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Pervasive / Wireless e- business Dec04 Emerging Markets IBM RFID Executive Overview Faye Holland WW RFID Solution Leader Pervasive/Wireless e-business
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Page 1: Pervasive / Wireless e-business Dec04 Emerging Markets IBM RFID Executive Overview Faye Holland WW RFID Solution Leader Pervasive/Wireless e-business.

Pervasive / Wireless e-business

Dec04

Emerging Markets

IBM RFID Executive Overview

Faye HollandWW RFID Solution LeaderPervasive/Wireless e-business

Page 2: Pervasive / Wireless e-business Dec04 Emerging Markets IBM RFID Executive Overview Faye Holland WW RFID Solution Leader Pervasive/Wireless e-business.

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Contents

What is Radio Frequency Identification (RFID)? What is the market opportunity for RFID? What is IBM’s play in the RFID space? What are the IBM Market Spaces for RFID? Why IBM?

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Building an effective RFID enabled business solution requires a fundamental understanding of the technology

What is RFID? A means of identifying a unique object or person using

a radio frequency transmission

Tags (or transponders) that store information, which can be transmitted wirelessly in an automated fashion

Readers (or interrogators) both stationary and hand-held read/write information from/to tags

RFID: The fundamentals

IntermecUAP-2100

Tags

Reader

How does it operate? RFID tags are affixed to objects and stored information

may be written and rewritten to an embedded chip in the tag

Tags can be read remotely when they detect a radio frequency signal from a reader over a range of distances

Readers then either send tag information over the enterprise network to back-end systems for processing or display it to the end user

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

RFID Basics

Tags Active - Includes a power source to help transmit a signal Passive - No power to transmit signal; relies on readers Semi-Passive - Not generally available as yet Frequency - Radio wave frequency at which signals are

transmitted (Telephone example: 900 Mhz, 2.4 Ghz, 5.8 Ghz)

Data Capacity - Many options, will depend on application Antenna - Device attached to tag to help capture

reader signals

Readers Reader - Interrogators that typically emits a radio

signal via an antenna and collects information that is captured from “scans” using some form of “controller software”

Antenna Device attached to a reader which helps transmit radio signals and capture “scan” readings

Page 5: Pervasive / Wireless e-business Dec04 Emerging Markets IBM RFID Executive Overview Faye Holland WW RFID Solution Leader Pervasive/Wireless e-business.

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Examples of RFID tags from different vendors

Intellitag 915 Mhz tags from Intermec Technologies

Family of low-frequency tags from Texas Instruments

2450 Mhz Backscatter tag from Alien Technologies

Spider 2450 Mhz tag from RFCode

Smallest 13.56 Mhz EPC tags from TagSys

13.56 Mhz tag with largest storage capacity (4KBytes) from Hitachi Maxell

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

EPC Tag Classes• Protocols have been developed for class 0 and class 1 tags, standards for the other classes of tags

are under development in EPCGlobal. Class 0 and class 1 tags will be used in the various mandates from Retailers.

• Class II tags are expected to reach the market in late 2004, early 2005

• Achieving a unified communications protocol for Class 0, Class 1 and evolving these to higher classes is a critical factor in spurring demand

Class Type Comments

Class 0 Read only passive identity tags Factory programmable (64 bit only)

Class I Write once passive identity tags WORM with provisions for read/write (96 bit

min.)

Class II Passive tags with added functionality, e.g. memory

or encryption Shorter range (i.e. 4”-18’) Read/write (multiple), user memory

Class III Semi-passive RFID tags Battery Assisted – reader activates, battery powers

Medium range (i.e. 10’-50’) Read.write, user memory, sensors, encryption

Class IV Active tags – communicate with readers and other

tags on the same frequency band Active – battery powered

Long range (i.e. 300’) Read/write, user memory, sensors, etc.

Class V Essentially ‘readers’ – can power class I, II and III

tags, as well as, communicating with class IV and with each other

Generat ion

2Source: Auto ID Center/EPCGlobal; Intermec

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Tag Frequency

There are a number of RF ranges for tags, including: 100-140 kHz, 13.56 MHz, 862-928 MHz, 2.45 GHz– each have very specific market applicability

Frequency Capabilities Applications

125 kHz

Read Range - up to 18"Good Penetration in Moist EnvironmentsSlow Data RangeCostly TagsNo Anticollision

Pallet/containerRPCWindshield decalLabel insertsCredit card

13.56 Mhz

Read Range up to 3'Good Penetration in Moist EnvironmentsPoor Performance in Metal EnvironmentsMany Standards in Financial MarketAnticollision (10-40 tags / sec)

Pallet/containerRPCWindshield decalLabel insertsCredit card

869, 902-928 MHz

Read Ranges up to 15'Fast Data RatesGood Performance in Metal EnvironmentAnticollision (50 tags / sec)Many Standards in Logistics / Supply Chain

Metal mountLabel insert

2.45 GHz

Read Range up to 3'Good Performance in Metal EnvironmentsPoor Performance in Moist EnvironmentsFast Data RatesAnticollision (50 tags / sec)

Metal mountLabel insertHardened tag formatReusable form factor

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

RFID Reader Technologies

There are three basic choices for reader technology – based on the job or type of work to be performed

Entrances - portalsConveyors across

assembly linesPoints of saleOverhead

StationaryHand-heldWireless or batchOne-piece or two piece

tagging

MobileMobile service agent

PCMCIA

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Examples of RFID readers from different vendors

1555 Handheld serial readers from Intermec Technologies

303.8 Mhz Mantis wireless LAN reader from RFCode

S6410 Serial reader from Texas Instruments

902-928 Mhz serial stationary reader fromMatrics

915 Mhz Network stationary reader (with antenna) from Alien Technologies

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Tag and reader costs projected over time

Purchasing Curve 2002 2003 2004 2005 2006

Industry tag sales (millions of units)

150 500 1,200 3,500 15,000

Tag price to highest volume users

$0.30 $0.25 $0.15 $0.10 $0.05

Industry reader sales (millions of units)

0.1 0.3 0.6 1 2

Reader electronics price to volume users

$500 250 150 125 100

Source: AMR Research

RFID –purchasing curve

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

World Wide Challenges for RFID

Europe:862 – 870 MHz (869

MHz 0.5 W)

Middle East:Potential for

862 – 870 MHz

China:Permissive 915 MHz

Australia:915 – 927 MHz

1 Watt

New Zealand:915 – 927 MHz

1 Watt

Japan:950-956 MHz

Potentially available

Pacific Rim:Singapore 862 – 870 MHz, Taiwan

915MHz

Northern Africa: 862 – 870 MHz

(869 MHz)

US and Canada:902 – 928 MHz

4 W

South America:Undefined but 915 is typically

accepted

Mexico:Typically 915MHz, Case

by case basis

Southern Africa: 915MHz Typically permit FCC

approved devices(902 – 928 / 4 W)

StandardsEPC

ISO

ucode

TagsCost

Durability

Packaging

Weight

Materials

FrequencyFrequency

Power Level

Duty Cycle

All Evolving

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

…and are already in limited use across several industries

RFID tags have many advantages over the barcode…

RFID has not yet been widely adopted due to high implementation costs and a lack of standards – industry leaders are combining their efforts to address this issue

Military containers: 250,000 containers are monitored for the Department of Defense

Automotive: Inventory Management at Ford

Baggage Handling Logistics: San Francisco Airport, Swiss Federal Railway

Mobile Assets: Singapore has tagged cars for road taxation, American “I-pass” prepaid highway toll systems

RFID tags are the next step after barcodes

Barcode/ UPC RFID Tag/EPC

Efficiency Ability to read one tag at a time (line of sight required)

Ability to read multiple tags simultaneously (no line of sight required)

Dependability Labels easily damaged Tags less susceptible to damageCan be used in harsher environments

Data Capacity Limited amount of data can be assigned

Significantly higher data capacity to capture detailed information about productAccuracy close to 100%

Flexibility Static information Potential for read/ write capability, making tags reusable

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Electronic Product Code (EPC™) Vision: pen standards for pervasive product tagging

The EPC vision uses low-cost RFID radio tags and readers to uniquely identify and track objects to improve inventory visibility and reduce costs throughout the value chain

Real-time information related to each object is stored and accessed via the internet

It is an open, standards-based system that facilitates collaboration among partners in the value chain

IBM is actively involved in defining the future of EPC vision through the EPCglobal organization

The Auto-ID system is not a stand alone solution or service offering, but rather a key enabler to current and envisioned initiatives within the value chain

Prototype Auto-ID radio tags

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Pervasive / Wireless e-business

Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Accenture ACNielsen Alien Technology Avery Dennison AWID British Telecommunications (BT) Cash's Catalina Marketing Corp Checkpoint Systems, Inc.ConnecTerra, Inc. Ember Corporation Embrace Networks Flexchip AG

Technology Board Members

Smurfit-Stone Container Corp Target Corp. Tesco Stores Ltd. The Gillette Company Toppan Printing Uniform Code Council Unilever United States Postal Service UPS Visy Industries Wal-Mart Stores, Inc. Wegmans Food Markets, Inc. Westvaco Yuen Foong Yu Paper Mfg. Co.,

Abbott Laboratories Ahold, IS Best Buy Corporation Canon Inc. Carrefour Chep International Coca-Cola CVS Dai Nippon Printing Co., LtdDepartment of Defense Ean International Eastman Kodak Gillette Home Depot

International Paper Johnson & Johnson Kellogg's Corporation Kimberely Clark Corporation Kraft Lowes Companies, Inc. Metro Mitsui & Co, Ltd. Nestle Pepsi Pfizer Philip Morris USA Procter and Gamble Company Sara Lee

Board of Overseers

Flint Ink GEA Consulting GlobeRanger IBM IDTechEx Impinj, Inc. Information Resources, Inc. Intel Intermec Invensys PLC Ishida Co, Ltd. KSW Microtec AG Manhattan Associates

Markem Corp. Matrics Morningside Technologies NCR Corporation Nihon Unisys Ltd. Nippon Telegraph and Telephone NTT Comware OATSystems Omron Corporation Philips Semiconductors Rafsec RF Saw Components SAMSYS SAP

Savi Technology Sensitech Sensormatic Electronics CorpSiemens Dematic Corp. STMicroelectronics Sun Microsystems Symbol Technologies TAGSYS ThingMagic Toppan Forms Toray International, Inc. Vizional Technologies Zebra Technologies Corporation

The sponsors of EPCglobal are come from multiple industries and geographies

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

EPC™ - variable length product identification code

Header Domain Class Instance

EPCglobal – commercializing the Electronic Product Code

The base of the EPC vision is the Electronic Product Code – a robust labeling convention that is embedded into each radio tag

What is the EPC™?A product numbering scheme

Created by the Auto-ID Center

Managed by EPCglobal

How is it different from today’ UPC barcode number?Variable length

Supports multiple industries

Uniquely identifies every single item (unique serial number)

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

RFID Standards

Auto ID / EPCglobal Standards Compliance is a Strategic IssueCustomers demand AutoID/EPCglobal compliance

Significant support and participation from Retail/CPG players

IBM has minimal influence on the board of this organization

IT companies have issues with EPCglobal’s IP policies

Software and data standards for connecting readers and applications

Tag data enrichment through object lookup WW standards needed for RF technology and tag data formats

RFID Air Interface standard for item management (ISO 18000 part 6)

Information interface for object orientated use of RFID in item management (ISO 15961/62)

Application standard for the use of RFID in the macro-supply chain (EAN/UCC GTAG)

Application standard for tire and wheel identification (AIAG) Data privacy and ownership issues and regulations emerging National, international and industry standard organizations require monitoring to ensure

environment supportive of IBM technologyANSI, IEC, ISO, EIA, AIAG, TCIF, ATA, GS1, EPCglobal

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

RFID is an On Demand Technology Enables end-to-end business process integration

Recognition of real-time transactions/ actions of an object, via an automated system.

Decrease of redundant recording processes and data reads

Automation of manual processes

Streamlined processes and improved order turnaround Automates response to customer demand, market opportunities, and external

eventsRecognition of alert events or special condition

Forecasting and real-time inventory diversion

Improved supplier and customer relationships (vendor direct, manufacturer, retailer, consumer)

Just-in-time manufacturing

RFID helps to operationalize manual processes and read dynamic conditions across intermittent conditions.

PC card readers

Page 18: Pervasive / Wireless e-business Dec04 Emerging Markets IBM RFID Executive Overview Faye Holland WW RFID Solution Leader Pervasive/Wireless e-business.

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Contents

What is Radio Frequency Identification (RFID)? What is the market opportunity for RFID? What is IBM’s play in the RFID space? What are the IBM Market Spaces for RFID? Why IBM?

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Worldwide RFID Market

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

2003 2004 2005 2006 2007 2008

US

$ M

Readers

Tags

Hardware

Software

Services

Significant market opportunity exists, with the IBM opportunity representing $3.1B by 2008

Based on estimates from Venture Development Corp., ABI, Yankee Group, and AMR, IBM estimates the RFID market compound annual growth rate at approximately 34%

IBM estimates total market for 2004 to be $1.5 billion

Recent market triggers such as Wal-Mart, Tesco, U.S. Dept. of Defence, Target decisions to implement RFID systems are expected to accelerate market adoption

Source: IBM estimates using inputs from Venture Development Corp., ABIYankee Group, AMR

$1.3B$1.5B

$2.2B

$3.4B

$4.3B

$5.3B

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

WW RFID IBM Addressable Market Opportunity by Geo

0

500

1000

1500

2000

2500

3000

US

$M

AP

EMEA

Americas

AP 152 179 263 443 566

EMEA 232 257 364 629 809

Americas 246 304 483 870 1127

2003 2004 2005 2006 2007

RFID WW IBM Addressable market opportunity differs by Geo; several drivers explain the growth

EMEA Drivers Retail initiatives (Tesco, Metro) Cross industry adoption occurring Increasing user acceptance Cross-border shipping Government regulations

AG Drivers US Government mandates Retailer initiatives (Walmart, Target,

Albertsons) Automotive, A&D, and Government

industries are extending the adoption rate

AP Drivers Expansion of suppliers in the region Adoption of radio frequency in Japan and

China Expectations that Australian Defense

Force will follow US Govt. lead Government and electronics industries

becoming more of a focal point

Source: IBM estimates using inputs from Venture Development Corp., ABIYankee Group, AMR

$.6B$.7B

$1.1B

$1.9B

$2.5B

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Market Drivers

Market Increasing end-user knowledge of RFID technology, its applications, and its advantages over traditional methods of data-capture Emerging and growing markets for different RFID applications across multiple industriesDemand driven by large retailer requirements, CPG and supply chain vendors’ investmentIndustry systems integration and process expertise developingBusiness pressures driving adoption are intensifying -- supply chain enhancement, asset exposure, regulatory pressures

Economic Falling equipment prices and improved performance resulting in better price-to-performance ratio Rapidly decreasing cost of RFID tags and readers

Physical/ Technical Technology is beginning to matureTechnical and physical interoperability, interference and data overload issues will be overcome through 2004-2005Enterprise middleware will embed RFID middleware to sustain/grow market presence“Agile readers” emerging -> able to read multiple tag protocolsChip and frequency standards are expected to evolve globallyActive tags will be increasingly evolve over time requiring unique solutions

Standards Industry-wide standards for many applications leading to interoperability amongst different manufacturers’ products, including hardware

Social/ Political Government requirements for cross-border trade Regulatory mandates Safety and security concerns has increased

Sources: IBM, Venture Developmentt Group, Frost & Sullivan, BRG Townsend, The Yankee Group

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Market InhibitorsMarket Availability of skilled RFID experts

Over hyped value propositions, business cases, and timelines Data ownership and security A multitude of vendors with fragmented approaches Confusion as to providers who have a WW presence and delivery capability

Economic RFID tags are still expensive compared to barcodes (approx. $0.25)Implementation and back-end integration costs are very high ROI may not be immediateBalance of benefit across the trade relationships

Physical/ Technical Country-specific idiosyncrasies in regards to spectrum bandsFor wide-spread adoption, tag costs must drop below $0.05 Tag and reader incompatibilities still exists between rival manufacturersRead reliability still needs improvement. Heavily dependent on business application and tag placementRFID signals can be blocked in certain environments (e.g., liquids, metals)Data loads produced by RFID systems could overload company systems

Standards Lack of flexible and global standardsClass 1 Generation 2 tags not available until late 2004/early 2005; EPC and ISO standards at odds until thenCross-company data sharing model has not been defined.

Social/ Political End-user acceptance: Privacy, for example, remains a concern

Sources: IBM, Forrester Corporation, Frost & Sullivan, BRG Townsend, Bear Stearns, The Yankee Group

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Achieving an RFID-enabled supply chain will take some time

Ongoing Challenges

Physics

– Read reliability – depends on tag placement, environment, application

– Metals and liquids Standards

– Tags and Readers

– Cross-company data sharing model Economics

– Tag cost reduction is critical

– Confirming the benefit potential when dependent upon trading partners Data Ownership and Security

Consumer Privacy Concerns

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Lessons Learned - RFID Business Cases

Every Business case is different– “Pain Points” (e.g Do you really have a shrink or counterfeiting issue?) – Distribution method ( e.g. full pallet vs. mixed vs. innerpacks)– Process capabilities– Trading partners– Product margins and brand loyalty

May need to look beyond your own four walls for significant opportunities

Need to consider the transition – Trading partner adoption over time – Decreasing costs ( tags, readers, software, etc)– Transitioning from one tag application strategy to the next

Think strategically...but balance with operational realities

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Lessons Learned - Pilots

Physics matters !– Tag placement on products

– Existing RF and wireless networks

– Environmental factors – Static, handling, temperature, condensation, etc

Successful deployments require planning–Testing tags and readers

–Procuring hardware

–Network and power considerations

How will you measure success ? –Read reliability metrics

–Data integration

–Cost and benefits assumptions validated

Not enough detailed discussion on cross-company data sharing

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

RFID discussions start about compliance and quickly move toward how to take transformation solutions to customers

Compliance

Transformation

Optimization

Low

High

Op

po

rtu

nit

ies

& B

en

efit

s

Low Complexity High

Enable new revenue sources through partnership

Data enabled services

Transform operating and business models

Meet minimum requirement

Replace or supplement existing barcode systems

Increase accuracy of existing applications

Optimizing logistics

Reduced labor

Enable warehouse management

Enable JIT manufacturing

Real-time decision support

Automate and speed processes

Visibility

Visibility through Value Chain

Enable collaboration with external clients and suppliers

Maintain full record of item history and touch-points

Track and trace materiel through the full value chain

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Strategic

How can RFID enable our overall strategic vision?

Should we be a leader or a “fast follower”?Which trading partners should I pilot with

and when?How will we operate in a world of dual

processes? And for how long?

Financial

What is the expected return on our RFID investment?

What specific RFID applications can drive value for us?

What is a realistic adoption pattern/rate of RFID and how will that impact my business case?

Organizational

What are the change management implications?

What are the risks involved in an RFID implementation?

Technological

What are our technology requirements for an RFID implementation?

What is the architecture that best delivers on my strategic technology plan?

How will an RFID implementation impact our current applications?

Developing an RFID strategy

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Emerging Markets – Pervasive/ Wireless EBO © 2004 IBM CorporationRevision: December 17, 2004

Contents

What is Radio Frequency Identification (RFID)? What is the market opportunity for RFID? What is IBM’s play in the RFID space? What are the IBM Market Spaces for RFID? Why IBM?

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The strengths of IBM

The world’s largest information technology company; the world’s largest business and technology service provider ($42.6 billion); and the world’s largest IT financier ($35 billion in assets)

$89.1 billion in annual revenues in 2003

Net income of $7.6 billion in 2003

Total assets of $104.5 billion in 2003

316,000 employees worldwide

With operations in over 160 countries worldwide

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IBM business unit overview

FinanceBankingFinancial MktsInsurance

DistribusionCPGRetailTravel &

Trans

IndustrialAutomotiveElectronicsChem & PetroAerospace

CommunicationsTelecommUtilitiesMedia &Entertainment

PublicGovernmentHealthcareEducation

Sm

all &

Me

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Bus

ines

s

Bus

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s C

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Str

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PersonalComputers

PrinterSystems

X-Series

P-Series

I-Series

Z-Series

Application Development

Tools

ibm

.com

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irect

Mar

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Bus

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IBM Research

Sales & Solutions Services Products & Technologies

Wireless EBO

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Smart Cards/Secure ID is focused on smart chip solutions that provide for the authentication of an individual based on information contained on a smart chip device (smart card, sim card, transponder, etc) carried by that person to allow for actions / transactions either in a “secure” or “non-secured” fashion

1. eCash – spend, loyalty, IRC2. secure id3. toll collection4. smart card / sim card

“Smart Transactions”

1. embedded machines 2. intelligent vending /

unattended retailing3. connected home

scenarios and service aggregator solutions

“Smart Machines”

Embedded Solutions are focused on the remote access / control of appliances and machines via embedded sensors or smart chips that collect and synthesize status

1. supply chain

2. work in process mfg

3. asset management

4. security & access control

5. consumer applications

“Smart Objects”

RFID Tagging offers the vision of a “consumer driven supply network” based on cooperative vendor/retailer business models. Assets are tracked using non-line-of-site RF to identify the object via a unique identifier

RFID TaggingEmbeddedSolutions

AssetMonitoring

Smart Cards / Secure ID

Asset Monitoring is the remote collection of data across networks of community-based assets in the field via embedded sensors or chips which transfer that data across wired/wireless lines to a remote location

1. metering, AMR 2. e-SCADA3. condition monitoring4. predictive maintenance

RFID relates to self-identifying “Smart Objects”, while other smart chip applications relate to smart machines and consumer-initiated transactions

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The IBM Point of View Transform business operations by coupling RFID, a powerful enabling

technology, with process change in areas such as supply chains, asset management and work in process manufacturing

Integrate RFID into your business using a planned approach and learn through using the technology while recognizing standards & technology capabilities will evolve over time

Build a foundation today that you can scale for future growth

Incorporate RFID into your broader strategy for process improvement or transformation such as e-production or Consumer Driven Supply Chain, since “compliance alone will not deliver value”

Gain benefits today by applying RFID capabilities to improve specific business processes

Business transformation drives requirements for a scaleable, flexible, robust and manageable infrastructure

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Importance of the RFID Market

Market opportunity will grow to over $2B by 2007 with significant growth rates

Game changing technologyMarket drivers will lead to broad adoption

by 2006 IBM competitors are entering the market

Become the dominant Services and Middleware SW provider in the RFID solutions market, by adding value to our customers businesses and delivering end-to-end solutions

IBM Strategic Direction

Focus on key RFID markets – Supply Chain, Work In Process, Security & Access Control

Focus on key industriesDevelop end-to-end solutionsBuild a strong RFID ecosystemSupport and drive open standards

IBM’s Vision

IBM’s Strategic Direction in RFID

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Forrester: “RFID Middleware Vendor Profile: IBM"

"IBM’s strong integration and application development capabilities will make it a good option for firms with a best-of-breed application landscape — particularly those looking for a one-stop services and software offering."

Source: Forrester: “RFID Middleware Vendor Profile: IBM” August 2004

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The AMR Research Risk Assessment Profile lists IBM Global Services as the Leading Service Provider for RFID Deployments

IBM leads or ties with market leaders in seven of eight categories:

Domain Expertise Delivery Expertise Referenceability Internationalization Business Strategy Financial Strength Customer Practices International Capabilities

The AMR Research Report, RFID in Consumer Products: Which Service Providers Have the Goods? May 2004, Kara Romanow and Dana Stiffler

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The AMR Research Risk Assessment Profile lists IBM Global Services as the Leading Service Provider for RFID Deployments

The Bottom Line: AMR Research’s Risk Assessment Profile analysis of the

service providers reveals that no firm can be considered low-risk yet, but

leaders like IBM Global Services and Accenture lead the pack in hands-on

RFID deployments.

IBM Global Services -- IBM leads or ties with market leaders in seven of eight

categories. Higher than average years of CP industry expertise in its core CP

RFID team puts it just ahead of Accenture in Domain Expertise. Where IBM

pulls away from the pack is in its technology expertise, complexity of delivery,

and in referenceability. Its ability to link RFID projects to cutting-edge

DDSN initiatives also sets it apart. References admired IBM’s Business

Consulting Services RFID team for "not falling into a vat of RFID Kool-Aid."

Internationalization and overall International Capabilities scores tie with those

of our other two top global players: Accenture and Capgemini.Source: The AMR Research Report, RFID in Consumer Products: Which Service Providers Have the Goods? May 2004, Kara Romanow and Dana Stiffler

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IDC Leadership Grid: WW RFID Services Market

Source:

IDC Study: "Worldwide and U.S. RFID

Services Competitive Analysis and

Leadership Study, 2004: Disruptive

Technology in Waiting and Why the

Services Value Chain Matters"

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IBM laboratories worldwide - 3 IBM RFID Test Centres

Wireless Enterprise Lab (WEL) :Gaithersburg

La Gaude

Raleigh Technology Lab

Austin Demo Lab

Raleigh WebSphere Integration Centres :

Chicago

San Mateo

Washington

Singapore

Sydney

Boeblingen

Hursley

Paris Global e-business Solution Centre

Dallas Others

Hawthorne

SPC Satellite Centres :Budapest, Hungary Warsaw, PolandTel Aviv, IsraelHelsinki, FinlandSao Paulo, BrazilToronto, Canada

Solution Partnership Centres :Waltham, MA - USChicago, IL - USSan Mateo, CA - USHursley, UK Paris, FranceStuttgart, GermanyShanghai, China Sydney, AustraliaTokyo, Japan Seoul, Korea Bangalore, India

IBM RFID Test CentresGaithersburg

La GaudeYamato

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RFID testing servicesTechnology Providers (tags, readers, printers, middleware)

Customer products (liquid content, metals in product or packaging, foils, special packing problems)

Specific use cases (speed, temperature)

Operating environment (RF interference)

Specs/standards (e.g. Wal*Mart's specs on read rates and distance)

Testing ApproachesYour Target RFID Site

"mobile on site" testingIBM sends our lab equipment temporarily to client locationHelps identify site-specific factors disrupting RFID solutions

Your Lab

IBM assists clients in designing and implementing permanent labs on client premises

Our Lab

IBM RFID Test Center (IRTC) offers full range of cutting-edge RFID capabilitiesLow-cost, entry level optionsClients send pallets to IRTC for series of tests with a broad array of vendors and equipmentClient report benchmarks results for the product, technology, and spec identifiedIBM offers complex RFID system consulting including custom solutions and integration.

IBM’s world class RFID test lab objectives

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IBM’s RFID organization IBM has a matrix, non-hierarchical teaming approach to RFID

Research

Solution Development Alliances

• GTM & Marketing• Customer Deliverables• Industry Alliances

Sean Campbell, Bill Paulk, Jan Jackman

Distribution

Public

Communications/ Financial Services

SMB•

So

luti

on

Dev

elo

pm

ent

• C

ust

om

er D

eliv

erab

les

• A

llian

ces

• M

arke

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g

BCSITS

• Solution Development• Alliances

Software Group

Sensors & Actuators EBO Software Development Alliances Standards Bodies

Robert MayberrySesh MurthyAnn Breidenbach

Industry (S&D, BCS) IGS SWG

Industrial

• GTM & Marketing• Customer Deliverables• Industry Alliances

Kal Gyimesi

•GTM & Marketing•Customer Deliverables• Industry Alliances

Bill Phillips, Radha Sekar, Tony Prince

• S

olu

tio

n D

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op

men

t•

Cu

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Del

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able

s•

Alli

ance

s•

Mar

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ng

Other

• A

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licat

ion

Man

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ent

Ser

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-bu

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Ho

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Str

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Pervasive/ Wireless EBO

StrategyThought LeadershipStandards Bodies

FOAKSolution Development

Jim

Re

yn

old

s,

K

ell

y U

ng

er,

M

ich

ae

l R

em

en

ter

Je

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ay

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ch

ell

Jo

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Ba

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)J

eff

Be

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n (

AM

S)

Paul ChouStefan Hild

Eric GabrielsonFaye Holland

Jeff Benton, Tom Motyka, Pat McNabb (AG)

Industry & Solution LabsBlueprints Testing

DemonstrationsPrototypes

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IBM Investments in Solution Development

Multi-million $ Investment Supporting RFID as strategic play

Focused RFID Expertise Pervasive/ Wireless Emerging Business Opportunity

SWG (with unique RFID investments)

Services - ITS and BCS (with additional focused investment)

Research (with additional $ investment)18 Months Experience with Solution Development

Complete, tested and integrated solutions

Keeping ahead of market demand

Industry specific focus

Componentized Middleware Products with RFID Capabilities

Robust scalable infrastructure

Unique extensions for RFID Solutions

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IBM RFID Solutions Architecture Investment

Important to our customers, across industries RFID is a key transformation initiative for consumer products and retail companies “The adoption of RFID technology is inevitable. It’s transformational promise, huge.

But the success of RFID in your business depends on your infrastructure.”1

Domain architecture provides flexibility and scalability to maximize business value capture

Group logically-related technology components Adapt to rapidly changing business and technology needs with minimum disruption Protect IT investments in both new and existing business applications IBM envisions the supply chain as a synchronous response environment

Companies will require a consistent architecture to support triggers from intelligent devices (RFID) and retailers

Insulate layers of technology advancements through loose coupling, flexible & clean interfaces between domains

Support evolving standards (ISO, EPCglobal)

1 Source: CIO Magazine – 12/01/03, The RFID Imperative By Meridith Levinson)

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The End-to-End Component Model is split into specific domains to contain the architecturally significant groups of components

Enterprise & Business Application

Domain

Antenna & Reader Domain

Tagged Object Domain

Security & Privacy Management

EdgeDomain

T

Premises Domain

T

Business Process

Integration Domain

T

Systems Management Domain T

Object Directory Domain

T

Tooling – support for customized business logicT

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Enterprise & Business Application

Domain

Antenna & Reader Domain

Tagged Object Domain

EdgeDomain

T

Premises Domain

T

Business Process

Integration Domain

T

Systems Management Domain T

Object Directory Domain

T

IBM plays in many areas of the value chain and partners to provide an end-to-end solution

RFID System Integrators

Hardware Providers

Infrastructure & Storage

Application Management & Strategic Outsourcing

Security & Privacy Management

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Enterprise & Business

Application Domain

Antenna & Reader Domain

Tagged Object Domain

EdgeDomain

Premises Domain

Business Process

Integration Domain

Systems Management Domain

Object Directory Domain

The Partnering Strategy Maps to the RFID Solution Domains

AeroScoutAlienAvery DennisonIntermecMeadWestvacoPhilipsPrintronixSaviSymbolTexas InstrumentsWavetrendWherenetZebra

AeroScoutAlien AWID FEIGIntermec MeadWestVaco -

Intelligent Systems

SAMSys SatoSaviSISSymbol TagSYS Texas InstrumentsThingMagicWavetrend WherenetZebra

HardwareArcomEmness

Software.IBM ConnecTerra

IBM ConnecTerraOAT SystemsMeadWestVacoSaviWherenet

IBMERP: SAP,

PeopleSoftWMS: Red Prairie,

ManhattenRetail: RetekPlanning: i2,

Manugistics

IBM VeriSign

IBM

RFID System Integrators Bearing Point, Cap Gemini, IBM Intel, IPI, Intellident

Hardware Providers

IBMInfrastructure & Storage

IBM

Application Management & Strategic Outsourcing IBM

Security & Privacy Management IBM

T

T T

T

T

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IBM RFID Software Solution Architecture

DockDoor

Reader

DockDoor

Reader

ConveyorBelt

Reader

ConveyorBelt

Reader

Handheld /Portable Reader

Handheld /Portable Reader

RFIDLabel / Tag

Printers

RFIDLabel / Tag

Printers

Visual Indicators

Visual Indicators

Switchesand

Sensors

Switchesand

Sensors

Antenna and Reader DomainAntenna and

Reader Domain

WebSphere Embedded Software

w/ IBM RFID enablement

RFIDController

Edge DomainEdge Domain Premises DomainPremises Domain

DB2

RFID Premises

Server

XML overMQ

WAS J2EE platform MQ Messaging IBM RFID Software

Systems Management DomainSystems Management Domain

Enterprise & BusinessApplication Domain

Enterprise & BusinessApplication Domain

XML, other over MQ

Business ProcessIntegration DomainBusiness ProcessIntegration Domain

BusinessEvents

MQ

RFID Integration

Server

WBI Message Broker WBI Integration

Connectors Tivoli Remote

Management

ERPERP

WMSWMS

SCMSCM

PortalServer

EPCInformation

ServicesWPC

EPCInformation

ServicesWPC

Object Directory DomainObject Directory Domain

IBM Application Accelerators

End to End Reliable Messaging Ensures Data Integrity

Persistent Data Flexible Integration

Supply Chain Business Partners

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We advise the execution of integrated and concurrent work streams to accelerate our client’s RFID readiness

Plan & Design

Pilot

Assess

Run

Implement

Feedback

Feedback

Feedback

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To assist in tailoring a client solution, the following business adoption questions need to be reviewed

Managing Trading Partner

Relations

How can I enhance relationships with my suppliers and

vendors?

How do I communicate with my trading partners?

How will RFID impact my business operations with my trading partners?

How can I implement a

reliable – scaleable and

extensible RFID solution that will integrate with my

overall architecture?

What is the most cost-

effective way to ensure that I

achieve required service

levels?

Managing my Business

What benefits can I gain through

greater visibility to my supply chain,

manufacturing process, asset status and/ or

inventory levels?

How do I configure a scalable RFID solution

for world-wide operations?

How will RFID impact my business

operations?

Understanding my Technical Environment

How does RFID interact with my

products, my processes and my

technical environment?

How does RFID interact with my products and

my technical environment?

How will RFID impact my technical

environment?

Assess Plan & Design

Pilot RunImplement

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IBM can also help our clients understand where they fit in the RFID Offering Framework

Managing Trading Partner

Relations

I have mandates being placed on me

by my trading partners

I understand there will be an impact to how I

interact with my trading partners – but I do not

know what it is

I want to gain RFID experience so that I can respond to / or issue a mandate(s)

I have completed successful pilot(s) and am ready to deploy an RFID

solution including associated

process changes and back-end

integration

I have deployed my RFID

solution and now I need to

effectively manage this

solution

Managing my Business

I intend to place mandates on my trading partners

I understand there will be impact to my business environment – but I do

not know what it is

I am considering implementing RFID across my business

Understanding my Technical Environment

I intend to understand how

RFID can enhance my business operations

I understand there will be an impact to my

technical environment – but I do not know what it

is

I need to understand how to define and deploy an architecture for

my RFID implementation

that can scale as I extend the use of

RFID

Assess Plan & Design

Pilot RunImplement

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IBM has a breadth and depth of RFID offerings to help our customers understand and implement RFID solutions based upon business processes and business objectives.

Plan & Design

Pilot

Assess RunImplement

RFID Total Management Services

Maintenance

Software Help Desk

Remote Systems Monitoring

On Site Services

RFID Enterprise Deployment

Trading Partner implementation

Initial facility implementation

Application Design and Implementation

RFID hardware installation

Security tools deployment

Network integration and implementation

Process Transformation

Training

Application planning, testing, integration and Implementation

Business Case Assessment

RFID Test Center QuickStart Services

Solution Development Workshop

RFID Execution Roadmap

RFID Site Survey RFID Capabilities Lab review RFID Technical Solution Design

Incl. Software Domain Mapping & Trading Partners

RFID Partner Selection Business Process Transformation

RFID PilotDefine/ Validate Pilot RequirementsBuild PilotTest PilotPilot Oversight & Performance Results

Our IBM team will work with the customer to understand their needs and tailor a solution from a set of the offerings we can provide

Security & Privacy Services

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Achieving the Vision

Assess Plan & Design

Pilot RunImplement

Business Consulting Business case and deployment strategy development; pilot planning and implementation;

process design; application implementation/integration

Technology Services Technology network and infrastructure design,

deployment and maintenance

Software and ResearchOpen and scalable RFID infrastructure, data integration and

management tools

Alliances with Hardware and Software Application Providers

Strategic OutsourcingManagement, hosting and outsourcing of RFID Solution

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Industry-Focused RFID Initiatives

As a partner for leading industry players: Business strategy

Pilot design, delivery & management

Technology and business application integration

On-demand infrastructure, software and services

Specific examples:Consumer Products / Retail

- Dedicated teams since 2002- IBM Auto-ID Business Case White Paper Series- Worked with GCI to develop a Retail/CPG EPC Adoption Roadmap- An end-end order-fulfillment RFID implementation accelerator, Pick Pack Ship, built by the SWG Distribution Sector Solutions team

Automotive, Electronics, Forest & Paper, Aerospace- Automobile Tire tagging and Tire-Vehicle correlation using RFID technology- Launched competencies in RFID 2004

Pharma White Papers Streamlining pharmaceutical manufacturing and distribution Thwarting counterfeiting

Public Sector- US Department of Defense recently awarded IBM BCS the contract to oversee their RFID initiative Program Management Office (PMO)

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Contents

What is Radio Frequency Identification (RFID)? What is the market opportunity for RFID? What is IBM’s play in the RFID space? What are the IBM Market Spaces for RFID? Why IBM?

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RFID across industry sectors

Industrial

Field Service

Healthcare

Retail/CPG

Logistics

RFID Across All Sectors

Government

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Retail

Lower labour costs

Out-of-stock triggers

Reducing shrinkage

Reducing inventories

Locating products

Real-time supply/demand data

Smart shelves

Self check-out

Reverse logistics

Customer convenience Healthcare/ Pharma

Tracking hospital equipment

Patient ID and tracking

Preventing medication errors

Tracking samples/ vials etc

Environmental monitoring (e.g. blood samples)

Anti-counterfeit measures

Product recalls

Manufacturing- Quality control- Lot Tracking- Recalls- Government regulations- Inventory accuracy and visibility- Labour & material costs- Asset utilization- Contract manufacturing- Supplier Management- Customer relations- Supply chain management- WMS- Inventory- Gray markets/ theft- Shrinkage- Shop floor execution

Government- Homeland security- Military/ defense asset tracking

Transportation & Logistics- Asset utilization and tracking- Volume planning- Automated sorting- Automated data capture- Shipment route tracing- Delivery reliability/ efficiency- Contract pricing verification- Reduced claim costs

Construction- Asset utilisation and tracking- Automated data capture- Yard control- Safety equipment tracking

Other- Farm animal tracking- Contactless payment systems- Sensor/ sensing applications- Theme park applications- Airport tracking of baggage/

passengers

Examples of RFID applications in all industries

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The RFID solution cluster is defined by five market spaces

Supply ChainManagement

Leverage RFID technologies to transform supply chains by providing end-to-end visibility of goods and enabling improved inventory management.

Includes: Supply Chain Mgmt using RFID for Warehousing, pallet/goods tracking, Inventory Tracking, Track & Trace, Sensor/ sensing applications. Also covers RFID impact of counterfeiting and fraud.

Work In Process Manufacturing

Apply RFID technologies to the in process manufacturing processes to enable effective inventory tracking and management, product line efficiencies, and JIT manufacturing advantages.

Includes: Automation of assembly, Component production, Production of vehicles.

Asset Management

Companies have physical assets (plants, truck fleets, PCs etc) that are needed to make, and to deliver products and services to customers - knowing where an item/ vehicle is on route, and also tracking of depreciating good – tools, HW, equipment, leased items. Includes: Equipment tracking, Fleet management, Vehicle maintenance management, Track & Trace, Military and defense tracking.

Security & Access Control

Monitor the movement and use of valuable equipment and personal resources.

Includes: Access control and tracking, Animal tracking, Automobile ignition security, Baggage handling systems, Inventory control, Parking lot security and access, Shoplifting prevention, electronic article surveillance, Vehicle security, Sensor/ sensing applications.

Consumer Applications

Monitoring peoples movements, personal security, convenience and Point of sale applications.

Includes: Personal identification and authentication, personal security and safety, Patient ID and tracking, Maintaining shelf stock, Innovative payments, Return management, Purchase maintenance..

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Each market space addresses specific customer needs

Supply Chain Management

Lower labor costs by automating data collection and data transfer Reduce errors in mis-shipments, lost inventory and redundant data reads Reduce theft and shrinkage Drive government compliance through regulation Utilize remote product maintenance, warranty and recall alerts

Work In Process

Manufacturing

Minimizes re-work – insures accuracy of manufacturing, Production Line Efficiencies - expedites locating and retrieving the correct part, facilitates the

staging of products and reduces manual processes Lowers manufacturing costs – alleviating labor intensive processes e.g. manual barcode

reads Helps eliminate recalls – automation of part integration tracking Less Line Stoppage - continuous inventory of parts in passage

Asset Management

Provide rapid identification of company assets Ensure secure tracking through the point of transfer Reduce theft and shrinkage

Security & Access Control

Ensure secure, convenient access to personal, confidential informationProvide a mobile, dynamic data repository that can be updatedReduce theft, decrease fraud and mitigate riskImprove users “peace of mind”

Consumer Applications

Improve individual safetyEnsure secure, convenient access to personal transaction data Increase users’ convenience in accessing goods and servicesDecrease fraud and mitigate risk

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There has also been an increased focus on Traceability which affects 4 of the 5 segments

Supply ChainManagement

Traceability is about tracing life cycles of individual products (sometimes people) starting from their resources, materials, parts, subassemblies through final products ending up with consumer use and recycle processes for the purpose of•Individual Quality Assessment, Individual Response/Action of business processes, Individual Environmental Impact Analysis, Individual Risk Analysis, individual Customer Services, Individual Recycling, Granular Optimization of Resources, etc

RFID technology is expected to play a major role in Traceability applications because we can write/carry/read IDs, attributes and generated data of objects in motion by embedding.

Work In Process Manufacturing

Asset Management

Security & Access Control

Consumer Applications

Traceability TraceabilityApplications

RFIDApplications

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Sample Customer Experiences (more detail in separate reference ppt)

Track and manage grocery store inventory from the distribution centre to and within the retail store environment. IBM have provided business consulting, middleware, implementation, hardware and support

BP enlisted the help of IBM Global Services - Integrated Technology Services’ Wireless Consulting for this project. In this year-long technical consulting contract, IBM is providing subject matter expertise in RFID physics and sensory technologies. Business benefits for BP will likely come from a reduction in chargeback and shipping errors.

The Fishkill plant needs to use thousands of different active containers for different functions that are transferred from storage area, process tools and manufacturing facilities - all of which are very valuable. Every container has an integrated passive RFID tag with a unique ID (common across all IBM sites) - know where its been, where its going and its history. Every container has an integrated passive RFID tag with a unique ID (common across all IBM sites) - know where its been, where its going and its history

The project provides near real-time inventory visibility to the Philips Semiconductors business units. IBM provided an end-to-end solution with RFID Middleware and consulting and integration services.

At the Burlington facility, RFID tags affixed to the container-level and item-level for tracking the movement of and location of hazardous materials containers helps ensure IBM production exceeds environmental and regulation safety standards.

A Large Paper Company

Our client needed differentiation in a commodity market to elevate vendor switching costs, increase market share and provide a competitive advantage. The client solution will use RFID for product tracking and portal technology for inventory visibility throughout the supply chain. IBM Consulting and SWG involvement.

A Major US Car Rental Company

Rental cars are equipped with RFID tags that ensure vehicle location and movement are identifiable at all times while on the rental lot and when entering/leaving.

APC needed to prepare for the implementation of RFID because of requirements identified by some of its customers such as Wal*Mart and the DoD. IBM helped designed and install a Phase I Pilot at APC’s manufacturing facility in Rhode Island. The solution included business consulting, hardware, middleware and implementation.

SGM (Shanghai GM) SGM hope to improve inventory and supply chain management of field material. Now field workers need check it in some locations periodically (many times a day) and send materials to product line. Sometimes product line has to wait for materials because material requirement is not found timely.

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What does IBM stand for?

IBM implements RFID strategies with customers and in its own locations

IBM addresses compliance whilst moving customers through optimization to transformation

Offers a phased approach to RFID implementations

Ability to connect to multiple business applications (incl. ERP, WMS, legacy)

Change management, process design and business case a focus

Proven capability in complex systems integration, standard based

IBM Research Developed and patented RFID technology Highest number of patents each year for

last 10 years IBM’s Gaithersburg, Tokyo and La Gaude

testing facilities provides on-site advisory services to design technology solutions in the context of your business needs

Experience

Implemented RFID & wireless solutions in many industries

Deep vertical integration and expertise Dedicated industry teams

Vertical Integration

IBM positioned to provide all the necessary infrastructure required to implement a RFID solution: Hardware Wireless software/middleware Device operation management, deployment

and support Secure and scalable solutions

Global coverage & Global financing Partnering capabilities across value chain

IBM has RFID partnerships with over 25 leading technology players including producers of readers, tags and chips, software and storage solutions

Full Equation

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Source: RFID Journal.Source: RFID Journal.

Market trigger: Wal-Mart expands RFID mandate to include all suppliers by 2006

In June, Wal-Mart required its top 100 suppliers to have products on pallets employing RFID chips and in cases with RFID chips beginning in January 2005

Pilot ramp-up in 2004 – starting with ~20 suppliers in Jan. ’04.

Regional implementation roll-out – start with Texas region ( 3 DCs, ~150 stores)

By January ’05 - ALL products flowing through Texas region for Top 100+

DSD and DC, all impacted formats, including SAMS Club

Wal-Mart has indicated it would start deploying Electronic Product Code (EPC) technology in the United States and then quickly move to implement it in Europe, then the rest of the world.

In August, Wal-Mart announced it would require all suppliers to implement RFID systems by 2006

NB Do not use this or any other chart discussing WMT. W

e will

advise when it is appropriate to mention WMT, but until th

en IBM

must not discuss any plans that WMT has for RFID – public or

otherwise

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Source: RFID Journal.Source: RFID Journal.

Market trigger: U.S. DoD will require suppliers to use active and passive RFID technology by 2005

DOD memo: “The DOD will be an early adopter of innovative RFID technology that leverages the Electronic Product Code (EPC) and compatible tags. Our policy will require suppliers to put passive RFID tags on lowest possible service part/case/pallet packing by January 2005. We also plan to require RFID tags on key high-value items”

The new policy expands active RFID tracking of all:sustainment cargo

unit movement cargo

ammunition shipments

pre-positioned materials and supplies.

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Market trigger: Tesco RFID announcement: IGD Retail Logistics Summit (London) – 6/11/03

Philip Clarke (Main Board Director; IT, Logistics & International Businesses) announced the following:

"We will have RFID infrastructure in all UK stores by this time next year”. (approximately 1,000 locations)

Selected suppliers (by size and category) will be required to send Radio Barcode Tagged pallets and cases to Tesco starting September 2004

1 Quarter ahead of Wal*Mart Tesco will give suppliers 6 months notice (i.e. April 2004 for first wave) A series of trials and launches through Q1-3 2004 will precede Phase 1.

All suppliers will have to ship tagged pallet and cases by the end of 2006

“Suppliers should start R&D efforts now”

Tesco will continue to trial item level tagging in 2004

“We firmly believe suppliers will have four-wall benefits through using this technology”.

Visit the website @ tesco.com/radio barcodes

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Source: RFID Journal.Source: RFID Journal.

Market trigger: Metro Store Announcement: NRF, Jan 04

The project at Metro highlights the accelerating deployment of radio-frequency-identification technology in the retail industry.

Metro's RFID rollout, planned for November 2004, is expected to reach 250 stores and 10 central Metro warehouses in Germany within the first year and involve 100 of its biggest suppliers, representing 65% of its sales in Germany.

Metro expects to equip all of its roughly 800 stores in Germany with the system by the end of 2007.

The Metro rollout follows a pilot RFID project at one of its supermarkets in Rheinberg, Germany, begun last year.

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Market trigger: Target, 20 February 2004

BREAKING NEWS: In a letter from CIO Paul Singer, the 4th largest retailer announced plans to require all suppliers to use RFID across all product by Spring 2007

“Top Suppliers” required to tag all pallets and cases, shipped to select regional DC’s by late Spring 2005.

Goal is for all suppliers to be using tags by Spring 2007

Top Suppliers not defined publicly – probably similar to Wal-Mart’s top 100

No indication yet if the mandate include only stores operated under the Target banner

Suppliers required to use UHF tags based on the EPC Class 0 and Class 1 protocols. The company expects to move to EPC Class 1 Gen 2 when tags and readers based on this specification become widely available

Target Messages:Very much taking a learning approach. Already in pilot with a few key suppliers, and intent is to share

learnings with suppliers later in 2004

RFID views as a complement to barcode and EDI technologies, and Target is supporting a migration approach. Current carton marking requirements for shipping containers will remain unchanged.

Target recognize and supports the efficiencies of common technology standards for RFID for both retailers and vendors.

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Market trigger: Albertsons, 5 March 2004

In another significant boost for RFID deployment in the United States, Albertsons, the nation’s second largest food and drug retailer, has launched its first RFID pilot and announced that it will require its top 100 suppliers to tag palettes and cartons by April 2005. The pilot, which the retailer is carrying out with select partners, involves the tagging of pallets and cases of products.

Albertsons says that it expects its top 100 suppliers to tagging their shipments to the company at the case and pallet level. Albertsons’ deadline, however, is not until April 2005, three months after Wal-Mart’s January deadline.

According to Bob Dunst, executive vice president and chief technology officer at Albertsons, the company believes its RFID deployment will improve what it calls its consumer demand chain management by enabling the company to instantly locate products as they flow through its supply chain.

Although Albertsons would not provide much detail about its plans going forward, the company said the announcement about its pilot and deadline was a way to signal to its suppliers and customers that RFID is part of its future strategy.

The company gave few details about its RFID pilot other than that it covers just one of its many project categories and that it expects it to be expanded to other categories as the trial continues. Details of the pilot and the companies involved could be made available later in the second quarter, according to a company spokesperson. The company also said it expects to hold a briefing for the suppliers its expects to meet its tagging deadline.

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Faye HollandIBM WW RFID Solution LeaderPervasive / Wireless e-business EBOHome office: (44) 1638 742335Mobile: (44) 7740 740839Email: [email protected] ID: Faye Holland/UK/IBMMail point: 31NA – Bedfont Lakes, MiddlesexUNITED KINGDOM

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