and sales trends,

can increase the accuracy of production volumes and capacity requirements from

a planning and production perspective when integrated into planning and forecasting

modules. This can reduce the reliance on forecasting methods that are typically

used today – which are “best-guesses” based on historical information instead

of real-time data. This is not to say that these methods will become obsolete,

but they can be enhanced by the influx of current data and information.

The level and timing of integration should be tempered with maximizing the

benefits. Integration into complex systems can be a long and expensive endeavor.

Integration of the RFID data into business and operational systems through detail

planning, design, development and deployment should be an activity that is

performed in the initial phases of an RFID deployment plan.

RFID Value Assessment Results Page 18

Highlights

Reducing out-of-stock (OOS) levels represents

the greatest opportunity area for both retailers

and manufacturers to profit from RFID

technology adoption.

Business Case Drivers

Benefi ts Overview

The Pilot demonstrated that RFID can be used to avoid OOS situations. RFID

delivers real-time information about inventory levels in the supply chain, enabling

employees to act upon that information. Thus, operational variability can be

reduced and product availability at the stores can be improved.

It also showed that RFID technology is expected to offer a superior level of promotions

management due to the enhanced visibility both retailers and manufacturers gain

on inventory positions, before and during the promotions. RFID is also promising

improved traceability during a recall because managers can have full visibility into

where the products are moving from the moment they have a commissioned RFID

tag attached to them until they are available to consumers.

Finally, RFID can improve the effectiveness of shipping and receiving processes.

It enables operators to proactively identify wrong picks, short shipments and

overages before loading is concluded.

Reduced out-of-stocks can be profitable for both manufacturers and retailers

Reducing out-of-stock (OOS) levels represents the greatest opportunity area for

both retailers and manufacturers to profit from RFID technology adoption. Even

though several initiatives have been undertaken by the Consumer Package Goods

(CPG) industry throughout the years to improve product availability on the shelves,

OOS events still jeopardize brand loyalty, customer experience, and ultimately

overall profi tability.

Several factors can contribute to an out-of-stock situation. Unpredictable consumer

behavior, for instance, is a huge source of fluctuation in demand and can play a role

in reducing product availability. However, other causes of OOS are more dependent

on process compliance and information-sharing infrastructure and, therefore,

should have the full attention of both manufacturers and retailers.

RFID Value Assessment Results Page 19

As illustrated in the chart, below, the following situation was identifi ed during

the Pilot:

• PoS data showed a period of five days in which there were 0 sales

for one of the Pilot products.

• RFID event data showed that in fact that particular product was in the back

room of the store during the time at which there was an out-of -stock at the

shelf level.

• In a real-world implementation, the PoS activity would be linked to an alert

mechanism which would notify store staff that there is an out of stock at the

shelf and that the required product is located in the backroom.

RFID can enable business analysts, category managers, merchandise managers and,

ultimately, store personnel to act (and react) upon real-time information concerning

inventory levels in different parts of the supply chain. As a result, a great part of the

intrinsic operation variability can be reduced and, therefore, product availability at

the stores can be greatly enhanced. The table below describes some of the business

processes that can contribute to an OOS situation and how RFID can help minimize

them.

RFID Value Assessment Results Page 20

How RFID can address OOS

Areas Ordinary Process RFID enabled Process

Receiving Accuracy

• Receivers need to manually count full/mixed pallets.

• Tagging and scanning may be necessary for control (at DCs).

• Discrepancies are identifi ed after the fact. Correction process is time- consuming, costly and might disrupt planned availability of products.

• Automatic receiving can minimize the need for audits.

• RFID-generated ASNs can speed up and improve store receiving accuracy.

Stock Visibility • Ordering and forecasting processes is based on historical and often inaccurate data.

• Real-time visibility of inventory throughout the supply chain streamlines ordering and forecasting processes, reducing variability and shocks of demand.

Replenishment from Backroom

• In most current retail store environments, it is diffi cult to segregate inventory from the backroom to the sales fl oor.

• Store associates do not have full visibility of the inventory carried at the backroom.

• In effect, RFID creates a fi fth wall within a retail store so they can distinguish between back-room and front room inventory.

• Triggered alerts can be sent to store associates informing them about available stocks in the back room.

• Integration with POS data can drive proactive behavior to avoid the occurrence of OOS events.

The Pilot had a mandate to study, identify and quantify only the benefi ts associated

with the interaction between suppliers and retailers. As such, it validated the

importance of reducing OOS situations as one of the major benefits categories for

both retailers and manufacturers. OOS represented 36% to 68% of all the potential

benefi ts quantified. We would expect these proportions to reduce in importance

as more business processes and benefits areas are investigated by each particular

company.

Furthermore, RFID could contribute to market share gains if it can improve

the chances that a certain brand can be available to consumers more often than

its competitors, particularly in highly competitive, price-sensitive categories.

At the same time, retailers could differentiate themselves by providing their customers

with a more standardized and pleasant customer experience at the stores than their

competitors would.

RFID Value Assessment Results Page 21

Hence, RFID enablement can be the tool to drive major competitive advantages

for both retailers and manufacturers, allowing them capitalize on a more streamlined

supply chain. However, such advantages tend to diminish as more manufacturers

and retailers reduce OOS levels on their products through the adoption of such

technology. As a result, we expect greater gains for manufacturers and retailers that

first move toward investigating the impact of RFID on their own business processes.

Improved execution evident during promotional events

Today’s retailers can see what’s within their four walls, but cannot distinguish

between back room and sales floor. RFID effectively adds a “fi fth” wall.

Even though sales promotions have become an indispensable tool to drive

business objectives, both retailers and manufacturers agree that there is great

room to increase return on investment in consumer and trade incentives. Studies

show that promotions can account for more than 60% of typical marketing budgets

of a CPG manufacturer, but the profitability associated with trade promotions is

still considered dismal. Anecdotal results show that as many as 2/3rds of promotion

dollars do not have the desired revenue impacts for both manufacturers and retailers.

Several factors contribute to this poor performance, including inaccurate forecasting,

lack of coordination among the parties involved, and competitive movements. Poor

store operation has stood out as a major component. In fact, the ability to manage

promotional item handling and to adjust processes quickly in a constantly changing,

demand environment is essential for improving promotion results.

RFID technology is expected to offer a superior level of promotions management

due to the enhanced visibility both retailers and manufacturers gain on inventory

positions, before and during the promotions. Compared to a normal store, an

RFID-enabled store is better equipped to provide accurate inventory levels, due

to the improved visibility of the inventory at the back room. As a result, chances

of a display-ready pallet sitting at the back room, or being broken down to replenish

normal shelves, is reduced.

RFID Value Assessment Results Page 22

Also, store personnel and business analysts, from both manufacturers and retailers,

can be alerted about the speed of inventory depletion and then make decisions

that can change replenishment plans and consequently drive promotion success.

This is possible by following product movement from receiving, to sales fl oor, and

then to the trash compactor. Point-of-sale data, if shared by the retailer, can support

the identification of OOS situations in almost real time, allowing even faster reaction

from store management and even vendors’ sales personnel.

Furthermore, RFID data can also be used to generate intelligence about past

promotions that can not only improve forecasting for future promotions but also

identify areas of inefficiency to enable continuous process improvement. Retailers

can identify individual stores that are not running promotions effectively, for

instance, and take action to improve execution of future promotions. Manufacturers,

on the other hand, can better track the investment in trade dollars and claim

measures from the retailers when appropriate.

The Pilot validated some of the expectations for improving promotions management.

A markdown promotion was scheduled to run in different stores for a full week,

in different stores. The RFID system was able to track the inventory increase at the

DC during the days that preceded the promotion. It also allowed analysts to identify

the dates and times that promoted products arrived at the RFID-enabled store,

and when they moved from the back room to the sales floor. The promotion was

successfully run at the pilot store, given that the inventory was depleted according

to the forecast and no OOS event was identified. However, in another store, which

was not RFID- enabled, an OOS situation occurred for many hours during peak

of consumption.

Quantifying the opportunity for improving promotions execution as a result of RFID

deployment is extremely complex and requires deep understanding of the processes

involved in designing, monitoring, executing and analyzing the results of promotions.

During the Pilot, only OOS for promoted items was quantified in terms of the

potential gains that manufacturers and retailers can achieve. On average, the results

showed that promotions management represents 17% to 60% of the total benefi ts

quantified to retailers and manufacturers.

RFID Value Assessment Results Page 23

Provides an effective way to provide one-up, one-down traceability

Traceability capability is essential for the food industry – to manufacturers, retailers,

and consumers. It represents not only compliance to increasingly demanding

regulatory regulations but also an opportunity to provide greater value to customers

while reducing costs.

While food manufacturers have applied procedures and technology environments

that address the issue with a certain degree of reliability, RFID allows them to improve

the efficiencies in which traceability is performed. ERP-enabled solutions can track

production lots and code dates, shipments and destinations, but such information

systems cannot provide visibility into the processes happening further down the

supply chain.

RFID stands out as a very promising solution to enable a real breakthrough in

the way traceability is performed, because managers can have full visibility into

where the products are moving from the moment they have a commissioned RFID

tag attached to them until they are available to consumers. RFID not only allows

immediate order and shipment tracking, but it also reduces the number of interme­

diaries involved in the event of a recall, while preventing managers from potentially

having to scrap large inventories instead of only the lots that need to be removed.

During the Pilot, a recall process was simulated with great success. Cases shipped

under different purchase order numbers had their locations identified in less than

five minutes, providing product, distribution and inventory information as mandated

by regulatory agencies.

But the real value of RFID-enabled traceability is not just in its strengths during

emergencies. Full traceability information can be used as the basis for effi ciency

gains and optimization in logistics, manufacturing and quality management processes,

by providing quick feedback to support pro-active measures to minimize risks on

future operations. Manufacturers and retailers should, therefore, make use of the

full visibility to gain efficiencies in the supply chain and build competitive advantage,

instead of to simply comply with regulatory requirements.

RFID Value Assessment Results Page 24

RFID-enabled condition monitoring allows greater visibility into temperature variations

Given the importance of controlling environmental conditions to maximize product

shelf life, thus avoiding spoilage costs and to improve compliance with strict regulatory

requirements, many food manufacturers and processors have implemented diverse

solutions to control temperature variations of perishable products in transit.

However, most of these solutions can only track average temperatures inside trailers.

The monitoring devices are not attached to specific cases; therefore, they cannot

identify events such as poor handling at the docks or warehouses. Moreover,

information access is limited to closed-circuit flows (transportation from origin to

destination and back to same origin), because the reading/controlling devices need

to be returned so that the information they carry can be accessed and analyzed.

As a result, the data captured is normally a description of what happened in the

past, limited to just a fraction of the total operation, and mostly intended to

support regulations compliance.

Consequently, there is great opportunity for improving the business benefi ts of

temperature control throughout the supply chain, and make it a source of differen­

tiation. Because RFID technology provides visibility to manufacturers and retailers

of how perishable products are handled before they are available to consumers,

it can be a viable enabler of consistently providing fresher products, stronger

branding positioning and, hence, competitive advantage.

RFID-enabled condition monitoring allows manufacturers to track temperature

in near real time through various control points in the supply chain. Tags attached

to each product case can record temperature readings, which can be accessed every

time the case passes through an RFID portal. If the temperature exceeds a pre-defi ned,

acceptable threshold, an alert is sent to the operators, enabling them to take preventive

actions to avoid premature spoilage. Also, the system can keep track of historical

temperature data that would serve as a record to satisfy regulatory requirements

and allow for process and quality improvements.

RFID Value Assessment Results Page 25

During the Pilot, a proof-of-concept was run to validate the technology readiness

and its potential. Four temperature tags were applied to a pallet of perishable

product at the supplier’s facility. Real-time, instant temperature reads were taken

by RFID readers at various points across the supply chain: supplier shipping,

retailer distribution centre and retailer store. The temperature monitoring solution

was configured to trigger alerts according to pre-defined business rules that set

temperature thresholds. The results showed that the products in the experiment

were manipulated according to the standardized procedure, and no substantial

variance was noticed. Product life shrinkage could have been calculated and alerts

were set to be sent if there had been a different outcome.

It was concluded that RFID-enabled condition monitoring is already possible today,

and this new way to ensure product freshness should be considered by food

manufacturers and retailers as a way to reduce costs and improve condition

monitoring effi ciencies.

Automation of shipping and receiving processes offers more than simply productivity

increase from replacing bar code scanning

The automation of shipping and receiving processes might be the most intuitive

application for RFID technology. Once simply considered the next generation of bar

code systems, RFID was mainly thought to provide benefi ts exclusively associated

with the productivity improvement gained by substituting bar code scanning. This

approach makes the quantification of savings more visible to managers studying

the viability of deploying the auto identification concept to their business. However,

it omits the benefits generated by the automated dynamic interaction between

vendors, transportation suppliers and retailers.

During the Pilot, a broader approach was taken. Rather than simply focus on

quantifying the labor costs associated with scanning labels, other business

processes were investigated in an attempt to identify ineffi ciencies that could

potentially be reduced. It greatly emphasized service level compliance and

costs of maintaining inventory accuracy.

RFID Value Assessment Results Page 26

Results showed that shippers that have a more fragmented distribution network

(several shipping locations) and a larger number of transportation suppliers –

or that present a lower level of information integration among their warehouse

management, order management and financial systems – tend to face a greater

challenge in providing higher service levels. Such complexity represents opportunity

for capturing benefits generated by RFID deployment, given that it can standardize

execution processes while capturing more accurate information in real time.

RFID can enable operators to proactively identify wrong picks, short shipments

and overages before loading is concluded, thereby improving the effectiveness

of shipping and receiving processes. Also, the RFID-enabled automatic shipment

notice (ASN) allows faster receiving and more accurate inventory control, minimizing

variability associated with order fulfillment and establishing the foundation for

ASN-based collection/payment procedures. Finally, RFID can reduce administrative

efforts and the costs associated with correcting and managing discrepancies in

inventory, outstanding orders and payment, while reducing order to cash cycles,

easing conflict resolution and ultimately improving service levels.

Investments

There are many cost/investment components to implementing an RFID solution.

For the purposes of the Pilot reporting, the category structures used are summarized

as follows:

1. Hardware: All hardware components required for the RFID technology

including PCs, controllers, printers, portals, readers (fi xed, portable

and handheld), antennas, light trees, motion sensors, cabling of equipment

and conveyors (where applicable).

2. Application and integration: Application servers and software (including

licensing) to gather, filter and report the RFID transactions, middleware,

hosting services, networking (one-time and ongoing monthly charge)

and integration into existing information systems.

3. Services: All consultation and integration services to support the pilot/rollout.

4. Maintenance: Ongoing software maintenance support costs.

5. Tag: The cost of the tags

6. Labor: Any and all labor costs associated with applying tags to the cases

on pallet, de-palletizing, re-palletizing and re-shrink wrapping the pallets

of tagged product.

RFID Value Assessment Results Page 27

The chart below illustrates the results of the three different models and the breakdown

of investment categories per model.

As you can see, the category breakdowns differ – significantly – depending on the

solution used. Each of the categories is discussed below, relative to the models

and how the results changed over the six-year period of deployment.

Hardware

Hardware, while a significant investment for an RFID implementation, became less

significant for the Hybrid and Slap and Ship solutions during deployment because

the cost of labor and tags surpasses the cost of the hardware. Fully integrated Inline

Print and Apply solutions use more sophisticated and expensive hardware, and for

a full rollout, all manufacturing lines require the installation and support of Inline

Print, Apply and Read Verification equipment. This approach eliminates the labor

aspect from the onset, thus changing the results of the investment picture.

The Hybrid model introduces the use of Inline Print and Apply equipment further

in the deployment and at a smaller scale, using fewer lines to perform the tagging

of cases after production, thereby reducing the amount of inline print and apply

equipment required but still demanding a significant amount of manual labor.

RFID Value Assessment Results Page 28

Application and Integration

Integrating the RFID solution into existing management networks makes up a con­

siderable portion of the overall investment, with the majority of it occurring in the

first year or two. It makes good business sense to ensure that the RFID data being

gathered is effectively incorporated into the day-to-day, decision-making tools

to reap the benefits of the information effi ciently.

Both Hybrid and Inline Print and Apply solutions have similar results (16-20%)

in terms of the percent of overall cost to integrate in this scenario. Inline Print

and Apply solutions generally have more points of integration and are more complex

as the solution travels further through the supply chain – starting in manufacturing

or packaging through to shipping. Slap and Ship has fewer integration points requiring

effort to integrate and is overshadowed by the escalating costs of labour.

Services

Services include business, process, and networking consultation and implementation

assistance. The range of services required is dependent on the level of sophistication

and complexity of the solution. Generally, more assistance is required to reengineer

processes, install the equipment and integrate the solution when implementing

Inline Print and Apply solutions. They are typically installed further up in the

process, such as during manufacturing or packaging where they are integrated

with existing program logic control (PLCs) and production systems. They affect

more intricate processing, both at the beginning and throughout the remaining

storage, picking and shipping activities.

Slap and Ship solutions, while still requiring significant effort to install the RFID

equipment, affect only processes in the later stage of shipping, such as picking

and shipping. Therefore, they tend to require less consultation services.

Maintenance

All software purchased today comes with maintenance offerings that are usually

about 10 to 15% off the purchase price. This cost is small in the scheme of things

and a good investment to ensure that upgrades and support are readily available

when needed. RFID middleware and software will continue to become more

efficient and effective in providing enhancements to the technology that will

support critical business decisions.

RFID Value Assessment Results Page 29

Tags

Tags continue to be the most consistent investment of an RFID solution, regardless

of the model used. The Inline Print and Apply model shows that in the six-year

period evaluated, the hardware costs outweighed the tag costs. For Slap and Ship,

the labour costs exceeded the cost of tags. This study amplifies the need for lower-cost

tags. It encourages suppliers and manufacturers to look deep into their organization

for the benefits that outweigh the ongoing cost of tags. They should consider solutions

that can open the door to additional benefits further upstream in their manufacturing

and distribution processes.

Labour

Labour is directly affected by the RFID solution implemented. Clearly, Slap

and Ship continues to be the most labour-intensive approach, at almost 50%

of the overall costs over six years based on this Pilot. The Hybrid Model, while

reducing labour costs, still requires manual attention during the first year or two

prior to implementing more automated print and apply technology as the volumes

increase. However, there is potentially still the need for manual intervention to tear

down the pallet, load it onto a conveyor system for tagging, and rebuilding the pallet.

If these steps can be eliminated, then there is the opportunity to reduce the labour

costs further for Hybrid Models. Inline Print and Apply solutions are designed to

eliminate the manual effort required to apply tags to both cases and pallets. This

approach also tends to increase the consistency of tag application, and consequently

can lead to better and more reliable read rates.

RFID Value Assessment Results Page 30

Highlights

“Slap and Ship” can be viable if being used

for a low volume, a short-term pilot, a test,

or proof of concept, where compliance

is the key driver.

Automating the application of tags to cases

– while we commonly refer to it as “Inline

Print and Apply” – is an appealing, long-term

model for manufacturers.

Deployment Strategy

Deployment Overview

The Pilot showed that “Slap and Ship” can be a workable approach if used in

a low-volume situation where there is no benefit in investing in a larger solution.

Regardless, it was discovered that the earlier the tag was applied in the supply

chain, the better the result in terms of improved accuracy and more effi cient

shipping. Critical to any successful RFID deployment is a collaborative effort –

the sharing of information between manufacturer and retailer to realize mutual

benefits associated with promotion management and out-of-stocks at the retail store.

“Slap and Ship” is not a viable long-term solution

For each of the four manufacturers, “Slap and Ship” became unfeasible as case

volumes increased beyond Pilot levels. The amount of labor time involved with

tagging a large number of cases drove costs upward, dwarfing the benefi ts identifi ed

in the Pilot. It was observed in the Pilot that approximately 15 to 20 minutes of

additional labor time was required to accurately apply RFID tags to every case on

a pallet. This included removing shrink wrap from a pallet, breaking down a pallet

while applying tags in the appropriate position, rebuilding and shrink wrapping

the pallet. This additional processing effort drives labor costs upwards when large

volumes are considered.

“Slap and Ship” also has a number of execution issues that reduce its viability

as a long term solution. Extra space is required to perform “Slap and Ship.” Extra

handling of the product to apply tags will increase the possibility of product damage

and associated inventory write-offs. Additional lead time and segregating inventory

may be required to perform the “Slap and Ship” function, driving costs to an even

higher level.

“Slap and Ship” can be viable if being used for a low volume, a short-term pilot,

a test, or proof of concept, where compliance is the key driver. That’s because there

is no long-term benefit to investing in the costs associated with complex, integrated

solutions if compliance can be achieved by using a “Slap and Ship” approach.

However, most compliance pilots lead to more long-term commitments where

a more strategic solution is required. Therefore, it is important to understand

the intention of the partner in the long term.

RFID Value Assessment Results Page 31

Tagging strategy is dependent on a manufacturer’s specifi c environment

The earlier an RFID tag is applied in the supply chain, the better the result. This

provides the manufacturers the opportunity to capitalize on benefits within their

own operations by using RFID technology to reduce handling, increase inventory

accuracies and achieve more efficient shipping and receiving within their own

four walls.

While “Slap and Ship” was the scenario used during the Pilot, the limitations of

the model became apparent and alternative deployment approaches were considered.

Each approach had to be tempered to the manufacturers’ environment, requirements,

absorption rate and strategic direction.

Automating the application of tags to cases – while we commonly refer to it as

“Inline Print and Apply” – is an appealing, long-term model for manufacturers.

Installing print and apply applicators was considered from two perspectives: during

the actual manufacturing process as products are being packaged; and after packaging,

as it moved into storage locations. Each one has benefits that were directly attributable

to the processes, tools and desired results of the manufacturer.

Another variation to this approach considered the evolution of the technology to the

point where tags would be embedded in corrugate and would simply require encoding

during the manufacturing or storing process. This would remove the need for inline

tagging or print and apply applicators and reduce the costs that most manufacturers

are absorbing today. From a manufacturer’s perspective, this approach is far more

appealing because it reduces their capital investment and also opens the door to

more benefit opportunities further along in their manufacturing/packaging processes.

Logistics organizations (3PLs) that provide warehousing and shipping services

for manufacturers in the supply chain are faced with the same dilemma if they

are considering providing a tagging service. Automating the process within their

environment is critical to reducing the service cost to make this a viable option

for their customers.

RFID Value Assessment Results Page 32

During the Pilot, results showed that for low volumes, they were able to provide

acceptable service levels using “Slap and Ship”. However, as the volumes increased,

significant disruptions to their operations and space requirements were evident.

Where existing conveyor systems were available, automating the process was evaluated

as a more cost-effective solution. As an integral cog in the supply chain, and to provide

the visibility throughout their warehouses, stationary or mobile readers would need

to be used to capture the RFID data and ensure the integrity of the information.

In summary, each manufacturer in the supply chain has special needs that require

unique RFID solutions, based on their operating environments, tools and processes.

Critical mass is benefi cial

As we examined the manufacturer business cases, volume sensitivities were calculated

to explore the effects of larger RFID-tagged case volumes. The conclusion was that

rolling out to multiple retailers could significantly improve the manufacturer’s ROI

in a shorter timeframe. Leveraging the implemented RFID infrastructure across more

retailers lowers the per unit cost for the manufacturer, making it a more lucrative

investment opportunity. It reduces the impact and complexity of managing two

different operational processes and inventory management activities that will cause

confusion and additional work in the manufacturer’s environment.

However, it is safe to assume that 100% saturation in the use of RFID-tagged

product may never be achieved because small retailers and suppliers will not

be in a position to implement the technology until the costs are signifi cantly lower.

Collaboration is key to qualitative benefi ts

One of the key assumptions necessary to achieve RFID benefits, which were proven

in the Pilot, is that collaboration and information sharing from the manufacturer to

the retailer, is critical. Near real-time data such as point-of-sale information, which

is not traditionally shared in this type of environment, is essential for the supplier

and retailer to realize benefits associated with promotion management and out-of-stocks

at the retail store.

RFID Value Assessment Results Page 33

PoS and inventory location data throughout the supply chain will enable faster and

more precise identification of products during a recall situation. Speed to react, and

the ability to identify specifically where the products are, is critical during a recall

to ensure the safety of the consumer and the long-term reputation and confi dence

the consumer has in the retailer and supplier.

Visibility to the inventory in the supply chain will help manufacturers, suppliers

and retailers ensure that the consumer is getting the freshest product at the time

of purchase. Management and rotation of code-dated products (first expired fi rst

out - FEFO) can become simpler and more efficient as data is captured through

the read points and made available to both manufacturer and retailer. It can help

identify situations that caused a product to have an early expiration.

Implementing RFID in the current environment of limited information sharing

not only limits the potential benefits, but it may cause RFID to fail before it begins.

Deployment conflict must be addressed

When defining an optimal deployment strategy for retailers and manufacturers,

differing preferences became evident during the Pilot.

Retailers preferred a geographic deployment plan by DC along with the associated

stores supplied by that DC. Once the infrastructure is installed by the retailer, they

can leverage their investment and increase the benefits by maximizing the number

of SKUs (that are RFID-labeled) flowing through their RFID-enabled retail outlets.

This makes good business sense for the retailer because the main benefi t drivers

are achieved when the product flows to the store fl oor.

In contrast, many manufacturers have suggested that they prefer to deploy by product

or product category, particularly if they provide private-label products for that retailer.

By providing a strategy that supports the automation of the tagging process by

manufacturing line for specific products or product groups, this approach simplifi es

their deployment. It also reduces the required hardware investment and the need

for segregated and/or dual inventory and minimizes labor and space constraints

associated with supporting a “Slap and Ship” solution.

Considering the divergent deployment strategies, discussions between both parties

to arrive at a mutually satisfactory deployment plan is necessary.

RFID Value Assessment Results Page 34

Highlights

As RFID gains traction in the Canadian

market, the question regarding RFID in

Canada’s grocery industry is not “if” it will

be deployed, but “when” it will be deployed.

So the real question is: Are you ready?

Next Steps: Making the Benefits of RFID a Reality

The RFID direction that Canadian retailers and manufacturers take in the near

term is not clear-cut. Many factors come into play when determining the best

strategy for individual organizations. However, retailers and manufacturers must

continue with RFID testing. This can be in the form of in-house RFID labs,

specific RFID pilots or through limited deployment.

As RFID gains traction in the Canadian market, it is imperative that manufacturers

are aware of the read characteristics of their products. Knowing which products

perform well with current technology and keeping abreast of new developments

will assist with deployment planning.

As RFID deployment in the American and European markets continues to grow, the

question regarding RFID in Canada’s grocery industry is not “if” it will be deployed,

but “when” it will be deployed. Manufacturers should be proactive in shaping their

destiny by identifying key SKUs that are frontrunners for RFID deployment. Criteria

for selecting these SKUs include high read rates, retailer specific or private-label

SKUs, and SKUs with potential for the greatest benefits (i.e., currently have high

out-of-stock rates). Given this knowledge, retailers and manufacturers can work

together for mutually beneficial RFID deployment. This will maximize benefi ts

for all parties involved.

Retailers also should be heavily involved with testing. With the high investment

in RFID infrastructure required at retail operations, it is imperative to procure the

correct equipment. Testing equipment in real-life environments will highlight any

potential hardware-related concerns. Choosing the right equipment and confi guration

appropriate for each specific physical site can make the difference between capturing

identifi ed benefits versus continually searching for ROI.

In addition, the value of being an early adopter should not be underestimated.

In Canada, many organizations have taken a “wait and see” approach to RFID.

RFID early adopters will actually accrue the greatest benefits, particularly in the

out-of-stock reduction benefit area. Reducing out of stocks will give a competitive

advantage to early adopters that might translate into increased market share.

Developing a specific business case for your organization will help identify

the tipping point where RFID benefits outweigh RFID costs.

RFID Value Assessment Results Page 35

As that tipping point quickly approaches, companies who are prepared for this

RFID transition will be rewarded. Deploying pallet and case-level RFID on a limited

basis is a viable option today for retailers and manufacturers, particularly where

certain supply chain pain points can be addressed.

Moving beyond the pilot stage involves a significant commitment from organizations

including the assignment of an internal RFID champion with a supporting execution

team. To achieve success, deployment is much more of a process-driven implemen­

tation than solely a technical implementation. Redefining processes to be RFID-enabled

and leveraging the additional information generated is critical to implementation

success.

Finally, looking beyond case and pallet tagging, RFID solutions can play a role

in a variety of areas for grocery retailers and consumer product manufacturers.

Surprisingly, item level tagging is gaining traction in other apparel and drug retailers.

As Canadian grocery retailers increase their pharmacy, and general merchandise

footprints, these item-level tagging solutions must be considered.

RFID solutions that track promotions (end-caps, displays, items, etc) will also be

popular solutions for piloting and deployment in the coming years. RFID-tagged

promotional materials will allow manufacturers and retailers to evaluate the true

effectiveness of promotions. Highlighting which stores are not complying with

activities and timelines will give retailers and manufacturers the necessary tools

to improve overall performance. Identifying when a promotion failed because of

execution issues rather than customer acceptance will help allocate future trade

funds in the most profi table manner.

New RFID solutions for grocery retailers are being introduced rapidly. For example,

intelligent shopping carts with digital screens will use RFID to display specifi c

advertisements, depending on where the consumer is located in the store. Also,

RFID tracking of trucks, trailers and containers is gaining traction in the industry.

Each of these solutions will become more commonplace in the future. RFID will

be consuming a larger portion of the IT budget each year so allocating those dollars

appropriately will be critical.

For further information regarding this study, please contact:

Shai Verma at [email protected]

© Copyright IBM Corporation 2007

IBM Canada Ltd. 3600 Steeles Avenue East Markham, ON L4R 9Z7 Canada

Produced in Canada 06-07 All Rights Reserved

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